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GATT Library

kq445fh2325

Verbatim Report of the First Joint Meeting of Committee I and Committee II in the Hoare Memorial Hall : Church House, Westminster, S.W.1. on Friday, 18 October 1946 at 4.45 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.I II/PV/1 and E/PC/T/C.I PV/1-4

https://exhibits.stanford.edu/gatt/catalog/kq445fh2325

kq445fh2325_90220029.xml

GATT_157

E/PC/T/C.I & II/PV/1 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMlTTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIRST JOINT MEETING of COMMITTEE I and COMMITTEE II in the HOARE MEMORIAL HALL Church House, Westminster, S.W.1. on Friday, 18th October, 1946, at Temporary Chairman: MR. MUNSZ KING (China). (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1.) E/PC/T/C.I & II/PV/1 THE TEMPORARY CHAIRMAN: The meeting is in order. It has been suggested and it has been commonly agreed that there should be a joint body in connection with Committees I and II to deal with questions of Industrial Development, and if it is agreeable to you I should like to call on somebody to nominate a Chairman of that joint body. MR. A. T. BRENNAN (Union of South Africa) : Mr. Chairman, having due regard to the great importance that will be attached to this joint meeting between Committees I and II, and in the light of the work they are going to under- take, I should like to propose to you and to my colleagues here that the Chairman of that particular Joint Committee should be Mr. H.S. Malik. Mr. Malik has wide experience, not only of the development of industry in his own country, but on account of his wide and extensive travels in the Eastern and Western Hemisphere, as well as the great work he has done as a member of other international organizations affecting Food, Agriculture, Rehabilitation, Labour. He is a man who, with his training and backround, is particularly and outstandingly suited to take the Chair at a gatheirng of that nature. In addition to that, he is a very great friend of nine,and accordingly I make that nomination. THE TEMPORARY CHAIRMAN: The delegate of South African has nominated Mr. Malik of the Indian Delegation to be the Chairman of this Joint body. Does anybody wish to second that? MR. J.R.C. HELMORE (United Kingdom): Mr. Chairman, the United Kingdom delegation could like to second the nomination that has been made by the South African delegate in such happy terms. E/PC/T/C.I & II/PV/1 THE TEMPORARY CHAIRMAN: The proposal of the South African delegate has been seconded by the United Kingdom delegation, and if there is no other nomination may I take it that the Indian delegate, Mr. Malik, is elected unanimously and by applause? (Applause). MR. H. S. MALIK (India ) then took the Chair. THE CHAIRMAN: Gentlemen, I am grateful to you for the honour you have done my country and me in electing me to this very important office. I am fortified by the confidence that you have been kind enough to place in me. I also feel strengthened by the knowledge that I shall receive your advice and your guidance in guiding the proceedings of this joint body. I am only promise you that I will do my best. (Applause). As this is a body that has been constituted without very much notice, perhaps it would be helpful if we could have some suggestions regarding the method of working of this joint body. MR. J.R.C. HELMORE (United Kingdom): Mr. Chairman, as it was the United Kingdom who suggested that this joint body might be useful to us, during the first meeting of Committee I, perhaps it would not be too invidious if we were to take upon ourselves the task of saying that, as you have reminded us yourself, Sir, we none of us had very much time to consider this. I think it would be generally agreed that our subject-matter is closely bound up with that of Committee I and Committee II, and therefore, though this subject takes no lack of precedence in importance, perhaps in time it would be better for us to return to it after Committees I and II have had two or three meetings and after the various delega- tions have had a chance to consider, to adept the words of military communiques, "the new situation" which has been thrust upon us. 3. E/PC/T/C.I & II/PV/1 THE CHAIRMAN: Any other comments ? DR. H.C. COOMBS (Australia): I suggest, Mr. Chairman, that it might be advisable if you as Chairman of this joint body kept in touch with the Chairmen of Committees I and II in the first few days of their sessions, so that it can be decided in the light of their early work how quickly we can get this Committee going on its substantive business. THE CHAIRMAN: If that is the general desire of the members of this joint body I shall act in accordance with the suggestions made by the delegate of the United Kingdom and by the delegate of Australia. The suggestion is made that instead of electing formally a Vice-Chairman, in the absence of the Chairman the Chairman of Committee I or the Chairman if Committee II may act as Chairman of this joint body. May I know if that is generally accepted? (Agreed). Then I propose to close the proceedings of this joint body, unless/any delegate has anything to say? The meeting ?? at 5 p.m. 4.

GATT Library

dd526yy3346

Verbatim Report of the First Meeting of Committee III : Held in Committee Room 4, Church House, Westminster, S.W.1 on Friday, 18 October 1946 at 5. 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.III/PV/1 and E/PC/T/C.III/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/dd526yy3346

dd526yy3346_90220056.xml

GATT_157

8/45/I 3 E/PC/T/C.III/PV/1 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIRST MEETING COMMITTEE III held in Committee Room 4, Church House, Westminster, S.W.1 on Friday, 18th October 1946 at 5. p.m. Temporary Chairman: Mr J.A. LACARTE (Uruguay). (From the Shorthand Notes of V.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) 1 E/PC/T/C.III/PV/1 TEMPORARY CHAIRMAN: I wish to declare open the first meeting of the Committee on Restrictive Business Practices. As you will probably be .aware, the agenda for today's meeting is contained in today's Journal and consists of four points; but before going into the agenda I hope you will permit me to introduce to you the Secretariat which will serve you on this Committee. The Secretary will be Mr. Koriwan, who sits here, the Associate Secretary will be Mr Renouf , and the Assistant Secretary will be Miss Wachenheimer. If at any time you feel there are any suggestions you can make as regards the work of the Secretariat of this Committee, such as improving their procedures or their service to you, I hope you will let Mr Koriwan or one of his associates know. For the benefit of those delegates who may not have been in this room a little while ago at the first meeting of the Inter-governmental Commodity Arrangements Committee, may I say that the Secretariat understands that the Rules of Procedure as adopted by the Preparatory Committee the other day will apply to the work of this Committee. Rule, 57 refers to simplified arrangements in respect of languages in Committees or any Sub-Committees whenever those bodies deem it necessary, so, although a full language service will be provided at all times, If the Committee should feel that at any time it wishes to simplify its rules as respects languages it is ertirely free to do so. I should now like to take up the first item of today's agenda, which is the election of a Chairman and Vice-Chairman. may I ask first of all for nominations for the post of Chairman of this Committee? MR WILCOX (USA): Mr Chairman, it is my privilege to place a nomination for the Chairmanship of this Committee. M. Dieterlin of the French Delegation is a member of the Ministry of National economy in Franrce and has long specialised in the field of work which will be the subject matter of the deliberations of this Committee, and he is thus well qualified to preside over this work. TEMPORARY CHAIRMAN: The delegate of the United States of America has nominated the French delegate, M. Dieterlin, for the post of Chairman of this Committee. Is this motion seconded? MR STEYN (South Africa ): I second. M. CALMES (Belgium): I also support this nomination. TEMPORARY CHAIRMAN: Are there any other nominations? I think we may take it that M.. Dieterlin has been unanimously elected Chairman of this Committee. I invite him now to take the Chair. (Applause) . (M. Dieterlin then took the Chair.) THE CHAIRMAN (Speaking in French: interpretation): As you have done me the honour of calling me to the Chair, my country will now be represented by M. Lecuyer. I would like to thank the Committee for honouring me and my country also in this manner. We now come to the second item in the agenda, which is the election of a Vice-Chairman. Has anyone any nominations to make? . . . I would like to propose Mr Gonzalez, of Chile, who is very well qualified to help me in guiding the discussions of this Committee. MR HOLMES (U.K.): I shall be very happy to second that suggestion. THE CHAIRMAN (Speaking in French: interpretation.): Has anyone any further observations to make on the suggestion? . . . I think I may take it that Mr Gonzalez is unanimously elected Vice-Chairman. (Applause). 3. E/PC/T/C.III/PV/1 MR GONZALES (Chile): I am very grateful for the honour that has been done me, and to the Chairman for having nominated me. THE CHAIRMAN: (Speaking in French: interpretation.): We now take up the question of the preliminary observations on the agenda and on the working programme which has been submitted by our Secretariat. This agenda has just been distributed by the delegation of the United States. Does anyone wish to speak on this agenda? I think it would be very useful if the United States delegate (they having submitted this agenda) would perhaps say a few additional words with regard to it. MR WILCOX (USA): Mr Chairman, I have no particular comments to make on this agenda. The heads of delegations in meeting today came to the conclusion that it would forward the work of the working Committees of the Preparatory Committee if that work were to be established on the frame- work provided by the suggested Charter prepared by the United States: and this agenda which we thereafter typed out is merely a presentation of the various headings in the chapter relating to restrictive business practices. MR HOLMES (U.K.): Mr Chairman, may I assume that in Accordance with the decisions taken at some, at any rate, of the other Committee meetings this afternoon, we should regard this rather as a provisional agenda which can be added to or even subtracted from in the course of our proceedings? THE CHAIRMAN (Speaking in French: interpretation) : Personally, I think that the proposal just made by the delegate of the U.K. is a very prudent one, and I am ready to agree to it, provided the rest of the Committee are of the same mind, MR STEYN (South Africa): I would support it. THE CHAIRMAN (Speaking in French: interpretation): Subject to the U.K. comments that have, just been made, I think the we should E/PC/T/C.III/PV/1 look into this provisional agenda that has been submitted by the United States delegation and, in order to clarify it, I should like to make the following observations. The agenda consists of seven items taken from the various headings of the Draft Charter, but the character of these items varies. The first ones for instance, takes up the position of principal and the following ones are concrete applications resulting from the first item, and I therefore think the best method of work would be first of all to discuss these general principles, and each delegate might perhaps make plain what is the stand of his own Government; and after that, if we have, reached agreement of a general nature, we could take up, the more practical aspects and regulations. Does the Committee agree to this, or have delegates any other opinions to put forward regarding this suggestion? Does anyone wish to speak on my suggestion? MR McGREGOR (Canada): Would these proposals be discussed at the next meeting of the Committee? THE CHAIRMAN (Speaking in French: interpretation): I think that it would be better for us to discuss this now - unless, of course, the Committee wishes to have time to think it over. DELEGATE OF CHINA: As far as the Chinese delegation is concerned, I think we want to have time to think it over. THE CHAIRMAN (Speaking in French. interpretation): In view of what the Canadian and Chinese delegates have said I propose that we should postpone the discussion of this question of general principles until our next meeting. (Agreed.) We now have to considered the question publication of records of our deliberations, and I call on the Committee Secretary to make a statement. E/PC/T/C.III/PV/1 E/PC/T/C.III/PV/1 COMMITTEE SECRETARY: I would like briefly to explain the method of keeping records of these meetings which has been put forward. There is a slight change in our arrangements necessary owing to the change in the pro- visions of a Rule of Procedure with regard to keeping these meetings closed. We will therefore distribute three different types of records. First of all, the verbatim record, which will be restricted and which will be handed to every delegation; then minutes of proceedings, which will contain a kind of rather extensive summary record, which will also be restricted and handed only to members of the delegations; and finally we are going to provide a very short, purely procedural summary, which will be handed to the Journal for publication the Journal; and we have anticipated that for these short summaries we shall always have agreement reached beforehand between the Chairman and the Secretariat, in order to make sure that it will not reveal too much of the procedure taking place in this Committee. Is that arrangement satisfactory to the delegates, or are there any suggestions in regard to this procedure? MR HOLMES (U.K.) Mr Chairman, I wonder whether it would be in accordance with your views that instructions should be given that in preparing these short summary statements for the purposes of the Journal the actual definition of the views expressed might not be allied with the names of the people who express them? That is, I thiink, the rule that again is being adopted in other Committees, and I imagine you would feel it should apply to this Committee also. THE CHAIRMAN (Speaking in French: interpretation): I am in agreement with this suggestion mads by the U.K.. delegate and he is correct in saving that this method has been adopted by other Committees, and I believe that the first summaries 6. E/PC/T/C.III/PV/1 that have already been drafted have been drafted along these lines. Have any other delegates any observations to make on the U.K. delegate' s suggestion? . . . Then the summaries for the Journal will be drafted along the lines suggested by the delegate of the United Kingdom. I would draw the attention of the Committee to the fact that a letter has received from the International Chamber of Commerce and there are certain points in this letter which refer to matters in regard to which this Committee is competent to make recommendations. The letter itself has been distributed and delegates are asked to study it. It is proposed that these requests that are contained in this letter shall be studied under the first This, then, concludes our agenda for today, but before closing the meeting I would be glad to know whether anyone has any observations to make concerning the agenda , or otherwise. MR. STEYN (South Africa): Mr Chairman, I would Iike to raise a point. Perhaps we can decide now when this Committee is going to have its next meeting. THE CHAIRMAN: The suggestion is that the next meeting, if the Committee agrees, will take place on Monday, 21st October, at 3 p.m. in this room. Is that late and time agreeable to the members of the Committee? (Agreed.) The meeting is The meeting closed at 5.30 p.m.

GATT Library

nh073bs0335

Verbatim Report of the First Meeting of Committee IV : Held in Committee Room G. Church House Westminster, S.W.1 on Friday, 18 October 1946. at 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/PV/1 and E/PC/T/C.IV/19-20 + E/PC/T/C.IV/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/nh073bs0335

nh073bs0335_90220085.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE Vebration Report of the FIRST MEETING held in Church House Westminster, S.W.1 Friday, 18th October, 1946. at Mr. J.A . Lacarte (Uruguay). (From the Shorthand Notes of W. B. GURNEY, SONS & FUNNELL, 58, Victoria Street Westminster, S.W.1.) 1. E/PC/T/C.IV/PV/1 ?' - "",- - - T. , - ? za 717 - I E/PC/T/C. IV/PV/1 THE TEMPORARY CHAIRMAN: Gentlemen, I have pleasure in declaring the first meeting of this Committee open. As you all know, the agenda fcr today is to be found in the Journal. It as a short one and consists of four items. Before enter on to the agenda, I should like to introduce to you the secratariat of this Committee. The Secretary is Mr. Judd, who sits here. The Associate Secre- tary is Mr. Gilpin, here, and the Assistant Secretary is miss Hadovary. If you have any suggestions of any kind as to the manner in which the.work might be carried out, we shall be very ad to receive them through Mr Judd, and, as far as humanly possible, put them into effect. The rules of procedure which we understand will be in order in this Committee are these which have already been adopted by the PreparatorY Committee. As was previously done today at the meeting of Committee I, I might draw your attention to rule 57, which refers to languages, and reads that Committees and Subcommittees may deceide to adopt rules of proceduure regarding interpretations or translations of a more simple character than these laid down in the rules.We will, of course, have adequate languae staff at oil timies, but if the Committee should ever feel that it wishes to simplify these rules, it is at perfect liberty to do so. Now we come to our first item on our agenda to-day, which is the election of a Chairman. I should like to call for nominations. M. ALPHAND (France) (speaking in French - interpretation): Mr Chairman I would like to proposed the election of Mr. Helmere, the Delegate of the United Kingdom, as President of this Committee. I do so first in homage to the United Kingdom, which is our host country, which is one of the countries to which all countries, and especially my country, France, owes a great debt. I do so, secondly, because Great Britain is a country which has always led In matters of trade which has kind of vocation for international trade, an which can teach us very much, Thirdly, I do so because 2. E/PC/T/C.IV/ PV/1 of the personal capacity of Mr Helmere himself. I have not yet had the pleasure of knowing him for any length of time, but I know about his position at the Board of Trade; I know his outstanding capacity . I can myself judge of one of his qualities: he possesses a quality which is rare but a veyr, useful one for a Chairman. I have heard that he has a very strong sense of humour. Without a sense of humour it is quite impossible to treat seri us questions seriously. Therefore I propose that the Members of this Committee sjhould unanomously by aceleratopm elect Mr Helmore Chairman. (Applause.) THE TEMPORARY CHAIRMAN: Gentlemen, I take that Mr Helmore has been accepted as Chairman of this Committee, and I now request him to take the chair. (Mr. J.R.C. Helmore, C.M.C. (United Kingdom) accordingly took the chair.) THE CHAIRMAN: Gentlemen and M. Alphand it is my privilege to thank you for the way in which the suggestion has been received, and especially to thank M. Alphand for the t wo grounds on which he based his suggestion. In the name of the United Kingdom I thank him for what he said. As regards my position as Delegate of the United Kingdom, I thank him for what he said about me; but as to that I have some doubts. In the first place, it was almost too much for the interpreter. In the second place, we in the United Kingdom sometimes fail in our sense of humour by assuming that we have a monopoly of it. The next item on our agenda is the election of a Vice-Chairman. Are there any nominations? Mr. McCARTHY (Australia): Mr Chairman, representing Australia, I have pleasure in nominating Mr. Bjarne Robberstad of the Norwegian Delegation as the Vice-Charirman of this Committee. He helds a position of preminence in the Norwegian Supply Department, and I believe his qualifications are such as to render him an appropriate Vice-Chairman. E/PC/T/C.IV/PV/1 THE CHAIRMAN: D-os any Delegate wish to second that suggestion? Mr. HAKIM (Lebanon): I second the nomination of the Delegate for Norway, Mr. Robberstad. THE CHAIRMAN: Are there any other nominatios? (After a pause:-) Then I have very much pleasure in declaring the Delegate of Norway elected. to the position of Vice-Chairman of this Committee. (Applause.) Before we pass on the next business, I think it would be the Committee's wish that we should say a word of welcome to the representatives of the specialilsed agencies, The four ghests sitting at the bottom of the table will no doubt read our minutes an learn from them that we shall very much welcome their assistance when they can centrlibute to the Solutions of the problems before us. Then, Gentlemen, I suggest we go on to item No. 2 of the suggestions by the secretariat which were circulated in the Journal; that is prelimninary consideration of agenda and programme of work.. The United States Delegation, I understand, have been good enough we make some suggestions to us which are now being handed round. M. ALPHAND (France) (speaking in French - interpretation): Chairman, I am sorry: I just want to draw your attention to the fact that ihe documents are distributed in English only, and I do not understand English. THE CHAIRMAN: If it would meet this temporary difficulty, I am sure the interpreter would be able to read it to us in French. M. ALPHAND (France) (speaking in French - interpretation): I want to be sure that this wll not be repeated. THE CHAIRMAN: I am perfectly certain that the Secretairies will observe the rules of procedure; and in their defence I must say that this document was, I believe perfectly correctly, handed in in one language only a. few minutes age. Now I might ask the Interpreter to read thIs document In French, 4. E/PC/T/C.-IV/PV/1 M. ALPHAND (France) (speaking in French - interpretation): I have now read it through; I understand it now and I do not want it translated . THE CHAIRMAN: Another instance of the monopoly being infringed. Mr. WILCOX; (USA): Mr Chairman, if it is appropriate now, I wouuld like. to speak a word. about this document. It is my understanding that it was agreed at a meeting of heads of Delegations this noon that, in order to facilitate the work of the respective Committees, as a matter of convenience, the headings of the various sections of the chapters of the suggested Charter prepared. by the United. States would be used as the agenda of the Committees, subject to such amendments as other Delegations m., :t care to make. In pursuance of that understanding, the United States between that meeting, and. this one has set forth these headings in a suggested agenda. I regret that, due to the limitations of time, in that interval it was possible for us to present tham only In English. There is only one change involved here, and. that is a slight re- arrargement in the sequence of the headings; so that principles would be discussed. first and.details of organisation and procedure subsequently, But the content of the headings is the same as that of the various sections of the chapter regarding commodity arrangements, THE CHAIRMAN: Does any other Delegation want to observe at this stage on the suggestions for cur agenda.? M. ALPHAND (France) (speakng in French - interpretation): Mr. Chairman, I am. sorry to speak once more. I do not think we have had. time in these few seconds to give a real opinion on this agenda. At first sight the suggested agenda seems to me to be quite good and well done; but I think we should have been given time to think it over, and at the beginning of the next meting we could give our opinion on it. 5. E/PO/T/C. IV/PV/1 THE CHAIRMAN: Would it generally meet the wishes of the Committee if we were to take as our first item of business when we next meet, consideration of the suggested agenda? is that agreed? (After a pause;-) Then we will do that. Now I think at this point it might be useful to the Committee if I asked the secretar- iat to give us an explanationn of the arrangements that are suggested for records of Committee Meetings. THE SECRETARY (Mr. Lacarte): In accordance with the decisions taken by the Preparatory Committee when it met in executive session on the rules of procedure, in view of the fact that Committee meettings will normally be held in private, verbatim records will be issued to Delegations, specialised agencies here present and observer countries and members of the United Nations. The summary record:will have the same circulation. There wiil also be a short version of the summary record to be prepared by the Secretary of the Committee and approved by the Chairman of the Committee, which will be inserted in the Journal. We hope that will prove acceptable to the Delegations. THE CHAIRMAN: I take it those arrangements are agreeable to the Committee? (After a pause; -) There is one other matter before we come to consider the date of the next meeting. That is that there has been circulate a document numbered .W.17 from, the International Chamber of Commerce. It might peragraps be useful if we were prepared with any remarks we want to make on that document a t the meeting to-morrow. Before I ask the Secretary ro tell us w-hat is contemplated as to programme of meetings, is there any other point which. any Delegation wishes to raise? (After a pause-) Then I call upon the Secretary. THE SECRETARY: It is proposed that the next meeting of this Comm- ittee take place tomorrow morning at 10.30. It will almost certain- ly meet in this room, and you will have confirmation in the Journal. We have made tentative arrangements for a further meeting on Monday at 10.30. and once again the number of the room 6. E/PC/T/C.IV/PV/1 will appear in the Journal. Mr. McCARTHY (Australia): *.What is expected to be the duration of the meetings? THE CHAIRMAN: In the morning? Mr McCARTHY (Australia): In the morning: particularly. THE CHAIRMAN: Well, I am in the hands of the Committee on this. I think the Plenary Sessions and Executive Sessilons have endeav- oured to rise by 12.30.Would it be convenient to take that as our aim? (After a pause:-) Then we adjourn till tomorrow morning at 10.30. (The Meeting rose at 4.15 p.m.) ________________.___________ 7.

GATT Library

kc760qb8719

Verbatim Report of the First Meeting of Committee V : Held in Committte Room 5 Chruch House, Westminster, S.W.1, on Friday 18 October 1946, at 5 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.V/PV/1, E/PC/T/C.V/32-35, and E/PC/T/C.V/PV/1-2

https://exhibits.stanford.edu/gatt/catalog/kc760qb8719

kc760qb8719_90230006.xml

GATT_157

E/PC/T/C. V/PV/1 UNITED NATIONS I ECC.A:Ic AND SOCIiL COUtCIL. OMMPA-ATORY C0I ITTEE of the INTMRERENONAL CORAF M1NCE MP T-MDE AlD E%.LOYENT Verbatit Repcrt of thc FIRST helm in mh-.h te r.n. 5 C'urch ue,.' r:l;.r5.-',, - Fri . 18th Cct. J>, 19< -t 5 P.:. (Frc: th Shcrthan Notos of .. 3 GURYEY, 50ii & FUNNELL 5b Vctcri-a Street, 'ezt;inster S. .'.) 1. OHairrn: .-v- 7.HITr (UK) . E/PC/T/C. V/PV/1 THE TEMPORARY CHAIRMAN: Gentlemen, I have great pleasure in declaring open the first session of Committee.V of the Preparatory Committee on Trade and Employment, the Committee on Administration and Organ- isation. The agenda for to-day' s meeting, which I hope we shall be able to make a short one, is set out in Journal No. 4, which was issued to all delegations this morning; but before we cone to the agenda, I would just like to introduce to the Committee the secretariat. The socretariat of the Committee consists of Nr. Bruce Turner, who is sitting on my right, and Mr. Wang, who is sitting on my left. I have told them, in common with theother committee Secretaries, to be completely unsparing in finding work for the Delegates; and. we shall equally expect that you will require similar effort on our part. There are two points to which I should lIke to refer before taking up the first item on the agenda. The first is to draw the attention of members of the Committee to the rules of procedure which have been adopted by the Plenary Committee and which will, therefore, govern the proceedings of this and the other Committees. In particular, I would like to invite your attention to rule 57, Which provides that the Committees and Subcommittees may by agreement decide to adopt rules of procedure regarding interpretations or translations of a more simple character than these laid down in the rules. In the absence of any such agreement to vary the procedure, the business of the Committee will be conducted in the working: languages, English and French, with interpretation between the two. Now we come to the first item of our agenda, and that is the election of a Chairman. Are there any nominations for the office of Chair an of the Committee? Mr BURY (Australia): Mr Chairman, I should. like to nominate Mr. Edminster of the United States Delegation as Chairman of this Committee. 2. E/PC/T/C. V/PV/1 TEMPORARY THE/CHAIRMAN: The Australian Delegate has nominated Mr Edminster of the United States Delegation. Is that nomination seconded? The nomuination is seconded by the Delegate of France. Are there any other nominations? (After a pause:-) There being, no other nominations, I declare Mr. Edminister elected as Chairman of the Committee, (Applause.) (Mr. Lynn R. Edminster (USA) accordingly tools the Chair.) THE CHAIRMAN: To be designated Chairman of this Committee is an honour to my country and to me for which I am most grateful. The next item of business is the selection of Vice-Chairman of the Committee. I will now entertain nominations. 1. HAKIN: (Lebanon): Mr Chairman, I have pleasure in nominating Mr. Cabal, the Delegate of Brazil, for the Vice-Chairmanship of this Committee V. THE CHAIRMAN: Is there a seconder of this nomination? (speaking in French - interpretation): E. MERINO (Chile) :/ Mr Chairman, the Delegate of Chile whole- heartedly supports the nomination of the Brazilian Delegate to the post of Vice-Chairman. THE CHAIRMAN Are there any other nominations for this position? (After a pause:-) If not, I shall declare the delegate for Brazil elected Vice-Presi-c (Applause.) Mr Wyndhan white desires to make a further announcement. I WYN !ANNWHIwDITEMr: ioChrmaan, s part ohf te elections of officers thisctCommittee, it 'wuld I think be appropriate fro: he Committee, to appoint a rapporteur. On the other hand, itmight be that the Committeew olud rather defer a decision on this pilnt until they have had an opportui.ty of seeing oaw thewWork of the Committee develops. Iin that cas,. the Cmniitteemnay merelyw;ish oc take note of the fact that it wll be dei~rable or may be dei rbole at some stage to apoinnt a rapporteur ad' to defer onsid.erai.on of that question until a ate-r meeing 3. E/PC/T/C. V./PV/1 THE CHAIRMAN: The next Item on the agenda is the preliminary con- si deration of an agenda and programme of work for this Committee. It is my understanding that the heads of the various delegations agreed this morning that the heads of sections or articles in the appropriate chapters of the Charter as proposed by the United States should be submitted for consideration, and, unless there is amend- ment, those headings should be used as the basis of each Committee's work. Copies have been prepared and I understand they have been distributed to the Committee. I take it that this will afford. an opportunity for mergers of the Committee to consider both the content of the agenda and the order in which the items on the agenda might best be taken up to advantage. Mr BURY (Australia): Mr Chairman, I should like to suggest that the agenda should have rather more elasticity than it has as set out here. The first three items could, of course, easily be dis- cussed now. As to the fourth item, the Conference, so much depends on the progress of other Committees, that nothing very much can be decided except in one or two aspects. Again, in relation to the Commissions, this does, of course, closely follow the United States proposals; but there may be other Commissions, and in fact, the whole structure may be considerably changed; so I should like to suggest, Mr Chairman, that we might take, say, the discussion on the first three, and then leave the question of subsequent items to a later meeting. Mr. HARRY HAWKINS (USA): Mr Chairman, I would suggestthat there may be other topics which are not so closely related to the work of the other Committees and that they might be discussed at an early time. Now I cannot say in detail what they are, not having studied it carefully, but I should think 7 and 8 in large part might be discussed at an early date. My suggestion would be that the secretariat look over the agenda carefully with a view to making recommendations as to the order in which the Committee might take up the items, having in mind the relationship to the work of et or Committees. 4. E/PC/T/C.V/PV/1 THE CHAIRMAN:. The Chair would like, to state that the secretariat, has already done some preliminary work on the matter referred to by Mr Hawkins: it has prepared for the consideration of this Committee a suggested order of business which will be distributed for your use. I understand that the principles on which this document has been based are somewhat as follows:- first that the 'Committee night take up those portions of the appropriate sections which are of a merely routine character and which are prostably wholly non-controversial; secondly, those items which may be controversial but which may not perhaps be closely depen- dent upon the outcome of the discussions in the other Committees; and, lastly, these portions which manifestly could not be acted upon until the discussions in the other Committees have proceeded further. I shall ask that copies of this document be distributed. Are there any other suggestions from members of the Committee which might be put before us at this time for consideration in advance of our next meeting? (After a pause:) If not, I take it that the programme would apply, that we should give considera- tion to the various suggestions over the week-end and that we should determine the content of the agenda and the order of dis- cussion at our next meeting. The next item on the agenda is an explanation by the secretariat of arrangements for records of the Committee meetings. THE SERETARY: Mr. Chairman, I think members are probably aware more or less of those arrangements, The records which will be prepared by the secretariat of meetings of this and of other Committees fall into three general categories: first, there will be a verbatim record taken of the entire proceedings of this Committee. That will be issued as a restricted document. That means to say it will be distributed only to Delegations; it will not be distributed to the public or to the Press. Secondly, there will be a summary record kept of each meeting of this Committee. That will be in the nature of rminutes of the Committee meeting, which will comprise texts of Resolutions or decisions taken and 5. E/PC/T/C. V/PV/1 a gist of the discussions. That also will be issued as a restricted document to Delegations only, not for publication. should be Thirdly, it has been suggested that the secretariat/responsible for preparing at the end of each day's session a very brief summary of the day's proceedings - very much briefer than the summary record, the purpose of this very brief summary being for publication in the Journal; that is to say, it wilI not be a restricted document, as the other two will be: it will be published and availablefor general information. It is the sugges- tion of the secretariat., in which we hope very much you will concur, that the Secretary of the Committee should clear this brief summary at the end of each day with the Chairman of the Committee, with the understanding that the Chairman, in his discretion, would consult certain members of the Committee, or, if necessary, the Committee as a whole, although for practical reasons we hope that that latter necessity will not arise very frequently. I should only add that as - far as this Journal record is concerned, it would be prepared very carefully indeed; it would be a very brief description of what took place. There will be no attribu- tions of any kind, that is to say, that no point of view or statement will be attributed to any particular delegate or dele- gation. Mr Chairman, it is hoped that the Committee will see fit to approve that general arrangement. THE CHAIRMAN: The next item of business concerns the date of our next meeting, The secretariat has suggested that the next meeting be at 5 o 'clock on Monday. I understand that that hour is not to bv taken as a precedent for further meeting, but for Monday the suggestion is 5 o'clock. What are the views of the Committee with regard to that? (After a pause:-) In the absence of any objection from Committee Members, I take it that our next meeting will take place at 5 o'clock in this room on Monday. Mr CABAL (Brazil) :( speaking in French - interpretation): Mr Chairman, before ending this meeting, I wish to thank the members of the 6. E/PC/T/C. V/PC/1 Fifth Committee for having chosen me and my country for the post of Vice-Chairman. I wish to tell them that I will spare no efforts to do the best I can in order to help them. THE CHAIRMAN: Is there any other business that anyone wishes to being, up at this time? If not, I declare this meetlng adjourned,unac, (The meeting rose at p5.33 .m.) - - - - - - - - - - - - - - - - - - - - - - ___________________________ 7.

GATT Library

hz958kh9959

Verbatim Report of the First Meeting of the Joint Drafting Sub-Committee of Committee II. and Committee IV. on Subsidies on Primary Products : Held at Church House, Westminster. S.W.1, on Wednesday, 13 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 13, 1946

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

13/11/1946

official documents

E/PC/T/C.II IV/PP/PV/1 and E/PC/T/C.II PP/PV/1,2

https://exhibits.stanford.edu/gatt/catalog/hz958kh9959

hz958kh9959_90220035.xml

GATT_157

E/PC/T/C.II & IV/PP/PV/1 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIRST MEETING of the JOINT DRAFTING SUB-COMMITTEE OF COMMITTEE II. AND COMMITTEE IV. ON SUBSIDIES ON PRIMARY PRODUCTS. held at Church House, Westminster. S.W.1, on Wednesday, l3th November 1946 at 10.30 a.m. Chairman: Mr. E. McCARTHY (Australia). (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street Westminster, S.W.1 1. A B. 1 E/PC/T/C. II & IV/PP/PV/1 THE SECRETARY: In the absence of Dr. Coomls- who, I understand is occupied in another committee at present, on industrial development - I have the honour to open this first meeting of the Joint Drafting Sub-Committee on Subsidies on Primary Products. The first item on our agenda must, of course, be the selection of a Chairman for this sub-committee. I would be glad if any Delegates present would suggest a Chairman. MR. SHACKLE (United Kingdom): I would like to suggest that we invite the Delegate of Australia, Mr. McCarthy, to be our Chairman. MR. DEUTSCH (Canada): I would like to support that. MR. McCARTHY (Australia): I would be glad to accept the chairmanship if it is understood that I could, in addition, speak freely for Australia as there is no other Australian representative here - and perhaps also on the understanding that if Dr. Coomb is available at any time he could take my place. If that is understood I would be glad to do what I can to help the proceedings along . Do you see any difficulty in my acting as Chairman and also putting, the Australian point of view? MR. SHACKLE (United Kingdom): No, I do not see any difficulty at all. (Mr. McCarthy then took the Chair) THE CHAIRMAN: We have before us Article 25. The position seems to be that we examine Section E, Article 25; and we have the view of the main Committee II that a special sub-committee should be set up to deal with primary products - a sub-committee representative of Committees II and IV. We also have the statements made in Committee II regarding subsidies as applied to primary products. As far as my records show we have two suggested amendments, one from New Zealand and one from Cuba. In the main Committee II when the matter of secondary manufactured products was dealt with suggestions were made by various Delegates that primary products might be treated separately. I take that to mean that there might be either a separate heading for primary products or the text of the draft might be so altered as to distinguish between secondary products and primary products. Do you think it might be appropriate to consider 2. B. 2 E/PC/T/C. II & IV/PP/PV/1 first the proposition wheather we shoud make a distinction in the text between secondary and primary products, and having decided that what particular form it should take by way of amendment of Article 25. MR. SHACKLE (United Kingdom): Before we become launched on our general discussion I wonder whether it might be opportune to consider the question of appointing a Rapporteur. I rather think there may be a case for appointing a Rapporteur because, for one thing, a Rapporteur has been found to be a very useful necessity in other sub-committees; and for another, I gather the Secretariat is rather pressed and might not be able to undertake the Rapporteur's work themselves. THE CHAIRMAN: I agree that a Rapporteur might be appointed. Would Mr. Schwenger undertake that task? MR. SCHWENGER (United States): I would be glad to do that, if the other Delegates are agreeable. MR. ALAMILLA (Cuba): The Delegation of Cuba has not been designated for this sub-committee, but we have a substantial interst in the matters to be discussed. Therefore, we would ask only to be able to be present in order to follow the discussions, even if we do not take part in them. THE CHAIRMAN: I agree with that. PROFESSOR de VRIES (Netherlands): We have not to hand the amendments from New Zealand and Cuba. Can the Secretariat provide copies? THE CHAIRMAN: We will have them distributed. While they are coming, I think perhaps we could look at the general question of the division of the Article. THE RAPPORTEUR: Would it be possible to meet this problems by using the word "primary" in the appropriate places in paragraph 3 of the Article? I might say in support of that, paragraph 3 is closely connected with Chapter VI, which deals exclusively, or almost exclusively, with primary products. That might be an appropriate way of dealing with it. you THE CHAIRMAN: And would/say in other places where it is appropriate? THE RAPPORTEUR: Yes - without having considered it too greatly in detail. B.3 E/PC/T/C. II & IV/PP/PV/1 MR. DEUTSCH (Canada): As a matter of clarification, might I ask what was intended in paragraph 3 in the draft of the Charter? It says: "In any case in which it is determined that a specified product is, or is likely to become, in burdensome world surplus." THE RAPPORTEUR: You mean why the word was not in there in the first place. Is that the question? MR DEUTSCH (Canada): Yes. THE RAPPORTEUR: I think it was an oversight. MR. DEUTSCH (Canada): Just an oversight? You had not intended that it should cover any commodity? THE RAPPORTEUR: The possibility that special circumstances as mentioned, you remember, in one paragraph of the Chapter may have had something to do with it. MR. DEUTSCH (Canada): I certainly agree that might be specified here, that it is primary commodity which is referred to. 4. C.1 THE CHAIRMAN: We have come across a constitutional point in regard to translations which perhaps will have to go to higher authority. The Delegate of Brazil has advisors with him who do not understand English, but understand French, and apparently it is necessary for me to decide whether they are entitled to have English translated into French. THE SECRETARY: We have a few copies of the Cuban proposals, and would be happy to give copies to those who may need them. Will Delegates who do not possess the Cuban amendments please tell us, We have also a Secretariat paper, Document W/34, which is a summary of all amendments which have been suggested. THE CHAIRMAN: The Brazilian Delegation has kindly agreed to allow us to go on in English, and the translator will assist them. I think that when we broke off on this side issue, Mr. Schenger had suggested that the term "primary product" should be included in Article 25, (3), and Mr. Deutsch and he had a word on it, and I am not sure I got the draft of what was said. MR. DEUTSGH (Canada): I wanted to know why it was left out originally in paragraph 3 (a), and Mr. Schenger explained that it was purely an oversight and was intended to be there all along. THE RAPPORTEUR: I might say that it might have been because of Article 45 (3), which allows for non-primary products in exceptional circumstances. THE CHAIRMAN: On that issue of the distinction between the two, it seems that paragraph (2) would require some alteration to meet that. That issue was raised in the main Committee, and it was said that paragraph (2) might be expected to apply quite easily to manufactured goods, but that there were difficulties in applying the same principles to primary products. 5. C.2 E/PC/T/C .II &. IV/PP/PV/1 MR. SHACKLE (UK): I do not know whether it is in order to raise the matter here, but it seems to me that if we part from the change we have already made in paragraph (3) and endeavour to separate the treatment of primary products from the treatment of manufactures completely in respect of subsidies, we shall run into some difficulty. First of all, there is the difficulty of definition. We have not, so far as I know, yet got a definition of primary products, even for the purposes of Chapter VI, and secondly, I have the feeling that there is probably no substantial difference in the principles which should apply in this matter as between manufactures and primary products -- that is, of course, a personal opinion -- but I do not see where the essential difference in principle comes in. I am wondering whether it might not be more appropriate to attempt to amend some of these paragraphs so as to fit the special situation of primary products rather than to attempt a separation at this state so as to separate the treatment of primary products com- pletely from that of manufactures for the purpose of subsidies. I suggest that we consider that question. THE RAPPORTEUR: I would agree with Mr. Shackle. The drafting here special was intended to be such that the/needs that the primary commodities might have under the terms of paragraphs (1) and (2) were met by paragraph (3), which is by way of being an exception to the preceding material. In that way it does in effect take out of paragraphs (1) and (2) the cases of primary products. It might be that the question of whether it does this adequately is one way that we could channel the question that has been raised about paragraph (2) itself. D.1. E/PC/TC/C.II & IV/PP/1 THE CHAIRMAN: In the meeting, of which I read the Minutes this morn- ing, more than one delegation found difficult, in paragraph 2 because certain amendments which they would wish to make in respect of primary products would hardly be applicable to secon- dary products. I think this could be the reasoning: that, so far as manufactured. products were concerned, paragraph 2 is largely acceptable; that the conditions laid down in paragraph 2 could be applied, in the opinion of members, but when it came to primary products, that was difficult. For example, the New Zealand amendment deals entirely with primary products, and it might not be wished to apply that to secondary products. Looking as objectively as I can at the Australian point of view in Commi- ttee 2, we had the same difficulty. The two countries, New Zealand and Australia, had difficulty where they did not make a subsidy on export, but where they had a home price which sometimes was higher than export, that difficulty, which could perhaps be covered by some special wording for the primary product, would make it difficult for a manufactured product. Could we look at that, and narrow it down to the issue that, in considering para- graph 2, are we satisfied that we could devise a wording which the Committee might wish to apply to primary products but not to secondary products? SIR G. CLAUSON (United Kingdom): Might it be done by proviso? THE CHAIRMAN: Yes, it might be done by proviso; we could look at it. MR. GUIMERAES (Brazil): I can see that we have three cases. We have secondary products which only in very exceptional cases can come under the provisions of Chapter 6. Then we have primary products which may come under the provisions of Chapter 6 but not necessarily are under that, because there must be certain special difficulties and there must be some body or organization or a member who starts the machinery. Then we have the third group - 7 - D. 2. E/PC/T/C.II & IV/PP/PV/1 of products which are already operated under Chapter 6. - the primary products which are not regulated and not dealt with by a study group or study conference under any arrangement in Chapter 6. These have to come, I belive, under the general provisions for secondary products until the time when there is a burdensome surplus or other special circumstances, as pro- vided for in Chapter 6, and then they may come cut of the main group into the group of products under Chapter 6. So I believe that in many instances we cannot make a distinction between secondary products and primary products, but we have to make a distinction of products under the provisions of Chapter 6 and those which are not. THE CHAIRMAN: Yes. That, I think is quite a point. Of course, if commodity agreements are set up, they would cover any con- ditions that any country might be applying to its primary products, but I think we then have to look at the question of secondary products, and primary products not covered by commodity agreements under Article 6. MR. SHACKLE (United Kingdom): It is a fact, is it not, that through- out this Charter we have used the term "primary products" without any definition? It may be inadvisable to launch the question of trying to find a definition which has baffled many people, but there is a saying that while you cannot define an elephant, you can tell an elephant when you see it, and that may be good enough for primary products for present purposes. THE RAPPORTEUR: In chapter 6 it says, in effect, that an elephant is an animal customarily known as an elephant. Nevertheless, there is an effort to make a definition - I forget the exact words - that a primary product is what is generally known as a primary product. THE CHAIRMAN: We have the fact that there are primary products and - 8- D. 3. E/PC/T/C. II & IV/PP/PV/1 secondary products, and they will have to have different treatment. MR. DEUTSCH (Canada): Is the issue narrowed down pretty well to the case of a primary product which is not now under an international agreement and which cannot come under 3a, because it is not in burdensome surplus, involving, stabilisation schemes that are now in effect in various countries under which, at times, the product is sold at a prices lower than the domestic market? THE CHAIRMAN: Yes. MR. DEUTSCH (Canada): Is that the problem? THE CHAIRMAN: Yes, that is the pronlem that is worrying us, and I know it is in the mind of New Zealand because of its butter plan, which is entirely different to ours, but which is also in question. I do not know whether there is anything else that comes into it, but there is a distinction in our minds between an export subsidy which has the effect of lifting the local price. One point made, which has a lot in it, was that you might have a small export subsidy, or a smalll export surplus, which you subsidise. The purpose of that is - I do not know that this was developed, but I thought of it afterwards, though I might have thought of it before - that that has the merit, from the viewpoint of the producing country, of lifting its export parity and causing a higher price to be charged to the whole of the community. That is the sort of thing that is worrying Australia and New Zealand, because they do not pay export subsidies. They fix, irrespective of the world market, a local price, and usually that price has some relation to the costs of production within the country. The reasoning would go something like this: For example, rice. We started producing rice and the price charged was something that would be close to costs of production but generally had some relation to import parity, that is with China's rice and quality differentions, and so on. All went well until one day we suddenly found that we had 500 tons more rice than we could -9- D. 4 E/PC/T/C. II & IV/PP/PV/1 consume locally. In such a case if you leave the 500 tons on the local market you cannot hold your price because you glut the local market, and it goes into report. The whole theory is that if you put that 500 tens into export, you do not want to bring it right down to export parity, so you keep your local price going by some machinery which enables you to keep on doing that, and you sell the 500 tons at the oversea price. As you proceed, you find that that price is lower, so you devise some machinery, and there are various ways of doing it. I could name half a dozen in Australia and New Zealand, with our different laws, of the different methods we can appply. Then the stage is reached when the oversea price rises. We have adopted the principle that if we charge our consumers above the world price when the world price is low, those con- sumers are entitled to be protected from the oversea price when the oversea price is high. So we keep that price of rice held notwithstanding that the oversea price goes above it. We think that by doing that we are contributing to the world position because, when the overseas price rises, our producers only get a part. They do not get the whole of their produce at oversea prices. You do not let export parity go up. You do not let export parity go into your local consumption, so, instead of getting the whole of the export price, they get only a mixture of the oversea price and the held, local price which means that they do not get the stimulss of the very high export price. The most striking example we have is that nine years ago we fixed wheat at 5s.2d. At that time the oversea price was 3s. The oversea price is now 12s. and our wheat is still 5s.2d. There are two reasons for it. ThF major reason is that, although we were not looking at it from the benefit of the world, we took the view that, having charged people 5s.2d. when the overseas price was 3s., we were not entitled to -10 - D. 5. E/PC/T/C. II & IV/PP/PV/1 charge them the oversea price when it was 7s because the reason we gave to the local consumers for charing 5s. 2d. was that that was a fair price based upon costs. Therefore, you cannot then say, "Well, you producers are going to get 5s.2d. for the local produce when the eversea price is low and get the oversea price when the oversea price is high." It means now that instead of all our growers getting 12s. a bushel, they are getting only about half and half - about half at 12s. and the other half at 5s. 2d, which means that whereas other world producers have stimulus with a 12s. price, ours only have the stimulation of a 9s. price. Under the wording of this Article, we are all right now, we do not come under it in respect of wheat, but immediately wheat goes to 5s. 2d., we have to talk to people and we have to defend it. New Zealand's trouble is the same. In their butter scheme - they work differently because they have a different law - New Zealand buys better at, say, 100s. The Government buys it from the producers and sells it. Up to the present, the Government has sold at a profit and there are a few million pounds in the fund. What New Zealand is worrying about is that if they buy in at 100s., what is going to happen to them as soon as the eversea price falls to 95s.? They make two points. They ask, First, what happens to us while we are paying out the difference between 100s. and 95s. out of the Fund we have accumulated? That is stage one. That Fund having been exhausted, the Government has to find money to make up the discrepancy itself. And they ask, What happens to us in stage two? They think, with a scheme like that, when they have gone for eight or nine years selling under world parity - at least, charing their own local people less than world parity, and buying in at less than world parity, they are entitled to get the credit when it goes the other way. - 11 - D. 6. E/PC/T/C II & IV/PP/PV/1 That is the type of thing which this statement of expert subsidies here has upset. More than once we thought of paying an export bounty - but rejected it because we thought it was, in the long term economically unsound - wich automatically lifte the whole of the returner and stimulates production very heavily. It is a very easy thing, to do if you have perhaps an 80 per cent local consumption and a 20 per cent export. You can then have a bounty on the 20 per cent export which lifts the price of the whole 80 per cent. That as a bad element in that it stimulates production by the amount of the subsidy over the whole production. We think that is bad because it gives the producer an undue return, but we do not think the other is bad at all. In fact, it might be good. To take another case - sugar. For years our local price has been above the world price of sugar, but we consider that the damage we would do by that is to stimulate the production of sugar and glut the world market. That is what other countries have done, and that is what we have done, but we counteracted it by putting a limit on sugar production and fixed it at 800,000 tons for very many years. If we did not do that, we whould cause serious trouble in the sugar market. follows. - 12- E.1 E/PC/T/C.II & IV/PP/PV/1 It has steadied down, and we have kept that local price for about ten years and although the export price has moved up and down it has never get above the home consumption price - in the case of sugar; it has in the case of wheat and other things. When we put that peg in we thought we might in negotiations reduce it to seven; we might undertake the con- version of sugar to butter, which is not so absurd as it sounds in relation to certain types of our land in the tropical areas. Those are the sort of ideas we have got. We believe that in these plans we have had for these primary industries, which in some cases have been built up over a number of years, we have tried to avoid the uneconomical flooding of world markets because we know it only reacts upon ourselves. In every case where we have got those schemes, and we have got four of them, lime fruits, butter, wheat, and sugar, we believe, by the safeguards we have adopted, that we have protected ourselves, because we realise that if we damage our competitors we damage ourselves. I am afraid that is a detail, but it does apply to New Zealand and ourselves as regards primary products. MR. SHACKLE (United Kingdom): I have no very definite suggestion to make, at least it is not worded in any precise way, but I am wondering whether those difficulties might not be covered to sore extent at any rate if we could add at the end of paragraph 2 something in this general sense: "Members who apply price stabilisation schemes may go to the ITO for a dispensation in favour of those schemes if they can show that the schemes are so framed and so worked that they are not liable over a period of time to result in export prices which are on the average lower than the corresponding home prices." That would be the home consumer price. There is just one point on that; I rather thought that some of the difficulties which possibly the New Zealand Delegation have felt result from the idea that what we are aiming at here is prohibiting export subsidies where the export price is lower than the price to producers. That is not the way in which this provision is worded. As you see, it speaks of "any subsidy on the exportation of any product, or establishing or maintaining any other system which results in the sale of such products -13- E/PC/T/C. II & IV/PP/PV/1 for export at prices lower than comperable prices charged to buyers in the domestic market." It is the home consumer' s price which is the test for comparison and not the home producer' s, which might contain an element of subsidy. THE CHAIRMAN: The method being to charge a high price to local consumers and give the local producers a higher price in respect of local consumption than they do on export. MR. SHACKLE (United Kingdom): Yes, but at the same time, is it not conceivable that they might be let out under some such provision as I have suggested? THE CHAIRMAN: I think it might. The view we took was that we would be pre- pared to submit our plans to the Organisation because, as I say, we believe that we are doing nothing to prejudice ourselves and that helps us with others. Some time age, before we left Australia, I had the idea of putting in at the end of paragraph 1: "Such discussions shall include in the case of primary products the advisability of regulating the volume of export trade in that particular commodity either by regulation of production or by diversion of the product to some other use or field of consumption. In this manner the ill effects of subsidies that it is considered by the Organization may result may be nullified or at least modified." I think if it is the desire of the Committee to provide for such schemes that wording can be devised to do it. But we have found difficulty in persuading people that these schemes are different, and we think that the term "export subsidy" is too all-embracing and that something should be done about it. As it is drafted, we do not think that sufficient cong- nisance has been taken of schemes which really have, as a major effect, the avoidance of the varying up and down of local consumption prices through expert prices. We do not think that a sound local price should chase the figures of the export market up and down and go either too high or too low. We do not think it is fair that our consumers of bread, for instance, should pay double the cost of production when wheat goes up because there has been a drought in some part of the world, and we do not think that, just because there is a glut in some other part of the world, our consumers should get bread for half-price. That is the sort of -14 - E. 2 E.3 argument that has gone on for the last 15 years. MR. SCHWENGER (Rapporteur): I am inclined to agree that it might be possible to draft words similar to those sketched by Mr. Shackle to deal with the kind of case you have in mind. I should like to point out that in drafting this we had the feeling that the case would not occur very often if at all. I might say that in drafting this I rpresented the Depart- ment of Agriculture and my concern was very much that of the primary product producer; as concerns most of the products Mentioned in the discussion, such as wheat, rice, and sugar the occurrence of prices below those maintained in the stability schemes the Chairman has referred to probably did and probably always will correspond to a situation where there is a burdensome local surplus or one is in very immediate prospect, if the prince in the world has already gone below the stabilisation price. We do contemplate that in the Charter stops towards a commodity agreement for Such commodities would be taken long before the world price would in fact come below the probably stabilisation price. In any case paragraph 3 would most surely be applicable. There is another group of products which enter into this, the perishable products. MR. DEUTSCH (Canada): Or take butter. MR. SCHWENGER (Rapporteur): I will take butter in the third group, if I may. We have been sometimes tempted to subsidise products of this kind when we had a local surplus and we felt that for those products we could very well in the interests of the purposes of the Charter forego that type of diversion and use purely domestic diversion. They are surpluses of a very spotty character, principally through the weather, and do not really represent a fundamental disequilibrium with which the Government has to wrestle. They are short-term problems and we felt that we could very well forego - of course it may be easier for us than for some others - that remedy as other remedies just as satisfactory can be found. Then comes the kind of case that butter may fall into at times, and I have Mentioned the other two because I think that the case is not going to be very frequent; it is going to be very special. It will not be -15 - E/PC/T/C.II & IV/PP/PV/1 E.4 E/PC/T/C.II & IV/PP/PV/1 possible to bring paragraph 3 into play. For this case my conclusion is as I began. I think we might very well add the type of thing Mr. Shackle had in mind if we could all agree to it. MR. DEUTSCH (Canada): I think I could agree to something of the sort Mr. Shackle has suggested if we could find the proper wording for it. MR. SHACKLE (United Kingdom): I will read my words. Add a proviso at the end of paragraph 2: "That Members applying price stabilisation schemes may apply to ITO for a dispensation in favour of those schemes if they can show that they are so framed and worked as not to be liable over a period of time ---" Perhaps we need not attempt to define how long it should be, exactly -- "to result in export prices lower on the average than the corresponding domestic prices." SIR G. CLAUSON (United Kingdom): May I just put another difficulty, which is specially applicable to the Colonial Empire, because although I do not think it comes in paragraph 2 I think it might come in paragraph 1. If I might go back to the end of the first world war, in 1919 certain colonial products which were produced in the Colonies for practical purposes only for export want up to very high prices. No attempt was made to control those prices and they resulted in a great increase of production. There was a glut and the price fell and all sorts of difficulties followed. On the present occasion we are trying to be more sensible and in the case of certain products which are purely export products and therefore do not come under paragraph 2 we are contemplating a system of export duties, the effect of which will be that the local producer will not get the world price. That will have two advantages: one internal, in that we shall avoid inflation which might be very dangerous, and the other that we shall not over-stimulate production of these products so as to upset the local producer and possibly other producers in other parts of the world. Our plan therefore is to cream off these high profits on production at present and put the money into a fund which will then be available for subsidising the producer whn prices, at a later date, fall below the cost of pro- duction. We have not at present thought of going further than using -16- E.5 E/PC/T/C.II & IV/PP/PV/1 to maintain the price at this later period the funds which have been collected from the producers of these products at an earlier period, so it is not a subsidy in the pure sense of the word, that is to say, it is a compulsory savings scheme by which the producer will be forced to save some of his money then prices are high and will get it when prices are low. Where you have a plantation company, it does the same things by putting money to reserve when prices are high and not distributing the whole of its profits as dividends and then using that money, when it makes a loss, to pay a dividend. It is exactly analogous to the case of the sensible private company producing a commodity with a variable price. We would very much like to get that sort of thing allowed under this. It is not prohibited by paragraph 2, but it might be by paragraph 1 if it could be regarded as a subsidy which operates to increase the export of such products. - 17 F1 E/PC/T/C.II & IV/PP/PV/1 MR DEUTSCH (Canada): During that period of low prices? SIR GERARD CLAUSON (U.K.): During that period of low prices. What we had Contemplated was that this might in favourable circumstanees make it un- necessary to have a regulation scheme because it would tide our people over until the world had got straight again, but if there really was a burdensome surplus all over the world then it would give us a breathing space while the commodity agreement was being framed. It is a little analogous to the New Zealand scheme but it is rather different because there is no internal consumption. The kind of thing I have in mind is cocoa, and possibly some of the oil seeds. MR DEUTSCH (Canada): I certainly would not see any objection to it in principle, as long as it does not over a period on years result in a net subsidy. SIR GERARD CLAUSON (U.K.): But I think we want words to cover it, and it goes a little beyond Mr Shackle's present amendment because that only relates to commodities which are consumed internally as well as exported. MR SCHWENGER (USA): Mr Chairman, we sympathise with that type of operation, I believe - certainly I do personally - but I think that in this drafting it should be applied under paragraph 3b. and not through the introduction of exceptions into 1 and 2. You see, under 3b. paragraphs 1 and 2 are deemed no longer to apply - it is provided that they shall no longer apply in oases where the surplus situation is such that the international efforts to increase consumption are not likely to operate rapidly enough completely to relieve the surplus situation - do not promise to succeed within a reasonable period of time in removing the surplus. What we are doing hero is using two channels for the same purpose within this Article. I think it might be better if we could find a way of making the channel provided in paragraph 3 deal with both of the cases that have been brought before us, and it will make a better drafting job and have the same effect, I believe. I wonder if Sir Gerard has considered the possibility of his case being met under 3b? SIR GERARD CLAUSON: Part of it would be. It just depends what your time basis is. You see, another thing that we have in mind is where you have a commodity which fluctuates a great deal over a single growing season - say a year. There we might well have a government buying organisation which would fix a 18 F2 E/PC/T/C.II & IV/PP/PV/1 price for the product for the season. Part of that time - for a week, say - it might be making a profit: that is to say, it might be selling at above the price at which it had bought from the small peasant producer. The next week it right be making a loss. Over the season it might make a profit. It might make a loss, but in that case I think that loss would be carried forward and the price in the next season would be lowered. The commodity I have in mind is cocoa. Supposing the external price of cocoa at the beginning of the season is ?20a ton. We think that is a perfectly good price for the producer. We would buy internally at a price equivalent to ?20 a ton. The price might rise to £25, and the government buying organisation, or whatever it was, would then for a time make a profit of £5 a ton. A little later in the season the price might fall to £15, and then it would lose. But the grower would have the advantage throughout the season of getting a steady price. That has all sorts of organisational advantages. You do not get all the nonsense that goes on when their prices are rapidly fluctuating and they are carried right back into an internal native market. Your purpose would be to break even at the end of the year. If you did not you would have to make an adjustment in the next year's price, with the intention of breaking even by the end of the second year. That is what I call the problem of short term fluctuations. The problem of long term fluctuations is rather particular to the present position when prices are very high above the cost of production and one wants to cream those unnecessary profits off and put them by for a rainy day. I think the first kind of thing is covered all right; I am not so certain that the second is; but I think it could be under 3. I think Mr Schwenger is right there. MR SHACKLE (U.K.): Is there not perhaps this point? I take it the practical object of stabilization schemes is that they shall maintain stability continuously. It rather struck me that action under paragraph 3 would be action under a special set of circumstances and therefore it would be dis- continuous. Is not that a possible difficulty in attempting to cover these various types of scheme under paragraph 3? THE CHAIRMAN: Perhaps we could look, at that point anyhow when we are looking 19 F3 E/PC/T/C. II & IV/PP/PV/1 over the draft. It night easily come underparagraph 3. PROF. de VRIES (Netherlands): May I make a general remark here? It is said in Article 25 that consultation shall take place, and then at the end of the Article it says that "any determination requireed...shall to made under procedures established... in accordance with paragraph 6 of Article 55," and that Article only provides for procedure to deal with such cases. I believe in Committee IV we have elaborated a workable scheme for dealing with the special difficulties of primary commodities, and in my opinion we are left here somewhat in the dark as to who is to determine a thing and who are to discuss and how will that discussion and consultation go on. Perhaps we could say that in cases covered by the special difficulties and objections covered in that paragraph we follow the procedure there and also that provided in chapter VI. I suppose that would cover nearly all those schemes of price stabilisation and of fluc- tuating prices on the world market, and I suppose also the cases dealt with by Sir Gerard Clauson; and they could all come under the procedure of a study group or a conference or an arrangement or an agreement or recommenda- tion to members or any other way that is covered by the procedure of chapter VI; and I believe that then we will have at least for the primary products opened the way and will not be left in the dark. We will know who has to do something and how it shall be done. Maybe we could do that in one rather short sentence and not bother so much about the long sentences here in this Article about who has to do it and about giving notice and all those things. It still leaves us in the dark with regard to secondary products, though it deals with primary products. Maybe we can leave it to the Organisation to find a satisfactory procedure for secondary products. MR SCHWENGER (USA): Mr Chairman, I agree thoroughly with what Professor de Vries says and I apologise for the way we handled it in the drafting stage, because it has caused a lot of confusion; but we did try to do it; and in any case in Article 55, paragraph 6; we tied the two together by saying that "The Conference shall establish procedures for making the determinations provided for in Article 25" (that is this Article) "and in paragraph 2(b) of 20 F4 E/PC/T/C. II & IV/PP/PV/1 Article 45", through the Organisation by consultation/among members, and we attach great importance to this consultation among members. We had in mind exactly what you had in mind, that is, that it should be the procedures of chapter VI. I wonder whether we might not perhaps deal with this here by merely indicating in a note in our report that this was intended and that the drafting committee struggled with internal mechanism which I think is unnecessarily complicated. I think we are at one on the point and the Committee will agree that is the case. SlR GERARD CLAUSON (U.K.): I do see one difficulty about that and that is that Article 45 has suffered a sea change and there is now no reference to procedures to be determined by the Organisation in the new draft. PROF. de VRIES (Netherlands): We should have to consider how we re-draft Article 55(6). MR SCHEENGER (USA.): Presumably that is a thing the Drafting Committee would have to do. SIR GERARD CLAUSON (U.K.): You see, the new paragraph which corresponds to 45.2.b. leaves out determination by the Organisation that a surplus exists and substitutes the phrase merely that "members agree that regulatory agreements may be employed only when a burdensome surplus of a primary commodity has developed or is developing"; so the Drafting Committee are going to be in horrid difficulties about that reference to Article 45.2.b., because the words have disappeared. 21 G. I E/PC/T/C. II & IV/PP/PV/1 THE RAPPORTEUR: Did not we agree on some kind of note about it in Committee IV? SIR GERARD CLAUSON (United Kingdom): I think that is so. What I feel is -- speaking completely extempore at the moment -- what one might substitute in paragraph 3(b) is something to the effect that where the difficulties about subsidies arise because there is a burdensome world surplus the matter should be dealt with by study group procedure. THE RAPPORTEUR: That sounds logical to me. THE CHAIRMAN: I think that might be looked at when we are going over the draft. I think we might come back to that suggestion of Mr. Shackles again now. That seems to have at least the idea of a solution of this important question of the stabilization sehemes. Before going further on that, do you think the stabilization schemes could be put a form to use the same procedure as paragraph 1, where you discuss them with the Organization. That would then make the distinction between them and pure export subsidies. THE RAPPORTEUR: I do not follow that. THE CHAIRMAN: When you are talking of the production subsidies in paragraph 1: "In any case in which it is determined that serious injury to the trade of any Member is caused or threatened by the operation of any such subsidization, 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." Then perhaps you could add a sentence to say where schemes are operated by individual countries for the stabilization of prices - even though at times they involve the local price being higher than the export price - they should be dealt with in the same way as in this paragraph - the major point being the damage to each other. I would go farther and say, "the Member granting such subsidzation discuss with/other Member or Members concerned." I think, as a matter of fact, No.1 is rather defective - "In any case in which it is determined that serious injury to the trade of any Member is caused or threatened". 1 would be inclined to say, "world trading conditions prejudiced. " 22. G. 2 E/PC/T/C.II & IV/PP/PV/1 THE RAPPORTEUR: I think in the draft we had in mind that paragraph 1 should be a case where there was no two-price system involved, but merely a producer subsidy; that is one such as importing countries frequently employ to permit their produccrs to sell at the world price on their own market, and yet receive a considerably larger income from their products then they would get if they had no other source of income than the world price; or which is sometimes employed by prodigal exporting countries to permit their exports to go out on to the world market and on to their domestic market at world prices and still let producers receive a larger income than they would receive if they depended on the world price alone. As a matter of economic competition, I recognise there is no essential difference on the world market between the case that I have just described and the case where the subsidy is paid merely on the exportation and the import does not get the benefit that is, the portion consumed domestically does not get the benefit. But as a matter of practice there has come to be a considerable difference of international treatment. Wrongly, as we believe, there has come to be a feeling that as long as the subsidy is only paid to domestic producers that does enable them to sell at half the price they might otherwise charge. It is not a matter for international discussion. I have been at conferences where representatives of producing countries have felt that they had to say - because of this peculiar convention.- "We object strenuously to your subsidizing your export. If you take the more money and give it to the producer and say that he will sell abroad at the same price as he is selling at the export subsidy, we will have nothing to say about it." That is a very peculiar thing. THE CHAIRMAN: The difficult thing in some cases is to define a producer subsidy. We have what we consider are producer subsidies which come under 1 and 2, but they are in conflict because of the different treatment for 23. G. 3 E/PC/T/C. II & lV/PP/PV/1 1 and 2 An excise tax which lifts the price of a product locally and which is put into a fund and paid out to prodecurs is a producer subsidy, but it does have the effect of lifting the price of the local product by the amount of the tax, which puts the local price above the overseas price. Well, that is a producer subsidy in accordance with paragraph 1, but it comes into paragraph 2 where it says that the local price shall not be higher than the overseas price. THE RAPPORTEUR: Perhaps it could be qualified if an appropriate form were added in paragraph 1 -- and I am talking now without having studied the way the words would go -- if it were said "which did not result in a different price between the product marketed domestically and marketed abroad." That is what is intended, you see. One is to cover the case where you use the subsidy without interfering with what is loosely called the one world price system. THE CHAIRMAN: Which is really a matter of technique. THE RAPPORTEUR: That is correct, but the one technique has never been considered to be subject to international discussion and the other has. That was our point. Therefore, 1 is a little more gentle then 2. MR. DEUTSCH (Canada): On the point mentioned by Mr. McCarthy I am a little bit concerned about a sentence in 2. It is the second sentence after the first long sentence: "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, ," Does that sentence mean you cannot put an excise tax on, let us say, domestic consumption of four, and that the, proceeds of that tax are to be put into a fund and then paid out to the producers - perhaps paid to them in the price paid to them for their product which they are consuming? Does that sentence permit that? THE RAPPORTEUR indicated assent. MR. SHACKLE (United Kingdom): The sort of case I had in mind was, for example, when you export whisky the price at which you export does not need to include the domestic tax, and if it does not include it it does not 24. C.4 E/PC/T/C. II & IV/PP/PV/1 follow from that that you are subsidizing your whisky morely because you do not charge your excise tax. That is one interpretation. THE RAPPORTEUR: Are not they the same as far as the operation of the tax as tax is concerned? MR. DEUTSCH (Canada): As lorg as the excise goes into the government funds as a tax revenue there is no objection. Take the excise tax on flour, let us say ---- THE RAPPORTEUR: Take the whisky case. MR. DEUTSCH (Canada): I want to take flour, because that is more important here. The excise tax on flour which the consumer pays operates in the sane way as if he had a high price on flour, and you take the proceeds of that excise tax, put it into the fund and pay it out to the producer of wheat. THE RAPPORTEUR: Then your payment would follow under paragraph 1. MR. DEUTSCH (Canada): Of course, this operates as a two-price system. THE CHAIRMAN: That is what it does. MR. DEUTSCH (Canada): It is just a device. THE RAPPORTEUR: But the payment does not operate on the two-price system; the excise does. MR. DEUTSCH (Canada): You can pay the money out to the producer again in paying to the producer so much a bushel. The result is you are charging one price at home for flour and another price, and a lower price, on the report market. THE RAPPORTEUR: Yes, but your lower price results from your excise tax not from the payment. The payment might or might not be the same amount - it never will be exactly. different MR. DEUTSCH (Canada): It is no ?/taking Mr. McCarthy' s scheme of charging the domestic consumer a higher price than you are charging the export; there you have the two-price system. You pay the producer the average of the two receipts, and he get a higher price than that for which it is sold abroad. That is exactly the same result. 25 G. 5 E/PC/T/C. II. &. IV/PP/PV/1 THE RAPPORTEUR: That is quite right, but you have got this political difference. You are not charging more for the exported product, I understand. We ran into that, and we felt it ought to be covered. It has been historically considered a domestic concern, as long, as the way you sell abroad is the same as the way you sell at home. We tied it to those other peculiar subsidy cases where you do not even make a tax but just make a general fund and pay out a subsidy to the producer; you have no two-price system at all, not even at the second stage, not even at your processing stage. In that case you will have a payment to a producer, which is resulting in an increase of the export of such product from the country concerned. In the case of the flour processing, tax and payment - it is the payment that does it, of course because it is the payment that enables him to offer it cheaper on the export market, not the tax, obviously. You are then obligated under paragraph 1, which does not leave you free. MR. DEUTSCH (Canada): Under this interpretation of Mr. MCarthy' s stabiIization scheme, if he just changed his device bit and said that instead, of fixing the price on the domestic market we will put on an automatic excise tax - which goes up and down according to the world market fluctuations - you ,might achieve the same result that you wanted to achieve, and still be within the rules of paragraph 2. THE CHAIRMAN: I think on our present/scheme we could get round it. If we shift the butter scheme, over to the wheat scheme technique it would cost us more money, more Bills in Parliament, more sweat on the part of Parliament in drafting the Bills. MR. DEUTSCH (Canada): You would have to have an excise tax which falls when the price of butter falls and rises when the price rises. THE CHAIRMAN : We would put an excise tax on butter, which would be a heavy tax, and the tax would be the difference between the local price that we wanted to fix and the export price. MR. DEUTSCH (Canada): Yes, that is right. 26. G. 6 E/PC/T/C.II & IV/PP/PV/1 THE CHAIRMAN: Having collected that money it would be passed on to the consumer of butter - because the manufacturer pays xxx first the men who gives him the cream and then the man who charges him a tax, and he would pass that on to the consumer, and the price would always be the same, as the tax would go up and down accordingly. Then you put it into a fund and pay it out to the producer, and everybody would say they are quite respectable. MR. DEUTSCH (Canada): That is right - they are quite respectable. It all comes under paragraph 2. THE CHAIRMAN: It would have quite the same effect as the current scheme, which is not allowed. MR. DEUTSCH (Canada): Yes. PROFESSOR de VRIES (Netherlands): There is an example in the Netherlands, which is, I believe, still stronger. Farmers in Holland have to pay very heavy taxes for pumping out the water from the soil and for the dykes. There is a very heavy tax on land. We could change that and say we do not give subsidies for butter and cheese being, exported, but we have excise tax on consuming butter and cheese, and at the same time we use that money for the treasury. We do not give it to the farmers but say that from now on the Government will pay for the dykes and for pumping out the water. Thus the cost of production to the farmers will be much lower, and they just sell at home and abroad at the same price only at home there is an excise tax on butter and cheese. 27 H.1 E/PC/T/C .II &IV/PP/PV/1. You shift the burden of tax from the producers for pumping out water, etc., over to the consumers in an excise tax. That is no subsidy. It is another way of finding Money for the Treasury. MR. DEUTSCH (Canada): It sees to me there is inconsistency of policy here, although the effect is the same. THE CHAIRMAN: Could it be said that the view is one that production subsidies that can be legitimately defined as such -- I do not know how you are going to define them -- it is desired should be covered by paragraph 1? In paragraph 2 it is desired to cover those products which can be defined as export subsidies, but the view of the Committee is that some provision ought to be made for special arrangements which might come under paragraph 2, but which are not considered to have the objections of export subsidies. But we rather have been on the fundamental question of what is a production subsidy, and that is rather awkward. What would the Rapporteur say to that point? The fact is that we are in trouble about when is a production subsidy a production subsidy? THE RAPPORTEUR: Our criterion has been that it is one which is paid to the producers, and does not result in a two-price system; that is, where the producer is benefited, but not through any price manipulation. He sells in the world market and in his own market, but in direct competition with imports, and yet receives a payment. That payment is looked upon as a production subsidy. It is so defined here. I think that is the intention. The other case is where you have a different price at home and abroad through a Government payment or a Government operation. Then, the sentence that we have been discussing exempts the whisky case, and some others, where the price of the raw product at home and abroad is the same, but where -- at least in the case we were thinking of -- a tax was charged on the domestic portion of the production at some stage between the primary production operation and its final consumption at home. 28. H.2 I am thinking particularly of the price fixing tax on flour milling that Mr. Deutsch referred to. THE CHAIRMAN: Where would purchase tax stand? THE RAPPORTEUR: The sales tax? THE CHAIRMAN: It is charged on local consumption, but not on exports. THE RAPPORTEUR: That would be under this, I think. It would come under the production tax exemption in the middle of paragraph 2, I think. MR. DEUTSCH (Canada): There is no objection to exempting the domestic excise tax as such. The case which Mr. Shackle was concerned about was putting an excise tax on whisky for home consumption, but not imposing that tax on exports. I think there is no objection to that. THE CHAIRMAN: Is not that done involuntarily by any primary product where you sell in a world market? MR. DEUTSCH (Canada): The only point I thought where objection cowes is when you use the proceeds of that excise tax to subsidise the producer directly by the amount of the proceeds. THE RAPPORTEUR: Then you throw back to paragraph 1. You are paying a subsidy. MR. DEUTSCH (Canada): Once you admit that, the attempt to do away with a two-price system becomes purely academic. You have in fact a two- price system. THE RAPPORTEUR: Would this be helped if we considered taking out, for clarification, the last clause in that sentence, so that it would end with "when consumed domestically"? That would like it quite clear that your remission of the tax came under paragraph 1. MR. DEUTSCH (Canada): It would be better, any way. THE RAPPORTEUR: We would have to cover the whisky case, I think. MR. DEUTSCH (Canada): Yes, you must be allowed to exempt domestic excise taxes. The only objection is when you use the direct proceeds from such a tax to subsidise the producers of that commodity by the 29. E/PC/T/C.II & IV/PP/PV/I as referred to in Chapter Vi, so that if a member feels that his trade or his production is seriously injured, he can apply to the Organisation for a discussion group or conference to consider the whole case. You can leave this to the action of members until the moment any other member says that his interests are so seriously affected by these measures that he will appeal to the Organisation to make a study of it. THE RAPPORTEUR: I think that the intention here was to accomplish very hearly that by the combination of the provisions for consultation in paragraph 1 and the statement in paragraph 3 which says that if you have a surplus, you throw off paragraph 1. To include this case without interfering with others, we thought that was a good way of drafting it. In the first place, if there is any harm it must be determined that it is so by consultation under paragraph 1. MR. De VRIES (Netherlands): There must be consultation and a procedure for it. THE RAPPORTEUR: The language here says it is harmless unless somebody complains. That is what it amounts to. This provides for them asking for different degrees. First, they can consult with the person doing the damage, through the Organisation, and discuss the possibility of limiting it. If that does not work, there is no further provision until you use paragraph 3, which is if the surplus is expected, and then you are still allowed to continue your practice until it is dealt with through an agreement, or the Organisation determines otherwise. But I think that is a very unlikely step, because it must be done in consultation also, which means that you throw it, in effect, into your study group process, under these provisions. SIR G. CLAUSEN (UK): I have a form of words which might help. It is this: " In any case in which the product subsidised is a primary commodity, whether the case falls under paragraph 1 or under paragraph 2, and whether another Member considers that its interests are 31. H.5 prejudiced by the subsidy or the Member granting the subsidy considers itself unable to comply with the provisions of paragraph 2 within the time limit laid down therein the difficulty shall, notwithstanding the other provisions of this Article, be deemed to be a difficulty of the kind referred to in Chapter VI, Article 3 (1) and the procedure laid down in that Article shall be followed." That Article refers to the right of any member to say there are difficulties with regard to a particular commodity, and the procedure laid down is that there should be a study group. I do not know whether that meets the whole case, but it might be a clarification. THE CHAIRMAN: That is designed really to cover the whole point. SIR G. CLAUSEN (UK): It does not cover the stabilisation point. THE CHAIRMAN: Or the definition of paragraphs 1 and 2. SIR G. CLAUSEN (UK): It does not to further than meeting the question of procedural difficulty which we are up against in Article 55. THE CHAIRMAN: We have got what might be called production subsidies, we have got export subsidies, but can we say there is another category which would include those cases which it is difficult to decide are either production or export? It seems to me that our discussions have brought us up against this, apart from the question that Sir Gerald Clausen and Mr. de Vries have mentioned. We have had difficulty in deciding between straight-out production subsidies and I suggest that the only really clear production subsidies are those that go to producers from general revenue. 32. I fols I. 1. EC/PC/T/C. II & IV/PP/PV/1 I think the only clear export subsidies are those that go from the general revenue to the exporter, and there is no doubt about those. There is the third category which light come then. It might be either a producer or an export subsidy, or both. How can we deal with that? THE RAPPORTEUR: There is this two-price system difference. MR. DEUTSCH (Canada): You have seized on the essential thing. THE RAPPORTEUR: That is the essential thing. THE CHAIRMAN: The major difference is that it is something which involves the consumers in the domestic market paying more for their produce than would be related to export parity, because it is not that the producer gets any more for the domestic market; it is that the consumer pays more, and the difference between what the consumer pays and, what the producer gets is put into a fund and is spread ever all producers, whether they are exporters or local. That constitutes what is known in some countries as the two-price system. I think that is the major distinction. THE RAPPORTEUR: We use the conventional distinction, as expressed in the suggested Charter, namely, "...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. " That has been the conventional point which has been chosen in the past to focus discussion. As I was saying, it has been considered that there is no export subsidy if that criterion is made. MR. DEUTSCH (Canada): I was going to ask a question on that. The price of the product sold on the domestic market, and the price on the export market must be the same. That do you mean by "product"? Could you sell wheat on the export market at one price and flour at another price? Are they regarded as the same product, or different? - 33 - I. 2. E/PC/T/C. II & IV/P./PV/1 THE RAPPORTEUR: They are different products for this purpose. You have the price comparison for each at the point of export with the product if it were purchased by the domestic user at the point of expert. MR. DEUTSCH (Canada): Could you, then, have a scheme where you charged the domestic purchaser the price for flour which, in wheat equivalent, was less than you were selling at the export price of raw wheat, and take in proceeds of the higher price of flour and subsidise the purchaser with it, and would that be all right? THE RAPPORTEUR: You would be doing two things. First, you would be putting on a tax - MR. DEUTSCH (Canada): You need not put on a tax if you have a state trading system in flour. Then you simply sell flour to do es- tic consumers at a price higher than the export equivalent of wheat. THE RAPPORTEUR: That would fall under the second - on the export equivalent of flour. MR. DEUTSCH (Canada): You would not be exporting flour at all, only a few barrels, and for the sale of meeting this rule you would be charging the same price. Would that be permitted? SIR G. CLAUSON (United Kingdom): Which nobody pays. MR. DEUTSCH (Canada): Yes, which nobody pays. THE RAPPORTEUR: And you would be assuming, that you had no domestic purchasers of Wheat; it would be the state; they would both be at the same price. MR. DEUTSCH (Canada): I would have state operation, which washes the whole thing out. THE RAPPORTEUR: Then you would take the proceeds if the greater and pay that to the wheat purchasers. All you would be doing would be subsidizing the wheat purchaser in paragraph 1. Then the question would arise whether, under that subsidy, it would not fall under paragraph 2. - 34- I.3. E/PC/T/C.II & IV/PP/PV/1 MR. DEUTSCH (Canada): But it would have the effect of an export subsidy? THE CHAIRMAN: It would come under flour. MR. DEUTSCH (Canada): In the case of flour there would not be any exports of flour which would amount to anything. THE CHAIRMAN: Where you had heavy exports of flour you would get caught on flour. MR. DEUTSCH (Canada): I am assuring no case of that kind, though in the practical world there are such cases. THE CHAIRMAN: It all boils down to this, that the money copies out of general revenue and is paid to the purchaser and the general community is taxed. In the case of 2, you tax the bread, eater by charging him more, and that brings it under 2. PROFESSOR DE VRIES (Netherlands): In the case of sugar in Java we had to sell sugar on the home market at very low prices, but not on all markets at the same price. In the home market there was a price which was the same as in the Singapore market. The Singapore market was about the highest overseas market for sugar we had. There was a clear distinction between the domestic rnarket and the Levant market, or the Africa markets, and the only way to maintain a system was to have the import of sugar forbidden. If we sold sugar at a low price to the Levant and it came back again, it would spoil the home market, but that was the only way we could do it. There was no money in the Treasury to pay a subsidy to the sugar manufacturers. In order to prevent high prices on the home market, it was decided that they should charge in the home market as much, but not more than in the Singapore market. You may say that that was one form of help to the purchasers of sugar, but there was no other way, and if it came before the Organization, we expect they will be reasonable people. SIR G. CLAUSON (United Kingdom): I should have thought that the Singapore price could not be maintained. If it was cheaper -35- I.4. E/PC/T/C. II & IV/PP/PV/1 to buy Java sugar from the Levant and bring it back to Singapore than to buy it in the Straits, I should not think they would go on very long. THE RAPPORTEUR: Might I say, perhaps more directly than I have been able to so far, that what we had in mind in drafting this was that the payment of a subsidy that affected international trade must be the subject of international consultation, and to the extent that it is harmful to the trade of other members of the Organization, that it must be subject to some kind of limitation and disapprobation, and except as it may be essential. We therefore Drafted one paragraph, which is the second one, to deal with the export subsidy case which, traditionally and in an accepted way, has come to be regarded as harmful to other countries. Then we drafted paragraph (1) as a complement to it to take care of the cases which it does not take care of and which are, by their nature - as has been abundantly pointed out in the discussion here - equally harmful, but which politically have not been so regarded in the past. Then the third case is where you have special difficulties in connection with your product and there is nothing that you can do by direct prohibi- tion, or anything of that sort, but merely provide for consul- tation and presumably, if the consultations are carried through successfully, some mutually agreeable arrangement will be arrived at, each country understanding the other's difficulties, and at the same time having made felt its own needs. Our aim will have been met if 1 and 2, as we think they do, cover all cases, and if 3 provides the necessary exception for primary commodites and sepcial difficulties. But I think that, desirable as it might be, it is not practicable to give this section on subsidies the nice from that we would do as econo- mists. I do not mean that in the sense of saying that we think it is to stay the way it is, but I do not see,from what has been said, just how it could be changed in any major respect - 36 I. 5. E/PC/T/C. II & IV/PP/PV/l to do the job without becoming completely inpracticable. THE CHAIRMAN: Could we consider putting in a third paragraph? I have talked of an export subsidy, and we have all spoken of production export subsidies. Then perhaps we could get some- thing on these lines: "Notwithstanding the provisions of paragraphs 1 and 2, schemes which have the effect of lifting local......." - that is, trying to find and including the excise one that is in 2, and trying to work out something that will cover those difficult points where you have what might be called a two-price system but which is not questionable on the grounds of its economic effects. How does that strike members? Time is getting on, when we shall have to adjourn. Shall we think it over? THE RAPPORTEUR: I would like to think it over, and to study the draft, put forward by Sir Gerard. THE CHAIRMAN: Could the Committee agree that, if we overcome that difficulty, we have more or less met our problem and that we could devote our energies to that? If we can over-come that, I think, with the link-up of the commodity agreements, of which Professor de Vries and Sir Gerard Clauson have spoken, we might narrow down our real issue to that difficulty and the twilight in between the two. What do you think of that, Mr. Shackle? MR. SHACKLE (United Kingdom): That sounds good to me. MR. DEUTSCH (Canada): Including this special question of the excise tax which falls into the same area. THE CHAIRMAN: That might be moved into 3, to make a slightly better job of it. MR. DEUTSCH (Canada): There is only one minor thing which concerns me here, and, that is the point to which I referred earlier, about the definition of any product. It seems to me that if the interpretation of the word "product" is a very narrow one meaning that a product which is in a slightly different -37 - I. 6 E/PC/T/C. II & IV/PP/PV/1 - form ay be sold at a diffeere ent pricct hombe tddan aloae then eby that mthodget you can around the who le spiritof this. The first sentence of 2xcept says: "E as provided in paragraph 3AA of this rtMemicle, no ber shall grant, directly or indirectly, any subsidy.." and goeesess on "or tablish or intain any othem"-em"systc.ta ver t is ry wide phrase - "which results in the sale of sucdh f fo prouctr export at a price lower thcomaaran thpe pble rice chargedfoikr the Ie product to buyers in the dommestic"" arWket. mhat is eant by "prodAuct"? bsolutely identical? Or, if it is in a slightly di ooffereeenfrm, r you then all right to sell at different prices? There sehouled b som understanding of what that word "product" means. THEA CHIRMN: Yes. Did you hear Mthat, leen. Schwcer? PPO TEUR:RiTEUmW oa sry, I did .notM aly tention was otherwise engaged. R DEUTSCH: (aaaOda): The first sentence says that a product shall not be sold for a price lower abrod than is being charged to the domestic purchaser, and then there are these words: "or maintain any other system which results in the sale of such product for export at a price loewr than the ocmparable price charged for the like product to buyers in the domestic market". The words "any other system" are very wide. THER APRPORTEUR: Did youm ean to go back - R.$EUTSCH (Canada): I was coming to the question of the definition of the two-price system really. It says in 2 that you must not sell a product at a price lower on the export market than in the domestic market. What do you mean by "product"? If the word "product" is interpreted to mean an identical product, then you can get around this by simply selling that product in a slightly different form, and undermining the whole purpose of this Clause. There must be some interpretation of the word "product". -38 - I.7. E/PC/T/C. II & IV/PP/PV/1. MR. SHACKLE (United Kingdom): So as to include first processing, or something? MR. DEUTSCH (Canada): What about, "or establish or maintain any other system which, in effect, results in the sale of such product for Export..."? J follows - 39 - J.1 E/PC/T/C. II & IV/PP/PV/1 MR. SCHWENGER (Rapporteur): You are just after that one point, trying to avoid the product escaping? MR. DE VRIES (Netherlands): Could we say "for the like product"? It is not the identical product, but a like one. MR. DEUTSCH (Canada): On the answer Mr. Schwenger gave me, if you sold flour at a different price from wheat it would come under this, because flour is a different product. He interpreted it that wheat and flour are dif- ferent. THE CHAIRMAN: If you could get the constituent parts into it? Perhaps in the case of butter you might have an excise tax on salt, and the same tax might not be applied to the salt in butter made for export. MR. SCHWENGER (Rapporteur): I think we had better rely on the consultation process to take care of these things. The reason/ I saw that is that we have experimented with, and found extremely difficult, this question of defining a product or, conversely, legitimate differentials of price between the same product at different stages of its processing. I think you have to rely on the consultation process to get around cases of pure - "faoetious", almost - efforts to get away from it. There has to be a certain element of good faith, and then you depend on the consultation process. As far as actual comparisons are concerned, you can rarely get satisfactory ones for international discussion, except "the same" or "like", which might be all right, except that in our tariff terminology "like" means "the same" - we have so defined it. MR. DEUTSCH (Canada): "Like" means absolutely identical? MR. SCHWENGER (Rapporteur): Yes, but we might use the words, "which is substantially the same product". MR. DEUTSCH (Canada): That is exactly what worried me. MR. SCHWENGER ( Rapporteur): Obviously it would not do we could define a four-inch apple as different from a two-inch apple; we export the one and retain the other. It would be an unfair effort to get around this. MR. DEUTSCH (Canada): I was not worried about the good faith part of it, I 40. J. 2 E/PC/T/C. II & IV/PP/PV/1 was worried because you gave a specific interpretation of it which disturbed me. MR. SCHWENGER (Rapporteur): I did not want to do that. MR. DEUTSCH (Canada): You did interpret wheat as being different from flour. MR. SCHWENGER (Rapporteur): I was interpreting the way the product has actually been used. I think wheat has been considered different from flour in international discussions. You have to have language about the differentials at different periods of processing, or make sure that that is met. I think it is generally assumed that you mean wheat and flour to be different. MR. SHACKLE (United Kingdom): If we do rely on the consultation process; it is desirable to introduce some words like "in effect" of "substantially the same" to give them something to bite on. MR. DEUTSCH (Canada): "Maintain or establish any other system which in effect" etc. If we put the words "in effect" in it might help. THE CHAIRMAN: I think we shall have to adjourn now. We need another meeting, and I suggest that we meet again at 3 pm on Friday next. MR. DEUTSCH (Canada): Friday of next week? THE CHAlRMAN: No, the coming Friday. The Quantitative Restrictions Sub- Committee is meeting that afternoon; would that worry you? MR. DEUTSCH (Canada): No, not specially. I wonder whether the Rapporteur feels that he has now heard enough expressions of opinion to see whether he can suggest some draft for us at the next meeting? MR. SCHWENGER (Rapporteur): I would be glad to try, especially if you give me a day in between THE CHAIRMAN: Then we leave it that he does that, and it is competent for him to call on any other member of the Committee to give him a hand? MR. SCHWENGER (Rapporteur): Thank you very much. The Committee rose at 12.52 p.m. 41.

GATT Library

tq939yz9110

Verbatim Report of the First Meeting of the Sub-Committee of Committee II on Quantative Restrictions and Exchange Control : Held at Church House, Westminster, S.W.1 on Monday, 11 November 1946 at 3 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.II/QR/PV/1. and E/PC/T/C.II/QR/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/tq939yz9110

tq939yz9110_90220020.xml

GATT_157

E/PC/T/C.II/QR/PV/1. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNRNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FIRST MEETING of the SUB-COMMITTEE of COMMITTEE II on QUANTATIVE RESTRICTIONS AND EXCHANGE CONTROL held at Church House, Westminster, S.W.1 on Monday, 11th November, 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. A1 E/PC/T/C.II/QR/PV/1. THE ACTING CHAIRMAN (Dr COOMBS) (Australia): Gentlemen, this is a meeting of the Drafting Commiittee to deal with quantitative restrictions, including quantitative restrictions for the purpose of protecting the balance of payments and exchange control. We have had these matters discussed in full Committee, and I think the views of the majority of the delegations were stated in general terms then. In addition to the American draft itself, we have received a number of documents on various aspects of this question, including a memorandum from the United Kingdom delegation, some appropriate observations from the Observer for the Monetary Fund, observations from the Brazilian delegation, the Chinese delegation, and also from the International Chamber of Commerce. Our first business is to elect a Chairman of this drafting Committee. May we receive suggestions for the position of Chairman ? Mr GUNTER (United States) : I would like to propose the French delegate as Chairman. Mr RICHARD (France) (Interpretation): In this Committee I think it is necessary that all countries with very determined ideas should be represented, on the one hand the younger countries, and on the other countries which must have their economics adjusted after the destruction of war. I think that all those countries should be able to express their opinions in a very precise way. I therefore think that the Chairman should be someone who is not leading such ideas, but one who would be above the question of quantitative restrictions. Mr HELMORE (United Kingdom): I wonder if I might make a suggestion which might get us out of a temporary impasse ? . It seems to me that if we take the suggestion of the French delegate we are on one side of the fence or the .other. If we are to look for someone who is on top of the fence we might look a very long time for him. I wonder if you would consent to be nominated as Chairman, Dr Coombs. I am sure we should all like that after - I may say so - your masterly conduct of main Committee II. On the other hand, we recognise that it is a heavy task 2. /PV/1. E/PC/T/C.II/QR/PV/1. and responsibility, and perhaps you have other responsibilities with which I, for one, can sympathise. If you would be nominated Chairman of this Commiittee, I believe we should go on in much the best fashion, and if you are not here I believe the Committee would find no difficulty in electing a temporary Chairman from time to time, according to who was present from day to day. Ithink we would do best to leave the matter in that state. 3. B. 1 E/PC/T/C.II/ QR/PV/1 MR LOKANATHAN (India): Mr Chairman, I would like to support the suggestion made by Mr Helmore, that Dr Coombs continue as Chairman of this Committee. If, on any particular occasion, he is unable to attend, he can nominate another delegate to take his place as temporary Chairman. THE CHAIRMAN: I thank you for the tribute you have paid to me, which I appreciate very much. If it is your wish, I will agree to serve as Chairman. I think the next point on our Agenda, and a most important one, much more important than the trivialities of Chairmanship, is the selection of a Rapporteur for this Committce. He will have a very difficult task facing him, which will be to reconcile varying and differing texts, and I shall be glad if anybody will offer to take on the job of Rapporteur. I think the United Kingdom delegation has al- ready done a great deal of work upon this on the basis of modifications of the draft Chartor. Would the United Kingdom delegate be willing to provide a reporter for this Committee? MR LOKANATHAN (India): Being the host country, it ought to be able to provide one, because we other delegations have come with very limited means at our disposal. MR HELMORE (UK): Mr Chairman, would you put your question slightly differ- ently and say: Would the United Kingdom delegation be prepared to pro- vide a Rapporteur, because that is a somewhat casier question to answer? THE CHAIRMAN: I meant that you would provide one from your delegation. MR HELMORE (UK): Mr Chairman, I think that Mr Meade of my delegation, who has already I believe done a good job of work - I know nothing about it - as Rapporteur of Committee I, would be prepared to do the some work for this sub-committee. I know that, largely because we are the host country, he has very many inescapable responsibilities at another desk - that is, his own desk - but if the sub-committee would bear with him if, on any particular ocasion, he has to be absent, I think we could very gladly make his services available to this Committee. THE CHAIRMAN: From my experience of Committee I I can assure the Drafting 4. B. E/PC/T/C.II/QR/PV/1 Committee that we could not have a more fortunate choice than Mr Meade. Is that acceptable to the Commiittee? (Agreed). We can now pass to a consideration of these questions, and here I have a somewhat revolutionary suggestion to put forward. I feel that most of us have expressed the views of our delegations on the various subjects before this Committee in general terms, it is true, but in fairly definite terms already , and we have certain clear lines I think along which the draft Charter might conveniently, and I believe with the concurrence of the original drafters of the Charter, be modified. I feel myself that if we proceed now to a discussion of the re-drafting of those provisions we are likely to go over a great deal of the ground that we havebeen over before, without very much assistance to the Rapporteur. I would therefggore suest for your consideration that,g having selected a Rapporteur, we might adjourn and ask him, in the light of the previous discumssio n and them arguments and documents which have been suggested, to prepare draft for our considera a suggestiontion. That is justg suggestion, and ws upiiI would like ton hear your view upon it. It woul not mean, of course, that there would not be the fullest opportunity for discussion and critoicism of the re-drafting; it would mean we would be discussing a document which had already been modified so far as the discussion which aas token place up to date made it clear that what is already in print needs to be modified. MR GUNTER (USA): Mr Chairman, I think that there is considerable value in your suggestion. However, I think there is at least one basic problem which we haveo got to solve before the Rapporteur can proceed too far, and that is the general qestion of criteria in connection with the balance of payments. I would suggest that there should be some attempt agreement on that point before We have the Rapporteur come up with the draft. We have got a complete range of sugestions upon that; on the one extreme, the suggestions for objective criteria all don the Iine, and think that is something we do need to explore. MR KAFKA (Brazil): I am afraid I was not present when the Committee was set u 5. B. E/PC/T/C.II/QR/PV/1 in Committee 2, and I am not quite clear about the exact terms of refer- ence. Is it just balance of payments or the general chapter on quanti- tative restrictions? THE CHAIRMAN: The general chapter on quantitative restrictions, including balance of payments, exceptions, and including exchange control. MR KAFKA (Brazil): Thank you. MR MEADE (UK): Mr Chairman, I have been rather rushed into a consideration of this particular problem and I find it diificult to express a snap judgment upon it; but my feeling is that something could be done if the Committee were prepared to see a set of alternative texts before them. But I cannot believe that we have yet reached a point at which it would even begin to be useful for the Rapporteur to produce a single text for discussion, because there - and I can thinking primarily in my own mind of the balance of payments quantitative restrictions - three main views, with variants of them, and one could, of course, produce three texts. As I say, there are variants to the three main views, startin: first with the idea of a pretty hard and fast and almost automtic criterion and ending up at the other end with the view that you want some impartial international body which will tell you, judging your balance of payments, whether you may or may not put quantitative restrictions on all those grounds, and having, in the middle, the view that you might have certain guiding principles which would guide the action here. I suggest that there, too, there could be two variants: you might either guide the action of the member in putting them on, in which case there would have to be a procedure for taking them off if they were considered to have been im- properly put on, or guiding procedure for a body which said whether they could ot could not be put on. So that there seem to me to be at least three variants, and I think a middle one which has two sub-variants. One could try to produce three or four texts from those round which a dis- cussion might centre, but whether it is useful to have them first I do not know. MR LOKANATHAN (India): May I suggest, Mr Chairman, that, before this matter is 6. B. E/PC/T/C.II/QR/PV/1 refferred to the Rapporteur, it may be helpful if he, without going into the merits of my question, just raised specific issues to be considered, so that in the light of those we could take decisions. What I mean is that it may be of advantage, taking Article 19, for instance, to raise one, two, three or four issues, and similarly in regard to Article 20; and in that way we should be in a position to know what exactly are the issues involved and that are the differences involved in each one of the various sections under each Article. in the light of all that the Rapporteur would be able to make a draft. THE CHAIRMAN: Suppose we turn to the first Article of the Charter dealing with this question, Article 19. Does the Chilean delegate wish to speak on this question? MR VIDELA (Chile): Yes, Mr Chairman. At the last meeting of Committee II I raised the question whether I had the right to speak on quantitative restrictions relating to exchange control and balance of payments. You, Sir, said that it would be better if I left my speech until this moment. Therefore, if you will allow me , I will say what I have to say now. THE CHIRMAN: I think what happened was that you raised the question of quantitative restrictions for purposes other than the balance of payments when we had already dealt with that, MR VIDELA (Chile): More particularly on Article 19, THE CHAIRMAN: Yes. If we take Article 19 now, we can perhaps do as the Indian delegate has suggested, draw attention to the main issues and perhaps a convenient way of beginning would be if you would make your statement. C. fls. 7. C.1 E/PC/T/C.II/QR/PV/1 MR.VIDELA (Chile): As the Chilean Delegation declared the 18th Plenary October at the Fourth/Session, "Chile is one of the countries these economic stability depends fundamentally on its foreign commerce. Chile, by reason of her method of reproduction and the problems she faces in her international trade, foms part - not only because of 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 similiar economic development . The factor which most influences the conditions of these countries is their exports . Those exports provide the means of payment for, and determined the 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 factor in their economy; their value greatly influences the internal conditions of the nations concerned and is mainly ressponsible for a state of national prosperity or depression. From the foregoing it will be clear that the principal 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 fluctuations that took place between the years 1930 and 1940, and that prices are maintained at a reasonable level, with the double object of firstly, stabilizing their balance of payments and, secondly, facilitation astable capitalization. 8 C.2 E/PC/T/C.II/QR/PV/1 "We are, therefore, desirous of contributing to all measures designed to bring about casier international trade; and we believe that this aspiration should be studied from a realistic point of view, taking, into account the circumstances and features of the trade of those nations whose economies are still undeveloped, therefore, whose balances of payments are generally adverse. In our opinion, an effective solution of these problems cannot be achieved unless the climination of international trade restrictions is accompanied by an increase of production and the industrialization of the countrries concorned. These were the words of the Heads of our Delegation, H.e. Senor Don Manuel Bianchi. I would. call the attention of the committee to those words. The main objective of the draft Charter proposed, by the United States, which is under discussion, is to abandon restrictions and to reduce tariffs. But we must have in mind the Resolution of the Council, Article 4, adopted on the 18th February last, which provides that. "The Preparatory Committee should take, into account the special conditions prevailing in the countries whose manufacturing industries are still in their initial stage of development." The United States would like to see, in the near future, a general climination of quantitative restrictions, end, furthermore, a reduction in the tariffs. Respecting Article 18 and; more specially, Article 19,a number of Dclegations have subbmitted their views, as summarised in C.II/W.13. In this connection the Chilean Delegation proposes to delete the word "agricultural" in article e 19 (2) (c). In regard to some products which can be preserved in cold storage, as fresh fruits, perhaps it would be more convenient at this stage to make it clear that the general conception of the clause forbids any kind of discrimination on account of a limited 9 C.3 E/PC/T/C.11/QR/PV/1 peried of impertation. As you know, certain countries, in order to protect their own production, have fired certain periods of importation, leavin the countrries which have their like production during the period closed to imports without the chance of competing in that market Respecting Article 20 (3) (c). those Delegations' hold the view that thecountry opposing quantitative restrictions applied by another should curry the burden of proving that latter's balance of payment is not unfavourable In referring particularly to Article 19 (2) (e) Chile - and, I believe Australia, Belgium,Brazil , Canada, China, Cuba, Czechoslevakia, France, lndia, Netherlands and New Zealand - would welcome our amendment. In our view, as experters of agricultural products, there is no clear reason why manufactured goals should not be included in Article 19 (2) (c). If there is any reason in favour of any agricultural product, this reason applies to any manufactured industry under the same circumstances. If the reason is to protect or to develop any agricultural product, the countries with under-developed indstries must be placed on the same footing;and if the reason is to attain the equilibrium of the balance of payments, I am sure that no country in this Conference could challenge the general principal of placing all the member countries on the same level. Iwould like to give to give as an illustration the fact that while the is value of world trade of.1932 decreased to 39.9% of it that of 1929, the foreign tard of chile declined to 14.9:%. Since 1878, when the Chilean monetary unit had had a goli value of 42 pence to the present day, whin the gold value is loss than id., the deficit of our balance of payments has been the cause of the fall of our monetary unit.This is a bitter experience that we must avoid in future Therefore, Chile reserves its rights to maintain quantitative restrictions so long as the elimination of restrictions or preferences directed towards the limitation of its exports, cither agricultured or extracted or any other poroducts, are not completed. 10 C. 4 E/PC/T/C.II/QR/PV/1i.; 51:, V AN: I have been looking back iTr' CIe =Libuon loin- 'back over teh, discusson which took placc his in thc _c,.rae agenda, and it might savenl cor.r~ittcc onn of thb. anit mi-;ht save n issues which were raiseda little tii.io if I quicklJy rmon ovr thc h h wcrc raised rhos economicsethc. t) Thk'rst -thin; .-as thc prcbll!m of th; counties s nt need tomehavu. boucn striouslv- impaired by the wiar, and their coo ed inre-c u4 anJ .olernisc their induutrics. Thc vic: ;.wa adv be met by ato relation to that problem rarticulcxly that it could perhaby a years orpossible extcsion of thu transition p;eriod, either in tomnas of teby t1u adoption? of principles for dotum-,nininr- when the; arpr * trLansition e.riol had bcen comIj1c cess of-)1 Thcsecond point w.s thuoucstion -:hither countries in a prKc portsra.d dcvlopmcnt w-;ould not of necessity have to select their ii l equip-with a viel: to ivin. priority to ii1orts particularly of capit ng periodrmcnt, -..hich zii;ht be a noed wLzhich woul' continue for a fai of etim. That question, of course, is vcr closely rclace tthc balanc of -p-a^yoents issue and may bc eorely dealt with there. .ae eacletion, thorc re a umbf other matters whurc thc ustin t did provide for the legitimatoowas raised wcr thexistin; axrrniL;oinnt dr thc ,c-itinate as made to therequirements of certain countries. Pa:lar refcr. nco-was e into theeffective continuance of warti; balanl c of peeaynts controlhe whether ies ofpostwar. purioO; / I was clear Jc that certain statc iionopol certain classes of -ods ~.hich becn taditionally practised and wie dependent on the existence of quantitative re-uations for the maintenance of that monopoly nre aloquately covered also whether in some cases schemes for the maintenance of stability in the prices of prinmzyucts ..'hicere deenicdont uponstence of quantitative restrictions would be permitted under those exceptions; and finally, wihether there rainh not be an additional exception providing for the use of quantitative restrictions for frankly protectionist purposes as an Jlrnative to subsiwdies or tariffs, perhaps only in cases vhre. t could be sho- that this was leess restrictive in its effects than th alternative :onrs 11 C.5 E/PC/T/C.II/QR/PV/1 I think those points, in addition to the ones to which the Chileanv Chilean has referred, cover the points which were raised in generalDcl-atQ her 4he -i3xnts wlhicdh wcrc raised in jenural er Delegatesdiscussion. It mihlit boz uii-ul if we cosidercd ;.-.es ther there.uld wish to draw attention to any other point, ,or *; cerc ussion none;e any other as;utsoi' t Q ,oats covoed1 in -cnoral 4isu which they would wish to claboratc. l to theIJ. 12L115RE Uitcd Kin',;doin): I -:oarnier if it would be ld notRrT.porteur if ,we sa-id to him th.t for the timLe libciiV are rewebratc thodraf to doe-al waith toss~il excetions whiched ttee of of the to industrial dev-Clonnlo. I understa-. the suminitteo of the joint therebody whAichd iconsidcrLin.., this hlks not yut coq.sletoe taskre ration inis a poss lity thi1;t solme off theilse< e:Atttcreccive eration ni n n onthat context. It sems to vi1_ it ..oul&.I bo Jbiposin; cn on purpose,th3 2tapporteur if 1,c asked li-Lm to elaborate: occa.tiono for when the reason for them, their context and their basis have not yet referred.been cLccidod recoimcnded by the ;hy'y to w-hich they have beeon postponedTherefore, I su-;cst thc -cncral t:.si of oxo- tions i1ai:-ht st oseas far as this committee is concexorio. -o not think w. all l.scy time on that locausc thecre. is quite -n ruacunt of ealready waiting for us. and while I agreeI LOKWUXATIUt.In'i.): Whiiceat ic ;>nerallyk, and w--th ,.te Unitedl idrom Dele;atc in that resother aspect whichh iving protection, whas _t to be raisccL hore is thc m-et-hod ction, whether in our ovn countery or in any other country. It may be quantitativ trade controls onr some oolly useful istrmuncnt o protection - arid in sEither because it willome rcpcot, better instruxaent f protection. -hor because it *iill cost less, or oirin-to the rigidity of tariffs, it a:i tht ouontttive ropriaterLritions may be nocossr-y. Ink that aspect is moro ai-ropri here, and I hope the m'i.portl not oxclue that. I. IElGRE United Kdincoia): I -s not seyin tha any aspect was til we see wthatnalpropriatc. I was only sayin;-aw shoulJl. lcav it eo what cons out of thu-ral bDod. 12 c. 6. E/PC/T/C.II/QR/PV/1 ER. LOKANATHAN (H1N (India): e havc noe myceir.isolf clearwas I .i^S thinking of it purely as one mof the ethods of protectWhether ion. cthcr or not that country has a certain kind of tariff it may ceonceivably us quantitative conterol aees an altrnatv method. I think that is relevant to this. THE CH'IPii1 Speaking now as a eEmember of thjoint bodye, I think thc point .Allcovered. It certaieenly has boon oposed at the joint bo dy that arecommendatioem n from th. should go fommiutte erwardto ontittoe II expressing the views of the joint body on certain chances or matters which ought at least to bemit eeconsidered by Comt II in relation to the method of giving protection. It may be, for instance, that they would ask Coiittee II to provide for the use of quantitative restrictions for protecitionist purposes n certain types of circumstances. If tghey are going to et instruments of that sort - as I think is not unlikely - it would be as welel to ewait until w hac received it before we attempt thcdraft. ME RPJPORTEUREempt ,[t Before we Crrot the draft about their use for protection reasons, whether it be protection for industrial development or not TH$CEMLE.N: tection for industrial development. THE RAPPORTBR: As Rapporteur I would say there amount Ais a terrific ount to do. I just wondered vihether it would not be better -- it depends what the committee feels -- to deal with the protection use of Q.R., whether for industrial developrmsment or for other fo of protection, after we have received some information from the joinat body. Although I gree entirely wvith the Delegate for India that they are different matters, they are so frightfully closely connected that I feel it might be a waste of time to rwkc draft nov. 13 D1 E/PC/T/C.II/QR/PV/1 I do not knew whether that would meet oulOL mloot it. N:THfL Q1flL.1 is agreed, thewn, that Y.e ave any question of the use of quantitative restrictions ectionist purposes?osifor pi onist pur,)oscs? XV3JDM;LJ le):mm iay Iask- theSub-Co.siui whether, under quantitative restrictions, youe will discartiuss here th pointee at cle 8, 2. a., whr we find soh quantitatived to imperial preference? This 3e restrictions relatri iprecronce? T)his is a very important -nt to us beecause thcsquatitative restrictions arc deling vth remember aoat d, thienk, some cereals. I r. er we have Ecntlemen's agree- ment in connection iAh barley and also we had to diminish our own importation hec f frozen meat. TIL C1nMLuN:hu Iitat issue in relation to those quantitative restrictions, as I recall it, was onlng embodied my Aas toe whether the understande codiec in ,;rticlc 8 ed that existinCpreferences would bcelir.inatcj ngotiation applied only to preferences embodied in the foriof tariff import duties, or whether it applied also to preferencs caesed in the form of quantitative restrictions; and that mattemr weas referred to a special Sub-Comitte of the countries directly affmet and ected_ hat Sub-Comeii-.dtteas not i.nc! consequently w arc not in a pommenmadnosition dton know wha6ts they arc rec but I Co ro tink it is necessary for us to discuss it here, at lemast until we have had a report fro then iM RICMG (Fracnmo) (Ierpretation): 1-ir Cr -an e thik that the question of re-ceuiLmnnt sknohould be postpond till we h the decisions of the joint com- mittee, but we also think that the question of modernisation for countries which have suffered on account of tphe war should also be postoned. MR IZIAORI (U. K.): z gave rise to this piroedural discussion, I ought perhaps to say that I was not in the lesastm suggeesting that thi Comitoe should not discuss these thins. It was only that it should proceed first with the things on whichm the subject matter is ore or lessw self-contained, and I ould eFrntirely agree witehe the ench delegate's rsrvation, as also with our own reserevation,e that if this gos far w wish to discuss the position for the couall tyeir hjntries which mhave lota their overss investi-ents. h K. (BrkKa) Mr Chaimrmane, I t.hin1- yo h siumarisodadmiraly most of the observations and doubts expressed by different countries, including Brazil, 14 D2 E/PC/T/C. II/QR/PV/1 on Section C, but there are one or two things othings I should like to mention at this point. I do not want to go over the whole field of quantitative restrictions. I woulo luimt myself to observations on Article id lie etyWslf t o'1scrvations on Articlc 19. Thu first thing eption which arises is that in respect of thccxcctLon contained in article 19(2) (a) (ii), the orderly liquidation of the temporary surplus of the stocks owned or con- trolled by the eegoverrnlent of any mcmsL country, we should.licto see a similar exception accorded for the case where private initiative has created in a country during this we certain industries which havc o sound economic basis and which may have to be liquidated in thopost-war >crd,; d wei' ould like this erliquidation to eed in an ordcrly .aanncr;dv wethink that therefore quantiteative reestrictions may in cutain casc be thcbest means of obtaining this orderly procedure of liquida tion of such war industries. This isthe first point. The second p oint is this: thAaat we should like toinclude in thisrticle the possiblilityof iml.)osingantitative restrictions for the preservation of scarce natural resources. I araware of the fact that under article 32(j) a similar exceptielp on is inclmmittee uded. Perhaps it may h.) the Subtdttec if. I read it out. It deals vth mcaurcs relating to the conservation of chaustible enatural resources if such measures arctaken pursuant to inter- nationa-agreeots or are mide ffective in conjunction with restrictions on ndoraetic production or ccsu~ert ion I think cases hmy very wvo'aise wfhere you do not need to make efective a restriction on the domestic produc- tion or ronsu=tion ouch resources but 'whee nevertheless your resources are so limited that you w6ld like Ito restrict the exports. 'can:think of a case of that kind in my own country, Brazil, where we have some manganese which is very ample for our present and pprospective domestic consumtion but which is not very ample if we alelow free exports of it. W did export that to a large extent during thenlast two wars but we are =w thinking of imposing certain restrictions on that, and I think we should like either to have 32(j) amended to that extent or to have something of this kind included in Article 19. The third point I wish to make relates to dumping. When we were discussing Article 11, "Antidunrping and Countervailing Duties", in the Technical Sub- Committee, our delegation raised the point that in certain cases of 15 D3 E/PC/T/C.II/QR/PV/1 interi.iittent dumping iinfi you could not reombat b ccr$oat that sor of thing* very effectively with countervailing duties, for a reason into which 1 ncd.net go hero imet this tkxe; and therefore we wantede to have to possibility reoserveed tppoo cuntriumps osed to d.ing of this kind c irxposingquantitative restrictions, subject naturally to certain guarantees that there would be no abuse; and it was then pointed out asthat thisas not properly the subeject for th Technmmittee, ical Sub-Cttee, becaause themmittee was discussing Technicl Sub-Cottce was disussing only articlee 11, which referred eto duties exumpingclusively and not to othr forms of dg, and thereforeore this mattmmieeer should be brou t up]befc the Sub-itce on Quantitative Reestrpporteurictions. I should therefore like th Raortcur. to take note of it. IA think it bght with advantage be included in xticle 19, unless it is decided to expand .ticlo 1. My last point is that I have no vry definite answer on the Chilean delmegate's )int that herme would!like to have iaort restrictions pctted under the sanconditions as in artclee ()(c) not only for agricultural but amlso for manufactured products. n It sees to me that the idea of limitig this, if I interpret the draftsman's intentions correctly, was that the sort of crisis against which this sort of restriction is directed is a crisis noducts.st likely to occur in agricultural prcucts. However, it can also occur in certain cases with manufactured products. In fact, the chapter on CoiaocityIgcemntsof the American Draft Charter, while it r'frprimarily amnd fore thalsoe scv-.c sons to primary comoditics,.ls foresees the possibility of in exceptional circumstances concluding ities chommodity agreements relating to coinziities vwich are not primary commodiitities, thereby iqicitting, I think wRth goodason, that mthe sOmcrt of crisis, and so on, rigt also develop in other than primasame ry production, and thercor; the zaine sorts of defences should be appl izC3kbl ein thosme cases; and therefore Ithin th Sub-Comittee should give very serious consideration at least to the proposal of the Chilean delegate abepermitted s to whohorsuch restrictions should locritted also in the sac ircummodities.mstances with respect to non-agricultural coj:ics. That is all I have to say. 16 D4 E/PC/T/C. II/QR/PV/1 ii/Q}iVP0 ANTHE ii.MeEN:a thcre y frther discussioAn on eLrtico 19? Iuld anybodey olikmment ctccoint on this? a AaGUI (U") I would like to poOoint cuMthatw iir vkin is not here and this iAas anrticle in wheich h is mvery uch interestedsd, a hoia want mto nae somnmecor.ets on it a little later in them Coneemttcc CHAIRMANTI LN: Would anyboeEdy ko eto ofcr mmany olents on the various suggestions which eehapve bn ut forward? e In th main they have come from individual delegatiogroups opns orouDs cf delegati ons, ad, s'far eas I know, other delegatioenpse have not xrssed their concurrence or disagree.nt with them. If any dedlegate woull like to dl that in order to asspist the Raporteur on thee general viwmmittees of mthe Conitto, it right be a God opportunity to do so. 17 E. 1. E/PC/T/C. II/QR/PV/1. Mr RICHARD l-LaD ( Fr.nerpretatione(Intctrprtation): I thought that tody we would studyg -ticle 19ragraph on the basis of the Charter. para aph by pa.thc basis of th, Charter. onnection with countriesLe lzve .idrcady L.adc one reservation inith countries d be taken intowhich need modernisation, ^a.d we think that this shounto on with theaccount during the stuc of thC x Zxt .rticle, in comnecthe ke to make.balance of paymcts. There is another coiicnt wie would like. It is of a limited character and is rather .question of drafting, but h it is nevertheless important. I roer to the first ,-caragra of aticlee19, which says that: "no Vrohibition or restriction other than duties, taxes or other charges, whether mndc ffective'through quotas, licenses or othc miasures, shall be imposed drmaintained by any Heicbo country". In Dlrmnc it is understood that this term "license" covers soaethint c-lsc then quota. relates to the substance of the matter, ;d the license to the form. The license makes it possible to put into practice the quota, and also to exercise a control of a statistical character over the airts or exports of a country. i think that those tk'qu-stons &re ifferent from each other, and we do neot think that this Charter should prohibit th use of licenses as a mcans o controlling the im-orts and exports'f a coun try. We theoorc hink that in Article 19the word "licenses" ing should be deleted. cthink that the rerLciing-terms adequately cover the puxose'f this Lrtcle,. TI CILL~I-iN would not want to prohibit licenses if the effect of licenses were not to impose a quota. MIr RIC'D anco): N MHr HEiOE (nited Kimengdoa):iig ht I makIea om.ucnt 'that comratively detailed drafting point. I do not think the French delegation have anything to fprear. :t the Article I-ibits is prohibitions' r restrictions. It does not prohibita slicenses. It simply sy that if the prohibition is done through quotas of licenses, then it is subject to rules. I would like to sugeest oin somewhat flippant vin, if I may, that 18. E. 2. E/PC/T/C. II/QR/Pv/1. the not effect of the speeches we chos vie have haard so for ie to rnako the Rapporteextremely urs task tre;,Uoly easy, that ism, that wehould corie forward with a blandk sheet of paper an Article 1ee9, afweter all the spches ic have heard, disappears, I do not think that he will take his task . quwould ite that spirit. I aoul that seriously like to, sst bha.t the logic of tha.quires that we should first of all wait for the more m the definitemmittee view to emerge fro thc Jo Coi-uiiitee, which will give us a clue as to how to handle the difficulties of quotas. There are various other types of restrictions for various purposes which have besen mmprehensive entioned, which are perhaps of a les coprehensive character and ay to fewer countries. 'ic wd do well to begin by asking the Rapporteur to start on the restrictions for balance of payments. If wocan ask him to begin on that while we think over the further sugmgestions that have been made in the 1in Comattee, we should do our work in the best possibleway. T CII1RAiLN:I think the Rap)prteur has enough to think about on that article and we will pass to the;consideration of Article 20, which deals with the use of quantitative restrictions for balance of payments purposes. Mr CIL1 rance)(Interprotaion): I think there was one point in itiecle 19 which was not covered in thadiscussion, dealing with the balance of pcments. I mean the question of restrictions-on exports . I think we should at least havean exchange of views on that subject, and let the Raapporteur study it after having herd the various views. The restrictions on exports are different from import restrictions, which will be dealt with in connection with Airticle 20, that is to so, in connection with the balance of payments. T GHLRRIQT: e question of quantitative restrictions on exports arises in one or two of the points which are referred to in the summary which has been raised at the an Committee, in particular the imposition of quantitative restrictions on experts is one of the measures necessary to maintaitimen the continuance of war price controls where domestic prices 19. E. 3. are being held at a level lower than w :orld prices. Similarly I think that might arise in relation to schemes for the maintainence of price stability of primary products in at th.,t they would be necessary when it was desired to hold erage the avragce price for the producer at a level below that curremarketrsnt Ton wmeorl narkts. o sonic extent the problem of quantitatiexports ve restrictmions on .orts has ben conmented on, but if any others delegate dhas amnything further to ad he ay do so. I LOKQL.ATILSndia) : t.hethere is- a carcity of any material during a particulamr perioed of rtime, it ay be ncessay to impose a certain amount of restriction on that class of material. That material may be mineral or it may be an agricultural product. I think the question as to what extent the export control could be maintained either for productive purpose or in conditions of scarcity, might also be considered. The Brazilian delwmegate has already drn our attention to another point, namely, that in certain cases it, may be necessary for us to impose controls upon exportation of certain generally scarce minerals.o That is a matter fr cmonsideration, but it ay be that within that periodm of time the country ay be faced with a scarcity of that particular product, and that product may be the subject of processing. Mr HE~bRE nited tyTYKingdom): I do noink we have a tclosed mind at all about the terorary imposition of export prohibitions which are to relieve conditions of distresms - and I attach iportance to the word "distress" - or to relieve shortages of essential foodstuffs, provided that they are temoeporary. But it ds raise a problem, it seems to me, intimately connected with the work of the Joint Committee. One of the ways in which export prohibitions could be used - as the United Kingdom knows from present day experience - is for protective purposes. I say that quite deliberately. It is possible for a raw material producing country, which wishees to industrialis, to do so behind a protective arrangements which is extremely effective, and that is preventing anybody else getting the raw material to use in his already existing 20. 1.2rwPC/-.0/C. E/PC/T/C.II/QR/PV/1. industries. The Charter already provides for effort duties to be negotiable in the same way as import duties. It will be no surprise to anybody round this table if I say, speaking for the United Kingdom, that we find export prohibitions as obnoxious when used for protective purposes as we find. quantitative restrictions on imports. It may be that in this respect the older countries are not so senile and defenceless as they really appear, because if export prohibitions of raw materials are to be allowed, so they will be allowed on exports. I think it would be in the interests of the development of the general objective of the Charter is export prohibitions for industrial purposes were not allowed. Mr MOSDYN (Belgium) (Interpretation): Mr Chairman, might I add that I do not think export prohibitions should be defended when the aim is to protect the quality of the product. Mr RICHARD (France) (Interpretation): I should like to answer the case of the United Kingdom delegate, We also think that prohibitions of export can be very detrimental, and we think that within a certain given time and as soon as possible they should be suppressed. But what we wish to say is that we should examine the. problem of restrictions to exports during the period of transition, and we think that this problem should, be discussed and will be discussed, in particular in connection with Article 21 on non-discrimination. 21. F.fols. E/PC/T/C. II/QR/PV/1 MR RICHARD (France) (interpretation): Mr Chairman, I should also like to add that I think a uniform terminology nuoogy sh uld be establind may beed, aal ioawb the Raportcu could be ashesiarious sel;gations eted by tW?tcs dceetions in this task, in orarious deemr to tparticularry to ounify kthe vxuto-rrn In _1xticulr, I sh:.uld lilce ndtopermit mentin the term, s ota," "lictnc"aml " ud" ything further on Article 19>?tTIM C.HIRIL cs abody wish to add -Lnytir _n ::ricle 19? We pass, then, to consider Article 20. Th'c in this connection ryou will recall that the United Kin orid circulate a dxaf which presumably was intended tbbe an alternative Article 20 of the United States draft gCharter. I think the m.n issues raised at the meetin of the full Cozonaitte ere, as I recall, the ones to which I referred in the previousme section, that all countries whose long-term developnt progranretended to keel)heir balance of sents in firly continuous difmficulties unless they ;re ablc o exorcse soIe election of their imports; secondly, ther as the question as to whether the criteria undner which ap country orld be free to act orthis exce-lon should be specific or gceeral; anme,ed, thcr was, thirdly, of cours;:the sa question of the lperiod ength ce character of the transitional -riod during which greawas ter fredom i-o permitted. Thc queston vrwLs aso raised - eitr in somwioe circumstances the difficulties associatedth the balance of paymnts mijh not be rcre radily corrected with a less egenerally restrictive effect if there wr the possibility3of the rule against discrigmination bainSwaived under certain safejards. Finally, there was the difficult question raised as to the precise relationship bdetween this provision of the Charter an the relevant provisions of the particles rof a-eeracntof the InternatinolMonetaxyFund, since both s doct~ndo cover alternative w rthodu odealing substantially wait the sam type of probleroand it ips clear that they do in that res: t need to be considered to-eer, and the relaetionships between the bodies ros ponsible fc their administration clareified. I think that those wre the main points that were raised in the general discussion. One point which I think rght help the Rma-peorteur is whether the Comittechas a view as 22. F.2 E/PC/T/C.II/QR/PV/1/QR/Vti/l r to wlothc he should bas on the original draft of the Chartee hon l ori; in 3raft of thc Charter ork on the document submitted by theor who thxr t w-;ul! Ic ')rofeor,-Clo n..,t submittcd b,.-y the Uiritcd 1i-k;dom. 'Would you ca re ta corirnent on this qu z RIuld beC~iV nce) (intrryettion): hvr hairn, I thik that it wolCd bL e he Uniteduscul tc ec-in work on the co ntcr-- ro1Oos-l >.rcsonted by th vationsKin4o..i dolc;ation.- In Coemittuc !I have heard v-i .us obs ith theide by tlero- xrsentativos of aan~ny countries in c onrnction w roposals,-,ro!gosals in the Chaftcr, onl I think that the Unitod Kindom in a certain degrec make it -ssiblc t reconcile the various views or t? talI them. iivtount. hLL.iH.TiLf ( i.ir Chaiw I shoulde J.ad if a co.py ofe articld be ee ps of tc noterna-tonal Monetary Fund coul.' ,laced incur hands, ebecause I think ite is Yst im-;ant that irc uld consult thc reevant sections, as this matter is so closely connected with the provisions of the Interneational Honctpax Funmd that we would likcto have a cod. I ar ot know where to get one. ArisingWsorry I have not bought one, and T ,o rc to ,et one. 2'ising out c that, I also feel that some i.iuriscussion is necessary as to why it is that the s cific issue of the balance of ;ayments, which was the subject =attcr thc Iternational Monetary FunCd,was inadequately- covered by thee International Monetary Fund, becc se now feel the nbe for some information on the point. If tl International Monetary Fund. had Dovided for payall the difficulties arising,out of the balance of -ny- mots thej therc ould be no need for us to consider the matter further, but the fact is that we ce that the articles of the International Monetary Fund l not sufficiently cover all thecases which we have in view, ando I -ld like to have a little more discussion upn that. Then, thirdly, Mr Chairman, eari:e 'qustion of the qualitative control in res,t of cxchange resources which a country has. I think that also is very imrrtant, that is to say, it is not a question so much of'the balance of 1om;nts icit as, whatever be the quantity of exchange resources that we harve, that mizt be utilized in: manner which will accord with certain Piaorities on certain tyypes of goods -d the qualitative control of the 23. F.3 E/PC/T/C. II/QR/PV/1 importation of goods due to conservation and utilization of foreignn cchangm in theibest possible. manner. Thesec a.ecsomeiof the points that I should like to raise. THE CHAIRMANCSHARKWN: On the first point you hede raisci, wawell tolk that uip with the Secreteeariat, h question of proevbers iding mmbors fwith cops os the relevant sections of the greement articeles eof arecrant i thc Intcrnational Mondyuetary Fundmmenent. Does anyb wish co on the other matters? MLUTMiRI Monetary FuoIMER (ternatiaonal Uy Fund):Mir Chaimnn, I think that the is points raised bay the Delegate from Indi/ that, although perhaps the delegations put forward these drafts for use on quantitative restrictions for bala, they nce of payments purposesgive -? Ywill doubtless wish o vivc their own expalanations; and I would like to sy from the point of view of the Fund that as v see it, when you are dealing with a balance of parments or a monetary reserve situation of thee kind postulated here, either x- change control measures or quantitative restrictions can pretty much be counterparts the one of the other, and that countries could deal with the situation frontghe point of view of restrictin,imaorts, either by a system of excheange licensing or they could dal with it through a system of import quotas. m Now I think the particular copetence of the e Fund is clearly in the exchare field; but it is also clear I thin- that the use of quantitative restrictions involves certain questions of trade and conncial policy which are not within the Fund's competence. I think that the only way we can look at this situation is that we recognize that sor countries will want to use quotas fogr this purpose; that we recoj- nize the nh ecessity for having some suc organization as the I.T.O. which will try to haronize tle interests of the members with the interests of the individual countries as quantitative restrictions are imposed f or mthose purposes. It does scolearly to us that there has to be provision for vdy close liaison and to pworking revent the organization viexcing at cross purposes in that field. MR HEMRE (UK): Mr Chainna I w-ondr if I could add a word or two in an attempt to answer in part at any rate some of the questions just put by the 24. M.4 E/PC/T/C.II/QR/PV/1 delegate of India. I think that I agree with his implied criticism, when he says, as I think he does: Why are we talking about the balance of pay- ments? Why are we not talking; about safeguarding reserves or safeguarding a country's exchange resources? Now, I think we should, for historical reasons and the usual in- ability of a democrat to chance his mind, or to change a word, we have continued to use this description when, in fact, practically all our criteria are related to the movement of reserves and to the level of reserves in comparison with rparison'vwith a afetyelevel, whhatevcr that is, and from an excessively high level, whatever that is. We do not think that a simple balancegure of paymentsgoo fiuro is at ala _d g:uide, and I think that the representative gree wof tmhe Fund wewould ae vr r.ie if rcre to say that to try to definec what a country's balall-nightim-ne of payments is is we-im- practicable, algthzeough one can usually reconi it when one sees it. The second question s whould like to deal with iSt-s question of giving priority within a gcountry's available exchanee resources for expenditur. overseas on particular types of imports, the sort of thing that the Unitedmoment: ingdomns doing at the mnentz a tendency to concentrate its exchange resources on essential foodstuffs, raw materials and essential capital installations. I think everyone must agree that if a country has not the exchange wresources to buy all the goods hich its nationals and other things being equal wcld loike to buy, then ;t is bound t,exercise sowme measure of choice. Quite ho hard and fast that measure of choice should be is a hmatter fonk r consideration, on wich I thic there is room for a considerable difference of emphasis, but that the choice should Iexist is I think reeconise d, and think Mr Hawkins rferredto it when he spoke ien the debatme fraid the gin the fullCommittc.'What I aeaai'd t United - Kingdom has so fabeen unable to aisQveris the logic which says: "You need to use these restrictions when you have in fact the resources to buy the gcds. Why try to exercise ab choice if a country can reasonably l expecnmted to pay for both the foodstuffs d the materials and the capital imports, as well as all the consumer goods and the luxuries?" B. fols. 25. G.1 E/PC/T/C. II/QR/PV/1rv/i I. GUNTER (United States): w I ;uld like emphasise to cphasisc anothe aspect. lem of this Drob.Yr which it isex-y important that we shold!not overlook. It is a pweeoint that h asmber rbn stressed ncr :of times in the Confwcronce andng I just vsh to brir it to your attention at this peeoint. Quantitatv restrictions can be a method which will lead to contreacting,e world trad. Tcrefore, onmposing the question of isinC; restrictions it is vexee important for us to kc in mind whether there es arcaldtcrn~tivme,c iasures ad.-ional erures .wich should bo nder-. takec. I think it is oncoof the primary rnationalfunctiOs of the intenona organization to be sure that quantitative restrictions, whenever they are imposed, act as ermslittle as possible in ts of restrictin; the total volume of tradl In other words, ite is very important to sec that whm a country imLses reestrictiaons it really neod to, en that it ha>c lored the other possgibilities of utilisin-,the resources of the Funeland Bank; -ossibly cachane depreciation, .d measures of that tYPC THE CHAIRMAN: Is there any further discussion on this question. 1. k.MCe it E (Bil': takmceihe proposal g subi-ted in writin"y various Deleegations in theee metwing oef Committ II ill b considered by the Rapportcr. I.. IL NWATIN (i): There is one matter I wougetld like to [et cl in qywn mind, not so. uch from the point'o view of the text submitted by theege U.K. clation. Suppose a country's balance of payments problem is established for a certain perieod of tim, that would then be covered by the time leeimit - fv or ten years. In wethat way can clear that difficulty. It seems toore medamental the morcun-lmaental matter with which we are no?w concerned is the us of quantitative restrictions as a permanent measure in our hands whenever there is a balance of payments problem. That is whatI.at.moe closely, cMoneected with the Hionar Fund and the Ienternational Trad Oerganization. Th whole philosophy underlying the Monetary Funawaes built up on gtting resources frol the Fund for short periods of timo The currency is depreciated aend you just makca few 26 G. 2 E/PC/T/C. II/QR/PV/1U.j/QWQViV/1 adjustments. ObvioeEAmerican usly eboth t iaRfor as itrian Chartorin so enr ns i has rcogniscdK. this point - andlthge U. 1draft, clearly recomise that apart from all teheese temporary faectors thr is also the mor pcranontsc. It is to aw that that I -w-s to drmi tention - though neeot from the point of iw of for or against, because that is not the point. I want tdeveloped o know wabout the underovelopoountry ;.hich wants to use qguantitativee restriections as lon as the criod of dvelopment is continuing. e Likcenisghtenmentc,I would like to hiac ore cn-hmcnt from the difficulties U.l Dcleoation s to the sorts of lificultios they expect to expericce beyond oven the usual transition period, for whiech of course there is provision in the Chartr. I think everybody uillagrcc the transition --cio MR. HE.01REnited Krinom): You want to know how long the U.K. will be in balance of payments difficulties? MR. LOKANAJNW (India): No. You may sa- five, ten or fifteen years; ' do noeEt mind thaget. I am concerned mo with the neral question, assuming Xk~gdd= twi period is over how lon-: t ;ille. Suppose a country does experience balance of paymentFs difficulties, the Monetary und could say there were certain courses open, either use the funds of the Monetary nddepreceiate the currency and makc litle adjustments. Those are the thin,,hat are a-lowed. Judging from the U.IK draft wcare not quiteWe w reconciled to that. eel that the balance of payments problem may continue beyond tahe transition period, nd we want gto know why. The su,stion is theyf shouldLsay it lasts "ve or ten years, or liable to periodical review. I thought the U.K. draft wtt further than that. I have not riven it close attention, but judging fglrom a very cursory ance at it I have the feeling that apart from the transition period there might be need for quantitative r restrictions whennvrthere is a balance of payments difficulty, and that diffieculty is not fully mt by the rIntern.ational Monetay Fund If I am nght inl that I want a littL more explanation of the condition which you anticipate after the tranesition period is ovr. 27 E/PC/T/C. II/QR/PV/1 MR. HELMORE EU.TOeE (Ungdomcd Kinjdoking from the point of view of anyadscinl; frorm the feoint of 'vic of any country. ". LOeKLJH;S (In):ew No,e ontircly from hc pointof vic\- of U. K. 1tR. (Uhniteiendoma): can expn quit easily how the United Kinance gdonmight be in balz'o of paeyments difficulties atcr the transition period: ifment the infdustrial developaent pls oi' the underdeveloped countwisel;uories went too fast or tooyscly. Seriously, surely the problem eis this. I oiMonetary Fund te a.:rect thu Itrnationa.l iocty PuMI will see to it thatt balaence of payments difficulties do no aris, or if they do areise tehey .ld l be solvedLby thuvarious Qxodicns anrichniques open under the basic inngemstracnof the Fund: there is excharC depreciation, easy drvi-, i, hts .nd It is possible t hat tose instreumnts either will not solve thDproblemsor will be insufficient, orwill be found in a particular case to be inappropriate. There is another way ofc recng emporary what I call in this eae a t;erary difficulty in balance of paymennits, *-rhis ag restriction on i orts for so lonoas the difficulty lasts.. I cn conceive that a country, through a particulgar internal financial policy, miht cause to be in the hands of its consumers a very large volume of purchasing power which it would not wish to be used overseas b)ccaus perhaps, another part of its financial policy was inconsistente vth that resulmt. It mig,t bcthat the circui stances that have caused these two things to arise at once were temporwary, and that it would not be ise to resort to thc classical method of solving the balanece of payments difficulty, namly, exchange depreciatiomign, because the ti conditions zt be expected to disappear within two years, and that loss dislocation to the world would be caused by comparatively moderate restrictions on certain classes of imports than by the smomewhat wholesale upset that ight occur if an exchange depreciation weree resorted to. Therefore, w feel that in the Charter there should be the opportunity for the country concerned to limit its overseas purchases, infomimng the I.T.O. at the same tin that it imposes the 28 G.4 E/PC/T/C.II/QR/PV/1Q9VP/1 8 on, and accepting the obligation that if any country thinks liinit'in._ thc obligation that if' any country thinks it is -;.ronr tI.T.O. and the iundLshould jointly take action. ike to make a k. LUTIMhIER; (Intornational Alonetary Funl): I woul hat there isfurther comment, if I may. I caa not alto&;c thor surc is teoo .i'lc an arca. of aisaroenient hero the:r is been suggested by theprobably a ratherr arQa of agrcomont than hassted by thc ay - and itlast fo speakers. In thc tatc!:unt I iladcl tho other t t the Fundhas boc rc-,d here this aftcrloon -I u xphasisod tat thc doc have as an inortant objective >n ttoiamo gt adjutment on a basis that -l not be Cdcstructivu f national or international !pr sepFuorit I think it is dLeiitoly hc hop of thc YAnlha in thcpost-trarnsition period a groa .n f the temporazy dificulties - in respeect of whiceh it is proper to come to th Fund to sek the use of its resources - can be solved on a basis that will maintain rather than roduocdemand. At erthe semc ine,it is clearly not contumated in tho arclese that it will bc posible to makc al adjustments oni s this basis. After agreement lle, there in the articles of aecuent tho provision with respect to ermthe post-transition period which will pit maembers to put restrictions on current pyments; that is, to authorise exchan-ccontrol mcasrcs. Thc reorces of the FundL are imited, and it sereves a ,od many members, so I hopcthat nothing I have said has su--td that therc ma not be somle crcumstances in which restrictions of' imports may be hesary, whethgerr his is done by exchan-e ontrol measures or by quantitative restrictions on imports. The point which I have tried to cpghasisoi that in the li;,hof the contribution which the Fund may make I do think the mechanism established here sshould ensure that thoe ogther alternatives are iven adequate consibefore deration by a country bkforc it definitely makes up its mind as ~~~~~~~o sc htto to thuspecific prorcammc hich. t wiill pursue. I -h sy that thc articles of agrccacntdo not attempt to su yuall the meaXsre thtA have to be taken of a corrective nature with respect to a fundamental 29 G.5 E/PC/T/C. II/QR/PV/1-V/l quilibrium, parqdisriwu, .rtice ulag time r ofho lon;; eetiecgguch has bocn sut :ested. ion in oOfe couerse,a .ltcrin hc vaueu o ^ cuerrency is no of thsc rmaesuromeasures s, t there meyerhaps largely e :ncurcs beyond thpcrll,.ps larcly of nto play. I have tried tozon inturna.l nature, ::hich also coiavo tried to ilplify .anmyuy jprovioutimaont a little, to try to prevent ; =isundcrstanding. e I, put forward anTE U-ORTLUR: y I pporteur mittoo I, p)ut former oxa^mplcich I think is very rUlvant to the problem raised by server for the Fund.the Inaan Dclcoatc a nd co0..rauntd on bythre ho Fund. ssion and awSupposcthere were soie deg-oc of : eneral trade dejncn@ county found as a result of that that it was in a difficult balance es to meetof jxovwions position aad had not.ot the cxchmnge source:;_ut it, and suppose that was thou't to bc and obviously was - a ltpracssion hich would remove itself in the course of a fel yecs. It would surely be vuy questionablc ihethur adprociaion of currency was more appropriated, to - on, say, for tw; years and then bcapan someprciatcd ack to what it was. That then should meomxom temporary restriction of imports. I think that was a case the a sub-UnicdXiora Dole-ation had in vic. - secakin: now. as a of Committee I.Dolcl'ato for thUnited ando- -and not as Rcapporteur o I. more*S. IDLO siXIRdia): I quite understood what Mr. Haid ap-, rentl with r!-d to that, Llthu-,h ertain course of action is/restrictive, it is in the lon;,n less restrictive than another course of action. I think that is a very sound yrinciplo. Moad's remarks suggest that therem. GUYMed States): I think 1.1r. 11oad' i,cst that thrre are various combinations of measures in particular circuatances which should butgaken to mce~t ance of 1paments problems, and not a sinle mCPeasurC The Dl6gat for India raised the question how these quantitative restriections fit into the gccrl p)icturo, and w they arc putin the Charddter. ';'ad evisualised it 'i this way. The Fun-ets up a corcan framework operating particularly in the cchane field; and that the articlges of areeraacat of the Fund leav free the riht to use quantitative restrictions. 30 H1 E/PC/T/C. II/QR/PV/1 One of our main objectives o1cAivos en Lrticlo 20 is to prrameworkvide a fLreiairork within which quantitamtivbe e restrictions ay eused and may not b used in ways that conpfleict with the puross of the Fund. We have become increasingly disturbed over how you can be sure that these various combinations and measures can be objectively considered and con- cerned over the question whether uncer the I.T.O. agreement a country will not boe able to get out f stop with the Fund. Now, the Fund is, wee feel, quite cortent to operate in athe balance of ,yments field, wand consequegntlye e are leanin mor and more towards the view that the question of the position of quantitative restrictions should be considered by the innternational orgaisations; in other words, when a country wants to put on restrictions it should consult with the international orgFanisations. The und would be primarily concerned in determining the necessity for imposing such restrictions; and the I.T.0g. and the Fund toether would member ,consult with theechor countries on the various combinations and measures that should be undertaken. MiVIDEmLU (Chile): ?r hawirnan I quite agree titthe point of the United Kingdo.delegate'in connection with the right of a country with a deficiymt in balance, of paents to reserve its exchange for special products, leaving aside certain others; and I would like to raise a very important point here, and that is the question of the debtor countries. Our experience in the crisis of 1931 was a very bitter one. I referred to it when I said that our international trade dropped to 14 per cent of what eitwas in 1929; andw still have to contend with the difficulties ecreated at tehat tim, because w are a debtor country. I remember this point was very wideely discussed at th world conference, and most of the countriesb agreed that the detor countries should pay in kind; and we are in the position now where we have to return to a sort of rld setandard,'and ve arccrafting a charter for'the application of multilateral agreements in order to give full value to the most favoureWd nation clause. e have to wait now to see iether in accepting the proposals we should be putting 'n 'anger our 31. H2 E/PC/T/C. II/QR/PV/1 balance of payments or whether we have to keep ) our quantitative restrictionos er xchgean control. Buwt e heav not taken into consideration here thme ost imortant difficulty, d my bet.miyw belief is that that important difficulty is the questione of the dbtor countries payineg their dbts. Abandoning, the doctrine of free trade, cozzcial and. conomi-cPolicy has adopted vmeasures arious iaasuros in an endeavour to protect the standard of living, procure economic independence and stability of the workers of the counrtry concenmrned, rovide th with the iaximau f work within the frontiers of their country, and in order to osumro he proper nlns of subsistence in. he emedvent of an ari. conflict, i. e., what is known as the policy of self-sufficiency. Of sneuwech measures, of the most diffmicult to overcoe in favour of the mainmtenance of the ost favoured nation clause is that which relates to the faculty the creditor nations have of reserving their internal marketso for products cming from foreign countries in which are invested their enterprises and capital, aasome me the return ono that atte scaLc the return on those investments and the usefulness of these enterprises also remain guaranteed for the future. The creditor countries will have to decide to abandon the entetrieasnd' cpital abroad, or else to reserve their own markets for the payment omentsf the return on these investacnts, since the most favoured nation clause has today only a secondary application, and a system okf barter or of reciprocity has taen the place of international free trade. In this way toehe debtor countries will be able negotiate their consuwtions freely with the countries which receive their products of an equivalent value . The policy of self-sufficiency has upset the balance of world production and consumption, and in order: to control production, world consumption will have to be rationed among the producer countries. The problem which has to be considered is the allocation of consumpti Weon among the producer countries. know that production is capable of infinite expansion, since man is master of na oture, but W raXstnot lose sight- the fact that-consumption and markets are limited. The control of production should be the first step, and to achieve this itw is necessary to control the poer of 32. H3 E/PC/T/C. II/QR/PV/1'V/1 investing, the spirit of enterprise, and thmMe cpetency of capital. England, for pleexam, can control the unption mcosTtion odf fo proO'ucts aeand rviaias, and her task dis to ;istibutemarket this :.iot between pire nationaeign le,op ercijrc fci!-n prcduction. But this distribution is intimLlatey linkedpayment, and the greater the with the balances oft, and thc grcator the loss must be her exports.invrstl.Onts v:Eof British e.. ital abroad,r exports. This iz on:f the causes of unemployiicnt n the creditor countries. Ife the value of the exports goes into the hane of thoforeign investors, the debtor countries wrill be unable to buy anything in the 6rcdit Ccountries, and the exports of the latter will necessarily be reedumced proportionately to tho amount ctheir inv satts abroad. Tle C-t tountries pay their imports nd their debts with their 04oortsonoouentlv expots must cover the value of their irmp-ors and the interestwa on their debts. In order to find a y out of the present crisis, in addition to conowtrolling, production, which wrill allsr of eor .jata.ient oes andtabilisc currences, and the roi:? ocit- 3arsystm, intended to equilibratei the alances of pn3zmnt, she availrself of the lovw ratesof interest and dle capital to convert the investments in abunanzrYf id1e to convert the investments in the debtor courntries to a lowear rate of interest. Wiith the eduction of the mount of the interest on foreign debts, the imrrting capacity of the debtor countries would increase and at the saact:the would be reduced the consu-ion qeuota which has to correspond to the dubor countries for the paymt withi oods of the interest on their debts. In order to avcicthe lacok of ment and toequilibriua in the balances 5fpeain and to maintaicopntries, un the stability of currency in the debto tr-ies, if these increase their imports they must also increase their exports in like ;portion; and if they increase their debts (the payments on the foreign capitalx invested) it is necessary that the amount of eports should be increased in li2iroportion. If we can assure in this manner a market for the 1-rcduct-o.^ whicdebtor countries must off ncessity export for paying the interest on their debts, and consequently the aequilibrium of their balances of payn.1oand the stability of their 33. H4 E/PC/T/C. I I/QR/PV/1 currencies, the crisis of the debtor countries will be solved, since the loans which these countries must of necessity make aakc to establiemthoraselves will frco the markets of- congestion of idle capital, aend on standard rate of interest throughout the world wllowill a of better stability of prices anommon d a cnimron standard of living in th delebtor and creditor countries. No country should be allowed in the futuree to authoris fresh investments of its capitoral in a debt country without previously undertakinge tmp,o raise th ort quota of goods originateing, from th debtor country to an equivalent extent, or to assure tarkletshem freh mrkot- of an equivalent value, without reciprocity, aexpense[cquired at theirxjensc in the market of markets", Capital invested without this undertaking should be ceonsidered as nationalisd capital. In consideration of the fact that the interest and arortisation an the investments in the debtor countries depends on the fluctueations of prices and th exports of the products of these countries, in future capouital invested abroad shld not bear any fixed rate of interest, and should be considered as part of the business capital, and subject to eperofits and losses. Prsnt capital at fixed intuerest or debentures shold be converted into ordinary capital. I may add, Seir, that followimade,adng thes lines Chile arrangements with the creditor countries, the United States and Great Britain, in 1934, 1935 or 1936 (I forget the yearc)pia in order to link theptal invested in Chile with the eanterprises where the xpital was invested. Therefore we have lirLe investments and production and exports, and the interest we are paying now to the investor in Chile is related to the exports. If we have no interest, we dow not give interemst; if e have some incoe, we give inome. This is my point, andlI mpthink this is a very inrtant point, because erthis is the clue to t crisis. 34. I.1. E/PC/T/C. II/QR/PV/1./'V/1. I WoueEld li the pointse I hav raised to be considered in order to direct the debate to the one point which I consider teo be vry relevant and substantial. Finally, I wish it to be cleardrely ncstood that the rerrks I have m,just de repremysent ipersponal ;int of view. HAIRMANTHE CRvMN: 'If there ierERsnorthtr discussion on that Article, could we , consideration of Article 21, the non-discriminatory administration of quantitative restrictions. As I pointed out earlier, the only point I recall which aros. in the discussion was the question raised as to whether, in certainms circutances, where there was a sharpfall in effctive demand in certain countries, that might not lead to circumstances in which the necessary restrictions for the protection of balance of payments of countries adversely affected by that fall, might not be provided for by discriminatory restrictions rather than non-discriminatory. Has anybody many coment to offer ? Mr GUNTER (United StaMtes): r Hawkins wanted to be present for the discussion onA this rticle, and I wonder if we could postpone it ? AIRMANTHE CHUIiKIN: I think so. The United States delegate asks that consideratquestion iqon of thisiicstion might be deferred until Mr Hawkins is here. We have made pretty good progress, and I think the Rapporteur has quite a deal to do. I suggest we might defer that. (agreed), Article 22 deals with exceptions from the rule of non- discrimination, which obviously must be discussed as the same time as Article 21, and consequently with your approval, I suggest that we adjourn now and invite the Rapporteur to get to work. THE PlZPORLWUa Do ypou wart the poor Rapjrteur to do everything at once, or do part of it and come back ? I do not think one get get further tham,nts Article emtn the balance ofpts.,rt.cle before one hears about the outcome of the Joint Committmbined ArticleAnee. ks is a fairly self-cored Article, would it be convenient to the Committee if the Rapporteur started on the balance of payments article and put forward alternative texts on that as quickly jas possible and then try his hand at so of the rest ? Mr GUNTR (United States): I think that would be highly desirable. I feel 35. I.2. that Article 20 is one of our most difficult Articles, and if we get ever ivor that I think the work ef thc Committee will be easier. HAIRMANTHE eMILS: Wi will ask e' Rapporteur to prepare a draft or, where he feels it necessarnative y, alterntivc drafts, for the consideration of the Committee, and that he report back as soon as he has the draft or alternative drafts ready in realance ;spect of t.he ..nce of paments, Mr GUNTM (United States): we are scheduled to mexe tomorrow, and I wdondered if wccoulcget som e general idea of'hat we will take up then. Th CILSJN: you think you could have a. drat ready tomorrow afternoon ? EURT iMAPPO'iT: I think that would be rather difficult. THE C&,hi;.Slternatively, if M.Ir wkins were available tomorrow afternoon, we migheEt re-asmble thden andceal with the discussion on licles 21 and 22, and then we would have covered everything to the stage where the Rapporteur could deal with it. Is that correct ? PPORTEUR: TM ROLUR: Yes. ANTHE CLM&,NThen we will meet tomorrow afternoon, presumably at 3 o'clock, the subject being Articles 21 and 22, non-discriminatory administration. Tho meeting is adjourned. (Theg rose G meeti rose at 5.5 p.m.) 36. QR/PV/1.V/1.

GATT Library

xb460qc0441

Verbatim Report of the First Plenary Meeting held at Church House, Wastminster, S.W.l. on Tuesday, 15th October, 1946, at 3.0. p.m

United Nations Economic and Social Council, October 15, 1946

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

15/10/1946

official documents

E/PC/T/PV/1 and E/PC/T/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/xb460qc0441

xb460qc0441_90210001.xml

GATT_157

E/PC/T/PV/1 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the FIRST PLENARY MEETING held at Church House, Wastminster, S.W.l. on Tuesday, 15th October, 1946, at 3.0.p.m. TEMPORARY CHAIRMAN: Mr. A.D.K. Owen, Assistant Secretary Generl for Economic Affairs. 1. THE TEMPORARY CHAIRMAN, Mr. A D. K. Cwen, Assistant Secretary General for Economic Affaurs :- It gives me great pleasure to declare open the first Session of the Preparatory Committee of the Internatioal Conference on Trades and Employment. It gives me great pleasure to be here to represent Mr Trygve Lie, the Secre- tary General of the United Nations. Mr Lic asks me to convey to you his regret that it was not possible for him to attend this Meeting, He had intended to do so, and but for the imminence of to General Assembly of the United Natons at New York, he would have been here in my place to-day There is no need ior me to recite tho antendetns of this Meeting. Discussions on an International Conference on Trade and Employment go back beyond the Conference at Bretton Woods at which those two great instruments of international economic co-oper- ation, the Bank and the Fund, were issued; but yau will recall that the Government of the United Statestook the initiative in this matGcer some months ago and intended to call an International Conference on Trade and Employment; but with the establishment of the United Nations and in particular of the Economic and Social Council, they submited to the First Session of the Economic and Social Council here in London in February a Resolution vvhich was adopted calling for an international Conference on Trade and Employment under the auspices of the United Nations and for the setting up of a Proparatory Committee, and that Conference to consider the agenda and procedures which were to be adopted by the full Conference to to held next year. This Meeting at which we are now gathered is the Preparatory Committee, and it will be your task to prepare an agenda, proced- ures, and to work out mutually agreed principles on which we are going to discuss these matters in the full Conferenc next year, There are gathered here represantatives of eighteen countries There are absent the representatives of the Government oa the 2. E/PC/T/PV/1 E/PC/T/PV/1 Soviet Union, and I understand from that Governnent that they are not able to participate in the work of the Preparatory Committee at this stage, as they have not yet found it possible to devote sufficient preliminary study to the serious and far- reaching questions which are the subject of our discussions, Before calling upon the President of the Board of Trade, Sir Stafford Cripps, to welcome the Delegates to London on behalf of His Majesty's Government, I should like to make one or two announcements of a business character. In the first plance, I should like to recognise the Executive Secretary of this Committee, Mr Wyndham White, and Mr. J.A. Lacarte, tthe Deputy Executive Secretary of this Committee, (Applause.) They were appointed by the Secretary General of the United Nations and will be responsible for all the secretaril arrangements of this Committee in the coming weeks. It had been hoped that at this meeting a system of simultan- eous interpretation would have been :ready for experimental use Owing to technincal difficulties, it has not been possible to instal thls system for us at the present meeting, but such a system will be ready for use during the next few days, and it will be for the Delegates to decide whether they regard this system as one which is satisfactory for the conduct of their business, This having been said, I should like to call upon the President of the Board of Trade Sir Stafford Cripps, to speak, (Applause.) The Rt. Hon. Sir STAFFORD CRIPPS, KC., M.P., President of the Board of Trade:- Mr Chairman and Delegates, on behalf of His Majesty's Government in the United Kingdom, I extent to you a most cordial welcome - to all of you who are here as Delegates to this Prepara- tory Committee. I hope that your deli deliaerations achieve a 3. E/PC/T/PV/1 fuller mutual understanding of those most complex economic problems which beset our various countries to-day, and that they may prepare, the way for reaching an international agreement which will held out propspects to the people of all lands of a happier and more propsperous life. I am sure that all of us who experienced the sequal to the first world war must be determned, so far as in us lies, to steer whole economic policies into safer and saner channels than our preducessors did. It is as well, however, to remember that it was not much the desire as the achievement that was then lacking. The world was then full of good intentions, but signally failled to translate them into wise actions. There was not then, I think, the same universed recognition as there new is of the important part played by the economic relations between nations, nor of the influence which those of necessity exert upon political events in the internat- ional field. We do new realise as probably never before that there is no security in peace unless we can deal Internationally with the major social, ecnomic, political and I personally would add, religious, questions. It is to that end that the United Nations have determined to work nand to set up their organisation This Preparatory Committee organised by the United Nations Economic and Social Council is a recognition of that fact, and it is an essential part of the work of the United Nations in their endeavour to stabilise peace that they should achieve an agreement as to the manner in which the nations can co-operate for the promotion of the highest. level of employment and the maintenance of demand and can bring some degree of regulation into world trade an commerce In doing that, we want to impose as few restratins as possible upon individual nations and trading concerns, while at the same time safegarding each from the damaging effects which may flow from the. acts of others. We know that in the period between the two wars, 4. E/PC/T/PV/1 when there was substantially no provision for world economic co- operation and no rules of lnternational conduct in matters of trade and commerce, we all of us suffered from one another' s acts In the result, by piling restriction upon restriction, "we Most seriously blocked the channels of world trade, with the con- sequence that Millions upon millions of our people suffered poverty and unemployment and frustration, "Poverty in the midst of plenty" became a catch phrase of the widest praetical applica.- tion. No nation benefited, though perhaps some suffered less than others or at different times. It is probably in this field of economic affairs that we are all most sensitive as to our own political sovereignty. Even these nations who heve themselves adopted some form of planned economy at home are doubtful about the risks totheir interests of planning matters on the internation- al scale. Manufacturers and producers of raw materials are alike jealous of their control and are anxious if they can to get the best of th worlds: freedom from all restraint and interference, on the one hand, and, on the other, protection from all the greater difficulties of extreme competition. But if we are to set out seriously and with determination to ensure a prolonged period of peace for all the peoples of the world, we must face up to the fact that unlimited freedom, according to our actual experience in the past, does not give any but a very very few the best of both worlds. In the great majority of cases - and this certainly rules so far as the generality of the people are concerned - it means that we get the worst of both worlds; and we have surely experimented long enough in the chaotic condition of world trade such as ensued after the last war to take as our start- ing point the need for some organisation,. some rules and regulations, as between nations relating to their conduct of trade; and if we accept that as a basis for our efforts, then it follows that we must each be prepared to give up some of our national methods of 5. E/PC/T/PV/1 pretecting and regulating our trade, provided, of course, others too are prepared to dothe same; and this process of accommodating our national economies to the interests of others as well as of ourselves does not consist in looking round to find out something which is of no value to us and then offering to give it away. It means that each one of us can best serve our truest national interest by considering what it is that we have which is inimical to the interests of others, which we can give up by way of exchange for those things which they do which adversely affect us. There is no need for any of us to be ashmed of being stout champions of our own national cause. That. is indeed our function at a meeting such as this. But though we are stout champions we need not perhaps. be also selfishly stubborn, The whole success or failure of our efforts will depend upon what each of us is prepared. to give up, always, of course, on the basis that we get in exchange something equally worth while. That I believe was the basis of the document which was put out by the Government of the United States of America last year and to which the Government of the United Kingdom expressed their assent in all its broad princIples, It is a very genuine attempt to lay a foundation for the organisation of International trade upon the basis of the maximum of freedom consistent .with the future good of the peoples of the world, At its very roco lies the conception that it must be the policy and the duty of each separate nation to take eve possible step within its own borders to provide full employment for its own people. 6. E/PC/T/PV/1 We know from our experience between the two ars how mass unemployment not only deprives the world of consuming power but also influences individual nations to adopt restrictive measures that are aimd at exporting their own troubles to other countries, Once this vicious circle of exporting unemployment starts, it has its repercussions throughout the whole world upon industrial countries and upon primary producers as well, If we can do our best to assure full employment each in our own country, then we can provide a basis for a healthy and expanding world trade. But, as I have -ndicated, some measure of protection against exported unemployment is necessary if we are to prevent the incidence of unemployment in one country from spreading round the world. Now, though full employment is basic to an expansionlist policy for, world trade, it is impossible to disregard altogether the practical basis upon which world trade has hhtherto operated. That trade has been given direction by a whole complex of national laws and has grown up and been developed in its reliance upon the continuance of that pattern of direction. Whole industries and schemes of agricultural and mineral development have been built up on that basis; and if we are going attempt to change those directions, to divert trade from accustomed to new channels, or to Introduce new trade into old channels, we must he very certain that we create the new channel or widen the old. channel at the same time as we are diverting the flow. Where two countries or a group of countries have accustomed themselves to particular forms of trading relying upon the existing provisions of their domestic laws, they will not of course, be willing to make a change unless they can be assured that alternative outlets will be provided for that trade. If we are going to expand the trade of some countries, it 7. E/PC/T/PV/1 must not be at the cost of diminishing the trade of others. In the existing post-war circumstances we are all naturally anxious about: our future trade. We know the history of the past and the unnatural conditions of the present; but it is very difficult to forecast the future. It is easy, therefore, to be fearful of the future and to be unready to try new experiments when there is so much doubt in the air. We sometimes seem to see the mirage of safety in the leaden atmosphere of inactivity and of the lack of courage to make a change; but we must take risks if we are to accomplish something really new; and unless we do achieve startilingly better results in the future than after the last war, we know only too well the direction of disastr in which developing events will force us to procced, We want to antici- pate these events and to. prevent the beginning of that restric- tionism which was so fatal after the Iast war. You are all of you, of course, familiar with the general scope of the proposals put forward by the Government of the United States of America last year which attempt to prevent the employment of restrictive practices in the many fields in which they flourished in the past. Their detail is of necessity complicated, and I have no doubt that many points will be dis- covered which are not fully covered by them and which will form the subject matter for prolonged discussion; but it is not the detail that is so important What is important is that we should devise some method acceptable to all the main trading nations which will ensure a degre of order in the International economic sphere and so will remove that fear that will otherwise prevent us from embarking upon an expansionist policy for world trade Just as in the political sphere we seek some corporate security for the world; so in the economic field we need to regulate the use of economic-armaments. Thus we can diminish the risks of external adverse effect upon national trade which so easily lead to and justify restrictionist policy. 8. E/PC/T/PV/1 We are following the Atlantic Charter and our own mutwal aid agreement with the United states of America, putting forward to the world through this meeting a new conception of national responsibility in economic matters. Hitherto it has been considered sufficient if cach nation regulated its conduct in these matters in accordance with the bilateral treaties that it had entered into: it was no one else's concern as to what those treat- ies contained or how they would affect others, and beyond that it was accepted that each country cold do as it liked with its own market. It was that accepted attitude to international trade which I believe led us intothe disastrous chaos of the inter-war years. It is to aliminate the danger of a recurrence of that chaotic state of affairs that it is now proposed to intro- duce a new conception: that what each country does to regulate its own trade is the concern of all other countries who trade with it, and that to-day is tantamount to saying all other countries, So the methods used for regulating national trade become matters of international concern, and the only way of attaining economic security with which to buttress political security is by organising at least a minimum of security in the field of International trade, Our conception of that minimum is illus- trated by the provisions of the document to which I have referred. I an convinced that this Preparatory Committee and the full International gathering that will follow it are pregnant with the greatest and most hopeful possibilities for the peoples of the world; but these possibilIties I believe will only materialise in terms of happiness and prosperity if we constantly remind our- selves of the tragic conditions of so many of our people in the period between the two wars, We are gathered here to devise plans which can be put into action that will make it unlikely that we need ever fear a repetition of those evil days of suffering and 9. E/PC/T/PV/1 unemployment. We cannot surely let it be sand of our 20th ccntury civilisation that it is only in times of war that the people can be given fullemployment or that only in such circum- stances of acute danger will allies co-operate to organise and order their economic life to the mutual benefit of their countries. 10. E/PC/T/PV/1 Certainly that was true of the war period. We then succeeded in achieving the closest integration of our economies for our mutual benefit. That was the foundation upon which we laid our eventual victory, and in no other way could we have emerged victorious from the second world war. The compelling sense of danger and the fear of defeat drove us inexorably to that course of action, and to mobilise effectively all our resources of manpower. Are we to admit that it is only the dangers and fears of war that can induce us to create full employment and to co-operate one with another on economic matters? I trust that the outcome of this meeting will be to show that great ideals and a genuine desire to ease the lot of the common men and women of the world are as powerful incentives towards wise and co-ordinated action as the bombs and guns of destruction. (Applause) THE TEMPORARY CHAIRMAN: Before the. interpretation takes place I should like to express to Sir Stafford, who has to leave us for a very pressing engagement, the thanks which I am sure all of us feel towards him for this most cordial welcome. (Applause.) MR McKINNON (Canada): Mr Chairman, before we turn to the next order of business, which I think is the adoption of the Provisional Rules of Procedure, I should like to suggest that it might not be inappropriate if the Committee were to pause before it begins its labours and consider and remember one man, who, perhaps more than anyone else in the world, has had in his mind for many many years the objectives for which we are now holding these proceedings; and therefore, if it is not inappropriate, I suggest that .th_ Chairman of the Committee should convey, on our behalf, to Mr Cordell Hull our sincere 11. sympathy in his illness and our sincere hopes for his rcovery. ("Hear, hear" and applause. ) THE TAMPORARY CHAIRAMN: I should like to thank the delegate of Canada for his very, happy suggestion, and I shall be very glad to convey such message as is thought to be appropriate to Mr Cordell Hull expressing our good wishes to him and our sympathy with him in his illness. It now remains for me to call for nominations for President of this Session, but before doing so it is proper, I think, that the section of the Draft Rulls of Procedure dealing with the appointment of President and Vice-President should be adopted by this meeting. I should like to draw your attention, therefor , to document E/PC/T/2 of 12 October, which has been circulated. On page 2 of that document, the third section deals with the rules governing the appointment of the President and the Vice--President. I should like to suggest that a certain modification should be made in the draft of Rule 7. I would suggest that the txt as circulated should be altered in this sense, so as to read, in the third line, "shall all hold office for the duration of the present session of the Preparatory Committee." It may be that the Committee will be re-convened at some time next year, and the personalities whom we may now appoint may not at that time be available to serve. This course would in no way, of course, affect their eligibility for re-appointment. May I take it that there is no opposition to that suggestion?- (Agreed.) May I also take it that Ruls 7 , 8, 9, 10 and 11 of the Braft Rules are adopted? (Agreed.). I now call for nominations for the office of President of the present Session of the Preparatory Committee.: MR MARQUAND (U.K.)': Mr Chairman, I should like to propose for election as President the name of M. Suetens, the leader 12. E/PC/T/PV/1 of the Belgian Delegation. If he would be willing to render this service I am sure that the Conference would. be grateful to him. He has a very wide experience of gatherings of this kind, and I am confident that ho would -preside over our proceedings with. the right combination of persuasiveness and firmness. MR CLAIR WILCOX (USA): , Mr Chairman, in consideration of Belgium's deep interest in the extension of international trade in view of her long record of leadership in matters of commercial policy., and particularly in recognition of M. Suetens' distinguished career in this area of public service and his intimate- knowledge of problems which it presents, the United Stetes takes pleasure in seconding his nomination for the Presidency of the Preparatory Committee. THE: TEMPORARY CHAIRMAN: M. Suetens, the delegate of Belgium, has been nominated for the position of Prsident of the Preparatory Committes in this present Session. Are there any other nominations? If not, I have very great pleasure in declaring. M. Suetens elected as President for the presnt Session of the Preparatory Committee. (Applause.) (M. Suetens then took the Chair.) THE PRESIDENT (Seaking in French)(See French Verbatim Report). M. ALPHAND.(France)(Speaking in French)(See French Verbatim Report). THE PRESIDENT (Speaking in French)(See French Verbatim Report). DR SPEEKENBRINK (Nethrlands). As Head of the Netherlands. Delegation I would like to propose a Second Vice-President. As we have now a President and a Vice-President from Europe, I think it would be only fair and. wholly in the spirit of this meeting if we now moved to the Western Hemisphere for 13. our Second Vice-Prsesident; so I move that Head of the Cuban Delegation be nomiated Second Vice-President. THE PRESIDENT (Speaking in French)(See French Verbatim Report), H.E. M. ERIK COLBAN (Norway): I beg to, 'support the candidature of the Czechoslovuk delegate. THE PRESIDENT (Speaking in French)(See French Verbatim Report). H.E. SNOR DON MANUEL BIANCHI (Chile): Mr President, in the name of the Chilean Delegation I would strongly support the proposition just made by the delegateof the Netherlands to elect as Second Vice-President of this Conference the Head of the Cuban Delegation, Who is at the same time the Minister of Foreign Affairs of his own country . THE PRESIDENT (Speaking in French)(See French Verbating Report). MR CLAIR WILCOX (USA): Mr President, the Provisional Agenda is acceptable to the United States, with the understanding that it is subject to amendment as we proceed with our work. THE PRESIDENT (Speaking in French)(See French Verbatim Report). DR COOMBS (Australia): Mr Bresident there does seem to be some possible overlap between items 10 ,and l1, and there are certain implications in ite 10(e) with which we would not be in entire agreement. I would like the assurance of the Chair, therefore, that if the Provisional Agenda is adopted in its present form that will not imply the acceptance of the form in which item 10 is now expressed. THE PRESIDENT (Speaking in French)(See French Verbatim Report). H.E. SENOR DON MANUEL BIANCHI (Chile)(Speaking in French) (See French Verbatim Report). THE PRESIDENT (Speaking in French)(See French Verbatim Report). MR MARQUAND (U.K.): We seem now to be getting into the stage of detailed discussion, and I would like to move that the 14. E/PC/T/PV/1 Preparatory Committee go now into executive session to consider the reImaining part of the Rules of Procedure and other matters relating to the scope and conduct of the Committee's procedings. THE PRESIDENT (Speaking in French) (See French Verbatim Report) EXECUTIVE SECRETARY: Mr President, I should like to suggest to the Committee that they consider having a short adjournment of this present session for, say, half an hour, and that we might endeavour this evening to hold a very brief session, of the Executive Committee. I make this request to th, Committee because it is necessary, if the Secretariat is to make arrangements for the next few days, that they shall have a fairly clear idea of the working order which the Committee wishes to adopt. THE PRESIDENT (Speaking in French)(See French Verbatim Report). H.E. M. ERIK COLBAN (Norway): We are going to meet again at five o'clock, then? THE PRESIDENT (Speaking in French)(See French Verbatim Report). H.E. SENOR DON MANUEL BIANCHI (Chile): That is the Executive Commit tee? THE PRESIDENT (Speaking in French)(See French Verbaitim Report). The meeting rose at 4.30 p.m. 15

GATT Library

yv799ps2542

Verbatim Report of the Fourteenth Meeting of Committee V : Held in Convocation Hall, Church House, Westminster on Friday, 15 November 1946 at 3.00 p.m

United Nations Economic and Social Council, November 15, 1946

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

15/11/1946

official documents

E/PC/T/C.V/PV/14 and E/PC/T/C.V/PV/13-15

https://exhibits.stanford.edu/gatt/catalog/yv799ps2542

yv799ps2542_90230022.xml

GATT_157

E/PC/T/C .V/ PV/14. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the ITTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Verbatim Report of the Fourteenth Meeting of COMMITTEE V held in Convocation Hall,. Church House. Westminster on Friday, 15th November 1946 at 3.00 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. E/PC/T/C.V/PV/14 THE CHARMAN : The first item this afternoon is the Report of the Ad Hoc Drafting Sub-Committee on Articles 50 and 51 and consequential amendments to Article 55, Article 57 and Article 76. I shall proceed Article by Article with the Sub-Committee's Report, and if there is any necessary explanation or comment I imagine that eithor Mr. Holmes or Mr. Kellogg will take over the responsibility for it. Article 50, paragraph 1: it is recommended that this para- graph be. approved without change. If there is no comment I take it it is approved. Article 50, paragraph 2: it is recommended that the words "the United Nations and" be inserted immediately preceding the words "other international Organizations" . I take it that this paragraph as revised is approved. THE SECRETARY: Mr.Chairman, my attention has been drawn to the fact that the copies of this document in French have not been delivered. They were supposed to have been delivered. If it is desired I would be glad to read out the text of each paragraph as amended, so that there can be no difficult ty on the part of any member of the Committee in fully understanding the nature of the amendment proposed. THE CHAIRMAN: Article 50, paragraph 3: it is recommended that in sub-paragraph (a) the words ":or the members" be inserted immediately following thewo-rd "Cgoanization". TE SECRETARY: ThatwAill now read "Recommendations or determinations relating to the discharge of the responsibilities of the Organizat- ion or the members under Chapte IVU". HE hHOARMAN: If there is no comment I take it that is approved. Then it is recommended that in sub-apragraph (c) of para. 3 thew ord "or" in the last line be replaced by thew-ord. "and. THE SECRETARY: The last line of the ArticlewAill then read, "as may eO deemed appropriate under the cmmaodity principles or in the OM A3 E/PC/T/C .V/PV/14 general interest ". MR. VAN TUYLL. (Netherlands): Mr. Chairman, in a former meeting I suggested that it might be unnecessary to include the words "in the general interest" after the criteria "under the commodit principles" , as I suppose that the general interest would be one of the factors of the commodity principles. I do not think it very important, but I would like for/the record to knorw if the Drafting Sub-Committee has deliberately left in these words. MR. HOLIES (United Kingdom): Mr. Chairman, I think the answer to that is that we did consider the suggestion of the Netherlands delegate that the words might be entirely removed, but that we felt they had some value as broadening the basis of this sub- paragraph, though at the same time we should agree or hope that anything done as appropriate under the commodity principles would be in the general interest. It seemed, therefore, that in order to avoid drawing a sort of discriminatory line between what was done under the commodity principles and what was done in the general interest we might appropriately make this small change, which members of the Drafting Committee all agreed met, we hoped, every point of view. B.1. E/PC/T/C. V/PV/1 4 THE CHAIRMAN: Is there any furtherobjection? Mr VAN TUYLL (Netherlands): Mr Chairman, I an satisfied, thank you. I only wanted to make a remark because I was afraid that perhaps it would be unders tood that the commodity principles might not be in the general interest, but I am quite satissfied to leave it as it is. THE CHAIRMAN: I take it that this amendment is areed to. (Agreed). Article 50, paragraph 4: it is propsed that the word "mechanism" be dleleted. MR VAN TUYLL (Netherlands): Mr Chairman, I apologize for again speaking in this sub-Committee, but at the last meeting the Indian delegate suggested the possibility of arbitration being included in this paragraph of Article 50. Now I see that the drafting committee, instead of expanding the meaning of this paragraph, has restricted it by dropping the word "mechanism" That is exactly what we would like to introduced,. mechanism for arbitration. Mr KELLOCG (USA): Mr Chairman, in reply to the question of the delegate of the Netherlands, the Committee yesterday worked on paragraph 4, of Article 50 in connection with its work on paragraph 2 of Article 76, and it was decided that we would leave paragraph 4 of Article 50 purely as one of a list of functions of the organization without going into detail, whereas in Article 76 (2) we would spell out all the details in respect to the handing. of disputes, and you will notice that in the treatment in the sub-Committee's report on Article 76 (2) we have included a mention of arbitration as one of the tools which might be used in the settlement of disputes. MR VAN TUYLL (Netherlands): I had seen that reference in Article 76 (2), Mr Chairman, but I also notice that the subject of arbitration was only mentioned with regard to the rulings of the Executive Board and not with regard to the decision of the Conference; but I am quite prepared to drop the subject here, if you will allow me to take the matter up again on Aricle 76. THE CHAIRMAN: Yes; I suggest that be done, and I assume that, in the B. 2 E/PC/T/C. V/PV/14 absence of further discussion, this amendment is approved? (Agreed) Article 50, paragraph 5: It is proposed that the words "and promote the acceptance by members of" be inserted immediately fillowing the words "to make recommendations for." Then there is a note: "As a result of the sub-Committee' s consideration of this paragraph, it is recommended that a new provision be added to Article 55." Mr HOUTMAN (Belgium) (Interpretation): Mr Chairman, I merely wish to ask you a question. I do not quite see the meaning of paragraph 5 of Article 50, the second and third lines, "to assure just and equitable treatment for the enterprises, skills, capital, arts a.nd technology" and so on. I myopinion, unless it is bad wording, I cannot see the real meaning of the word "arts." Perhaps we shouId say "artistic processes." Otherwise, it does not make any sense, in my view. MR KELLCGG (USA): The purpose this word in this paragraph was to covor sucr matters as possibly copyrights and works like cinema films and such things, which do involve artistic as well as technological skills; and if the delegate of Belgiur can suggest a good term to put in there to take the place of the word "arts" we shall be vory pleased to have it. Mr. HOUTMAN (Belgium) (Interpretation): Given the explanation, wich we have just heard, I think the text would clearer and its scope would be more general if we included such a phrase as "technological processes." MR KELLOGG (USA): I think the Delegate of Norvay is correct in suggesting that "arts" in English is the equivalent of "procedés artistiqcues" in Fench, although I would scarcely like--- MR HOUTMAN (Belgium) (Interpretation): If I can have in my French text "procedes artistiques" without changing the English text, I am thoroughly agreeabe. MR PALTHEY (France) (Interpretation): Mr Chairman, I merely wish to ask a question of the delegate of the United States. Does he include in the term "arts" copyrights for designs of all kinds such as fashions, perfumes, jewels, and so on, and would that be covered? THE CHAIRMAN: That question I take it is addressed to the delegate of the 5- B.3 E/PC/T/C. V/PV/14. United States and not to the Chaire. MR KELLOGG (USA): I would say that the answer to the French delegate is Yes; we did intend it to cover just exactly that, and if it is felt by any member here that we should expand the word "arts" to make it appear broader, we shall be very glad. to do so. MR DAO (China): Mr Chairman, I would like to ask for an elucidation from the sub-Committee in regard to the insertion of the wods "and promote the acceptance by members of" because I am wondering if they have any importance in the mind of the sub-Committee and by what means the accept- ance by members could be promoted. MR HOLMES (UK): Perhaps I should answer that, because the initiative for this alteration and for the suggested alteration we shall be coming to in Article 55 came from. the United Kingdom delegation. I raised this point I think at the last full meeting or the last meeting but one of this Committee. If the Organization is to have as part of its functions the recommendation of international agreements on these various points, and if -such agreements are to come into effect, then it seemed to us desir- able that every encouragement, at any rate, should be given to those agreements to become effective. It would not be very much use to have a draft agreement drawn up on these subjects unless the members, having approved. them in principle, then became members of those agreements and put them into force. The only form of promotion of acceptance by members beyond the recommendation of such agreements in principle will really be found in the sort of process that we have advocated, as is suggested in the addition to Article 55, under which it will be seen a member would undertake to give due consideration to these subsidiary agreements and- to make up their mind within a reasonable time about accepting them and becoming members of whatever organization or subsidiary organization they may look to, and if they do finally decide not to join such a body to explain why they have come to that negative decision. That is the sort of promotion we had in mind. MR PARANAGUA (Brazil): I want just a little explanation. With regard to 6. B.4 E/PC/T/C . V/PV/14 this international agreement, does that mean bilateral and multilateral? I take it that it would cover both. THE CHAIRMAN: I suppose it does, but I wall refer the question to the United States delegate. MR KELLCGG (USA): Yes, you are quite right. The purpose behind this para- graph vas primarily of course to cover multilateral conventions on these matters. Conceivably, I suppose, you might have a situation where a bilateral agreement would do the trick, but normally that would not be true. MR PARANAGUA (Brazil): But that is not prohibited? MR KELLOGG (USA): No. MR PARANAGUA (Brazil): That is the only thing I wanted. Thank you. THE CHAIRMAN: Is the amendment proposed by the sub-committee agreed to? I hear no objection. I take it it is;. and I assume also that with regard to the question raised on the matter of the word "arts" it would be satisfactory to the French-speaking delegates if note is taken of our discussion in connection with the translation of the word into French. MR HOUTMAN (Belgium) (interpretation): I am quite satisfied, Mr Chairman. THE CHAIRMAN: Article .50, paragraph 6: It is recommended that this paragraph be amended to read as follows: "To co-operate with the United Nations and with other intergovernmental organizations generally in the attainment of the economic and social objectives of the United Nations and in the maintenance or restoration of international peace and security, and in particular, in the achievement of an economy of effort in the performance of the functions set out in this Article. " C.fls. 7. C1~ ~ E 4T//PC/PC V/V/14 - The Chair would likewW to raise a point or o with reference to this proposal. I do sowith some apology a& my usual purpose is to expedite the consideration cf the matters before this wommittee. I have tvo slight suwgestions to Make. I vould not press either one of them. They might. perhaps just be noted. First, I wonder whether it is not rather illogical to put at the end of this paragraph a phrase such as the one which begins "in particular". It seems to me that that is rather anticlimactic and that it would be better from a purely drafting standpoint it the Article were to begin "To achieve an economy of effort in the performance of the functions set ou t in this Article andto co-operate with the United Nations", and so orth, and let the Articlee end on the high nothof maintenance and restoration of international peace ond security. I kncw that is not a very irjortant suggestion but it seems to me that the addition of this phrase at the end is distinctly anticlimactic. 1 EOIJ7GN (Belgium) (Interpretation): I secMnd yourmproposal, Lw Chair an. THE C1AIRIMN: I repeat, I do not attach great importance to it, but I think it -ould be a little better drafting. I hare a further suggestion, not very important, and I suspect that the delegate from the United States will wish to take me cut and talk to me very strongly for suggesting it, because it is a suggested change in wording that. was in the original United States draft. The phrase "and in the maintenance or restoration of international peace"u it seems to me, caght to read instead "in the restoration awo maintenance". I imuld explain that just now we are, I think, attempting to restore international peecw. le hope that wc !il succeed and that thereafter the job of maintaining it will be a successful one; and it seems to me, therefore, that it would be more logical and perhaps somewhat more optimistic if we were to say "and in the restoration and maintenance ], KMLLOGC (USA): The language in that paragraph was adapted from the language in the United Nations Charter, but I think that the suggestion of the Chairman car be easily accepted. It cectannly -does not ohaige the intent of th- paragraph. - TD A.IPkN: take it that the- amndments suggested by the Chair are C2 E/PC/T/C .V/PV/1 4 acceptable to the Committee. (Agreed.) Article 50, paragraph 7. It is recommended "That this paragraph be approved without change." Any comments? (Agreed.) Article 51. It is recommended "That this Article be amended to read 'The Organisation shall have as its principal organs: a Conference, an Executive Board, Commissions as established under Article 61, and a Secretariat*" THE SCRETARY: There is a small typographical error in that Article. The word "and" in the second line should, of course, be "an", THE CHAIRMAN: If there is no comment, it is agreed. Article 55. It is recommended "That the following now provision be added to Article 55, as paragraph 5 thereof: '5. The Conference may develop and, by the affimative votes of two-thirds of its members, recommend for their acceptance, conventions and agreements with respect to any matter within. the competence of the Organisation. 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 therefor. "' (The Belgian. delegate, Mr Houtman, drew the attention of the Committee to an inconsistency between the wording of the English and French texts. The necessary amendment in the. French text was duly noted by the Secretariat.) If there is no further discussion, I take it this amendment is agreed. (Agreed..) Article 57. It is recommendad. "That the following new paragraph be added to Article 57, as paragraph 5: '5. Any member of the Organisation who is not a member of the Executive Board shall be invited to send a representa- tive to any discussion by the Board of a matter of particular and substantial concern to that member. Such representative shall, for the purpose of such discussao have All the rights of Board members, except the right to vote. " Are there any comments? MR NAUDE (South Africa): Mr Chairman, as I said before in principle I wholeheartedly support this amendment. I realise the difficulty of drafting 9. C3 E/PC/T/C.V/PV/14 the Article so that there are no difficultios of interpretation. I shall therefore not pursue it at all, except to suggest that if we are to follow the words in the Charter we had bettcr change "who" to "which" " - " the Member which". MR. AIAMILLA (Cuba) I see that in the French text the words "a toute seance" appear, and in the English text it is "to any discussion". We discussed that. point the other day, as to whether it was to the ful1 meting or to a discussion of a particular item, and I think it is important that the texts should agree here. I do not mind which it is, but it should be one or the other. MR HOLMES (U.K.): I think what we had intended at the Drafting Committee was quite definitely what now appears in the English text. The point was a small one but it did seem that if we worded. the new paragraph as in the English text we did get round the suggestion which. had been made at the full meeting before that we might, under the original proposal, be giving a non meber of the Executive Board the right to stay on and listen to a1l sorts of irrelevant matters once the part of the meetings which dealt with relevant matters to him had come to an end - assuming that more than one iten was taken at the same session; so that I think it is just a clerical error that the word. "seance" appears in the French text. MR BOUTMAN (Belgium) (Interepretation); I support the idea that this amendment should be made, because it is justified and equitable, it seems to me, yet I wish to ask one question. Who will decide whether a member not represented on the Executive Committee may be allowed to attend a meeting when a question concern him is being discussed, and how will it be deoided by an ordinary majority or two-thirds majority? - subject, naturally, to the previous consideration of the criterion itself according to which we would discuss whether this question is a particular one and an important one. There remains the question of the decision by the majority, a simple majority or a two-thirds majority, and. the question of procedure generally speaking. MR HOLMES (U.K.): The clue, I think, to the intention behind this suggested new paragraph is contained in the word "inviteda"; that is to say, the iniative might be expected to come from the Executive Board. 10 OM D1 E/PC/ T/C .V/PV/14 My United Statescolleague .has pointed out that in that respect the proposed new paragraph follows closely the terms of Article 69 of the United Nations Charter, which provides that the Economic and Social Council shall invite any member of the United Nations to participate, etc. on somewhat similar terms. MR. HOUTMAN (Belgium) (Interpretation): Therefore, Mr. Chairman, i is logical to conclude that this decision is to be.taken by a simple majority of the members of the Executive Board. MR. DAO (China): Mr. Chairman, we agree in principle with the purpose of this amendment. We think that a member who is not a member of the Executive Board should have an opportunity to state a case, but we are a little worried about its place in the Charter. Article 57 deals with membership of the Executive Board, the number of members, and so forch, and then we come to paragraph 5, which says that any member of the Organization who is not a member of the Executive Board shall be invited to send a. representative, etc. We should have thought that the would Executive.Board, when it is constituted.,./draw up its own rules to provide for the 'attendance of international organization representatives or non-member representatives, so we think a place should be found for this somewhere under Article 59 with regard to procedure. THE CHAIRMAN: The Chair feels that the delegate from China has mac a valid point, that the subject-matter of this proposed new .paragraph. does not really have to do with membership of the Executive Board, but does have to do with its sessions and procedure, and while the decision does not rest with the Chair I hope that we can agree to that suggestion with a minimum of discussion.However if anyone 'wishes to discuss it further, - 4 <. . . ;- -- . ... ,;~~~~~~ -._..i : hei floei '> ¢pen to them'- ~Al,,-I, KLA (.,b-: shaiians the Chair has. tken the -wod- out- ofz A Au. I thOught'- Mer all in accord that the 2wo ' ' - . , ' 0 . >J. paragraph should come in and that it would be a matter for the Drafting Committee to decide where it should go in the Charter. THE CHAIRMAN: Is there any futher discussion? MR.. LAURENCE (New Zealand): Mr. Chairman, I am still somewhat con- cerned from the operational point of view with the word "shall" in the second line and the word "any" in the third line. There is no discretion left to the Executive Board, with this section in the Charter, to have discussions of any sort whatever in their own councils, as it were. I think we can agree with the principle, but I think it is far too rigid. THE CHAIRMAN: I take it the delegate of New Zealand wishes us simply to note that, comment as we pass upon the proposed amendment? If there is no further comment I take it the amendment is agreed to? We pass next to Atrticle 76, paragraph 2. THE SECRETARY: Mr. Chairman, there are two corrections to make in the text paragraph 2. In the second sentence the words "as may be appropriate should be struck out, and immediately before the word. "refor", two lines down, the word "may" should be inserted, so that the sentence will now read "Before giving its ruling the Executive Board may require a preliminary report from any of the Commissions or may refor the matter to arbitrat- ion under procedures which it shall establish." THE CHAIRMAN: The proposal then of the Sub-Committee is that this paragraph be further amended to read as follows: "1 2. Any questions or difference concerning the interpretation of this Charter or arising out of its operation shall be referred to the Executive Board. for a raling thereon. Before giving its ruling the Executive Board. may require a preliminary report from any of the Commissions or may refer the matter to arbitration under procedures which it 12. D3 E/PC/T/C .V/PV/14 shall establish. Any ruling of the Executive Board..... ............ be referred. to the Conference" There is a further suggested revision, but perhaps we should take this paragraph by paragraph - There is a new paragra 3, which does not change the content:- "3. Any justiciable issue arising out of a ruling of the Conference ..... ... submitted to the Court under this Article ." MR. ALAMILLA (Cuba).: Mr. Chairman, I do not really understand this and I would like to know more about it. Where does "Any ruling of the Executive Board" etc. end, end where does paragraph/3 start? MR. KELLOGG (United States): In answer to the question of the delegate of Cuba, the thought was, to break old paragraph 2 of Article 76 about the middle, where it starts "Any justiciable issue", and to give that a separate paragraph. In this way we divide the old paragraph between a first part, dealing with matters up to possible appeals to the world Court, and a second part dealing with appeals to the Court. THE CHAIRMAN : The delegate of Cuba has asked the question and I would like to know whether he is satisfied? MR. ALAWILLA (Cuba) I am perfectly satisfied with that. The only thing I want to know is, what has become of all the discussion that we have had about the words, "if.the Conference consents" etc? I just want to know what the idea of the Sub-Committee was, and if they are (as I suppose that they are) satisfied that the. words are unnecessary? MR. KELLOGG: There is no intention on the pert of the Sub-Committee to change the previous decision of this Committee under which the worda "if the Conference consents" were taken out, and the words "in accordance with such procedures as the Conference shall establish" were substituted for, them In other words, we retaine the previous decision of/this Committee. 13. j-x. .': ....x;, - :.*<.' '- '-. '. i!;,_. MR ALAMILLA (Cuba): I am perfectly satisfied I was afraid that the sub-Committee had changed it: .; COMETEESARCRT-,T: I would draw the attentionr o the smm-Coxnritee to the fact that the nate soys "That this papagrcnh be furaher omended." MARA R;GCA (Brazil): Mr Cmhairan, I just want to know howttha+dworks. Ie thore is a rglinZ from Ehe executive Doard, and then the Executive Board asks tpe o-inion of themComdissiod an. if the Executive Board sa"d: `Theingl"ir is all righe; wc shall not change it, " is there always ppoo*,?rtunity ppealaeg~in' from this decision, or would the woy t e.l ae 'b blocked and wdouf the decision of the Executive Board stand? IMKELLOGo=OG (USA): Under the new draft the theory wouthdbe that a matter would be referrey b the ExecueiBc oard to one of themCo0missions, if a-wropriate, before it made its rugin- elsoian, nd the only ruling resumably at thap 2oint would be the rulgn, you heSc referred to, that of the Commission.f Ater the Comnmission had finished and filed its report with the Board, then the Board would ooik it over, and give its final ruling on the case. ITARANAAUA : (Brazil): That means there would be no more - it wouldebc final. _KELLOLOGGUa SA)N Io. If anybody isg agrieecd underht-e last sentence of new paragpa-h 2 anpa-peal could be taner to the Conference, and that sentence is not changed: "Any ruling; of the ececutive Board. . shall bd referred to the Conference." laARANAGUA AG (Brazil): But heec is thexprjression "if the ruling is of general application. " Does that mean that in a particular case one could aepaal or only in cases of general application? RKELL GG (USA): If a ruling affects only one or two members theth +ose members can appeal; if the ruling affects all members, thenlanl members can appeal to the Conference. M APANAGUA A (BralLz ): But psuposing you have the case of one mberer who does not think the decision is right, he can appeal to the Commission; then it comes back to the Executive Board, and if it is not of general '4. E.2 E/PC/T/C. V/PV/14 application, there can be a right of appeal? MR KELLOGG ( USA): No. MR PARANAGUM (Brazil): No. then it goes to the Conference? MR KELLOGG (USA): Yes. MR PARANAGUA (Brazil): Thank you. I am satisfied, Mr Chairman. MR PALTHEY ( France) (Interpretation): Mr Chairrman, I wish to ask for some clarification regarding the last sentence of Article 76, paragraph 2 which says: "Any ruling of the Executive Board shall. .. .. be referred to the Conference," ard the ruling is made. here. Is it the ruling of the Executive Board in general or any ruling decided upon by the Executive Board on the question of any interpretation of the Charter? In other words, if the Executive Board when an issue is being discussed reading implementation. of the Charter, decides upon this interpretation, shall we, when we refer this to the Conference, invoke the decision of the Executive Board? ...? ,GLOGG (USA.): The thought there was that the ExecBbbutive Do. might find it appropriate eo refcr a dispute to arbitratoon. H;wever, we felt that it was desirable to have the Bakard mcing agrulin, on the arbitrator's refort a'ter it was ready; in other words, we presumably wculd noanyut =;rbody off at the arbitration stage:. they would still have a chance to discuss it before the full Board. Thdn, unier the last sentenne op new naragraany2, =ay aggriembermer-~r could go and appeal to the Conference. I think we should rest this point, end the question of w ether-ow nmi ve rrght fine itabasiro1le to let the Execuoive B6ard determine i. that case, that the Arbi'ratorl s report should be final, with no more. recoursp to a?peal, I think it might be felt desirable to provide for the enfing o. the dispute at that point if it is a small matter and possibly we smould rake a note in our report saying that the procedures which the Executive maard y establish might include the right, to make the arbitratoon prnceedijgs final. But khiw r We ought to have some Qpinions upxo that. --ITHEY (France) (Interpr±nteetation): Mr Chairman, thereforea I vke it 15. E. 3 E/PC/T/C. V/PV/14 we mast amend the text and envisage that when an issue is referred to arbitration the decision should no longer be taten by the Executivè Board at this stage, but that we should say very clearly that the decision reached by arbitration is final and irrevocable. If the decision given after arbitration. is to be the subject of any appeal, then the appeal should be outside the framerwork of the I. T.OC.It might be-perhars the International Court of Justice or any other court, or perhaps no court at all. You have threeduifecrentpo_ssb'ilities; but we cannot pass frm.. the decisions of the arbita:tor on to a political plane. MRKELLLOGG (USA): The thought there was that by using, theexp~ression . under the procedures whichthe Board shall esabllish," you would leave it open to theBDoard, on the facts of each case, to decide whether the arbitral decision should be final or not. I spprose we could havea- case which would have a certain political tinge to it -here the Boad' mgiht feel that the arbitral award mgoht be very a-lab'le but should not be final, and should reserve to itself the right to make a final rulig- afeor the arbitration board had agreed. That was the purpose of using the words "rrocedures which the Board shall establish." RRALAMILLA (Cuba) :Mr Chairman, I accept the interretation of the delegate of the United States; but I vvould also like to know whether we are to take it that the ruling: of the Executive Board maymea also that the parties myayever contest the fact of its being submitted to arbitration NRMV.,AN UYILL(Netherlands): There are tovwooints I would like to raise ad'ndhe first one is this. I also feel, with the French delegate, that it is inconsistent to have an craitration decision that is not final. What I mean is that one does not ask for an arbitration once a decision has been made by the Executive DoBrd. If the TxEcutive Board wants advice it can ask the advice of expert-tsbut we should not call that arbitratior -n. Artration to ymrmnd is a final decision. The other Popnt is this, that to zymmind arbitration should be allieow in every f:.rina 16. E.4 E/PC/T/C.V/PV/14 decision of the Organization. If the final decision is taken by the Conference, to my mind arbitration and the other possibility of appeal to an independent court should be open. NoTv, here ic are dealing with another possibility of arbitration. That is arbitration in those cases where a final decision has not yet been reached; and to my mind it would not be wise to allow members,. at any stage of a disputer,. to ask for arbitration; only in the case of a final decision by the Organization should. there be any arbitration or appeal to a higher court. If the Executive Board or any lower organ of the Organization came to the decision that a question was not so important that at that stage in a dispute there could be recourse to arbitration, I am quite prepared to accept that; and I think that it would be very wise because it will save a lot of time and the process of arriving at decisions will be much quicker. fols,~~ ~ ~ - * -. ** .f.- . -..- F. fols. 17 i. . .71. : JM . But I do not feel that we should allow a. member in any stage of the dispute even before the final decision of the Organisation has been reached, to press for arbitration. MR COLBLN (Norway): Mr Chairman, I entirely agree with the suggestion that arbitration must be final, but I have also come to the sane conclusion as the delegate of Cuba, that no party to the dispute can be forced to accept arbitration. If those two points are clear, I think the proposed text by the Sub-Committee is perfectly clear. Arbitration, by its own definition, must be accepted by the parties in the Organisation. If that is so, then I do not see any . risk at all in accepting the text. (Interpretation) MR PALTHEY (France):/ I think we have two possibilities whenever an issue arises. We either refer it to a judiciary body or then to a political body in the Conference, or the Executive Board, for instance. The second question is, who is going to determine the nature of the question which is going to be referred to arbitration or to the Conference? I think I myself should like to propose - and here perhaps the Netherlands delegate would agree with me - that if any issue arises then any issue could be referred to the Executive Board, which will decide whether it is going to be solved within ITO itself or be referred to arbitration; but if it is referred to arbitra- tion I do not think the Conference should be allowed to go back on the not decisions of arbitration, and therefore we should/envisage further appeal here. MR KELLOGG (USA): I wonder whether this change in the, language of the new paragraph 2 would take care of the suggestions made by the delegates for France and Holland. The second sentence might read:- "Before giving its ruling the Executive Board may require preliminary report from any of the Commissions, or it may rule that the matter should be referred to arbitration for final decision under procedures which it shall establish." MR ALAMILLA (Cuba): Mr Chairman, I think the position is clearly this. The Executive Committee can do two things. One is to refer the matter to arbitration, for final decision, as the Norwegian delegate has said. The other is to give its decision with or without a preliminary report of. the Committee. Once the Executive Board have decided that, that decision of the Executive Board is subject also to the opinion of the person interested. 18 F2 E/PC/T/C.V/PV/14 He may say, "I do not want any arbitration. It is costly; it takes a lot of time; I do not believoe we should have it here." I think this point is covered in the Article, but I think one phrase should be added, just in case the matter be referred to the final arbitration, saying that in that case only the arbitration decision should be subject to a further discussion under the Court of Justice. That is, the only thing that I think is lacking now. MR HOUTMAN (Belgium)(Interprctation): I thinK there is a majority within this Commission wishing to discriminata between two stages, the administrative stage and the judiciary stage. The former should be dealt with in paragraph Fa 2 and the latter should be dealt with in paragraph 3. It seems that the discussion goes on only because the two are being mixed up, up may I propose the following amendment. In the administrative phase it is only natural that the Executive Board will wish to look for enlightenment coming either from the Commissions or from any experts whatsoever, so let us then say so; and then in the second stage naturally the question can be referred to the Court of Justice' or, if the parties do not wish to go that far, to mere arbitration, but in both cases the administrative phase is over. So I propose that the first paragraph should read as follows: "Any question of difference concerning the interpretation of this Charter shall be referred to the Executive Board for ruling thereon. The Executive Board may require a preliminary report from any of the Commissions in such cases as it deems appropriate or refer the question for consultation to experts, and then the question will be referred to the Executive Board and again to the Conference if necessary." . . . .~~~~~~~1 G.1 E/PC/T/C.V/PV/14 Then we should have paragraph 3r "Any justiciable issue afising out of the ruling of the Conference with =opect q *n "etc. "may be submitted by any party the dispute to the International Court of Justice or referred to arbitration." Then the two things would not be mixed up. MR. KEELOGG (United States): I would suggest that now that we have the ideas of most of the Delogates we might refer this matter to a drafting sub- committee. I do not think we can draft this Article in the full Committee very well. THE CHAIRMAN: The Chair recognises that there are two or three more who want to speak, but I do want to say that this Article is taking a perfectly enormous time. We spent a long time on it the other day, we have had a drafting sub-committee at work on it, and here we are bogged down again. I do not know whether we shall ever get, over it in this fuIll Committee; I hope we shall but I have a great deal of sympathy with the suggestion of the United States Delegate, even if he does come from. my country. We have some business to transact this afternoon beyond this Article, and I hope we can find sone way of cutting the Gordian knot. I suggest that we pass on to the rest of our afternoon's work and appoint a small sab-committee to work on this thing at the end of the afternoon.. If we move on we shall be able to turn the matter over to the sub-committee before it gots very late. Either that, or else, .while the sub-committee works on, the other people have tea. Mr. BURY (Australia): That's an idea. I should like to support your last suggestion, Mr. Chairman. THE CHAIRMAN: If there is no objection, I will designate a small sub-committee which shall not have tea, but shall work . The seven victims are: the Delegates of the Unted States, the United Kingdom, the Netherlands, Belgium, France, Cuba and Norway, and if he would be so good, I would suggest thlat the Delegate of Norway act as Chairman. MR. COLBAN (Norway: I do not object, but. I do not think it is wise to waste too much time on it. I think we all find that the text submitted by the 20 G. 2 E/PC/T/C .V /1 4 drafting committee, in the light of the discussion which h has taken place, might be acceoted. We could perhaps accept the text submitted by the Drafting Committee as it. stands and sond the minutes of this discussion together with the text to the Interim. Drafting Committee, so as to get over this point. Thore is not really, to my mind, a difference of opinion between us. All we want is simply to have a clear text. MR. LEPAN (Canada): I should like to support strongly the suggestion made by the Delegate of Norway. MR. NAUBE (Union of South Africa): So would I. MR. VAN TUYLL (Netherlands): I hope that the Noregian Delegate is right, but I am not quite sure he is. If we had continued this discussion I should have wanted to make some remarks on paragraph 3 of Article 76. Does the drafting committee you wanted to nominate include paragraph 3? If it is only paragraph 2 I do not object. Mr. BURY (Australia): I merelyi wish to point out that I overheard the Delegate of the United Kingdom suggest that we had tea anyway, even if the suggestion of the Delegate of Narvvay were acceptable. THE CHAIRMAN : We seem to be wasting a great doal of time deciding what We should decide and whether we should have tea. I have no particular choice in the matter, either in regard to tea or in regard to the text of this Article, but I do suggest that we must find some means of breaking off our discussion of thisematter and turn it over to somebody for drafting, unless you want to accept the suggestion of the Delegate of Norway. I am not myself convinced that this matter should simply be left gor the Interim Drafting Committee. I do not think they should have it without some further clarification of the draft by a sub-committee of this Committee. I.still have the improssion that the sub-committee should try to prepare a more acceptable draft for the approval of this Committee. If that cannot be done this afternoon we possibly could pass it on at the last moment by bringing it up at the meeting early next week although I had hoped that we could close the books todey. G.3 E/PC/T/C.V/PV/14 That was the reason for having the sub-committee work on it while the rost of us had some tea. MR. COLBAN (Norway): Then let us have the sub-committee now, immediately, while the rest of the Committee go to tea. THE CHAIRMAN: All right, If the sub-committee wants to have tea as it works, that is all right with the Chairman. After a short adjourment: THE CHAIRMAN: Gantlemen ,a few members of the Committee have not yet returned from the recess, but we must move along, so that I shall call upon the delegate of Norwwy to present his recommendations with regard to this matter we have been discussing. MR COLBAN (Norway): Mr Chairman, we have agreed on the following draft of paragraph 2 of Article 76: "Any question or difference concerning the implementation of the Charter, or arising out of its operation shall be referred to the Executive Board. The Executive Board may decide either to give a ruling, in the matter itself or to refer it, with the consent of the parties, to arbitration upon such terms as may be agreed by the parties." Then we go on: "Any ruling of the Executive Board," etc. THE CHAIRMAN: You have heard the recommendation of the Drafting sub- Committee. Are there any further comments on this matter? MR PARANAGUA (Brazil): Just one - to thank them for their sacrifice and for the good job they have done. THE CHAIRMAN: The Chair shares your view upon that. We are greatly indebted to them. If there is no discussion, I take it then that this is the text to which this Committee agrees? (Agreed) MR VAN TUYLL (Netherlands): Mr Chairman, when we were discussing Article 50; paragraph 4, I asked your permission to discuss the matter of arbitration again on Article 76. In Article 76, paragraph 2, we have settled the 22. E/PC/T/C.V/PV/14 question of arbitration for questions which the Executive Board decide as fit subjects for arbitration, but to the Netherlands delegation it is of great importance that the rulings of the Conference should be open to appeal to the International Court or to arbitration. As the Article reads now, it says: "A ruling of the Conference may, in. accordance with such precedures as the Conference may decide, be sub- mitted by any party to a dispute to the International Court of Justicc." That only goes for any justiciable issue arising out of a ruling of the Conference; so that if questions which are not justiciable issues could not be brought before a high inrdependent authority we feel that it is very important that such an independent authority should be able to decide on the matters brought before it, and we feel, too, that the members of the Organization should not be prevented from bringing any question they want before such a court. I am not afraid that the prestige of the Conference will suffer if any decisions of the Conference are brought before a court or go to arbitration, because if they have taken wise decisions those decisions will be upheld by arbitration or by a court. On the other hand, I am not afraid that members will appeal to a court or go to arbitration on too many occasions, because it would mean loss of prestieg for themselves if they risked a decision which was contrary to their interests. I an afraid that if decisions have been taken by the Conference, let us say by a two-thirds vote, or by a vote which did not give a conclusive result, there may be decisions in the Organization which can only be solved if they are brought before a court. Therefore, I would once more like to ask this Committee if they could not agree to introducing also in paragraph 3 the possibility of arbitration. Up to now appeal to the International Court of Justice wiIl only be possible on legal questions; on. questions which are not legal I would very much like us to adopt the arbitration system.. I do not think the Committee would agree to strike out the words "ary Justicible issue arising out of," which would make the paragraph read "a ruling of the Conferenc e can be submitted to the International Court," 23. H. 3. E/PC/T/C. V/PV/14 but a better solution, instead of striking out those words, would be in my opinion to create an arbitration body which could be set up by having experts appointed by the members of the Organization, and that arbitration body should, in the opiniòn of the Netherlands Delegation, be in a position to give final decisions on non-legal questions on which the Conference has decided. MR BURY (Australia): Mr Chairman, if this question of arbitration is to be rejected into the prcceeding at all it will need very considerable discussion and clarification. It does seem to me that certain questions of substance are involved here which we might defer for the next meeting of the Preparatory Committee; and unless we have a series of special meetings, I cannot see that we are likely to agree on the points raised by the Delegate for the Netherlanads. It seems to me thatt either we shouldd proceed to put through some draft such as the United States draft, with the reservation by the Netherlands delegate, or that we should just make a note that the question of arbitration in re- lation to those Articles will need discussion at the next meeting of the Committee. J fols. 24. J1 E/~~~~~_/PCT/C.4/:-PV/19 RMANihS-eDU:Tho Chnar e.a becn aoomt e ac _akcb Lt me sagge suo cstien, nezcly, that ee tae notch of twe vievs od teg aelcJate of Nctherlands and, in view of ehe grcat lackme fetio hnre eo haec an cxheustivc discussion eo latc in ouo Confcrence, ehagree aorcc tc, this provisiomeaseaiandcd, simply taking note cf eis vicws; and that leavemathe rztter autormatically open to further discussion- am all natters arc, for that matter -e tethcmecxt rieting of the Confcrence. ~CN UYLL T'Ne e('cthcrlanns): IT that Iase, T thimigit beght QC useful if I 7wrc a vrittenmstate:ent to tmis Ceemittoc, cohich culd be handed over to the m tcx-_. Dg aommi Cee -ittccan wwhic -oulmaautalaticc-ng bri the question before themeext r-eaging <ain. I TrE CH9-:JiN: I shwold; thdnk that -ould be satisfactcry. Is there further discussion of this Article? Ie not, then I eekC o - it is agrccd tr- subject tCthe aaee&c.-ns made.h.vAgbeer. .-..c. (2Erood.. The ncxt rcer thateI desi.e Io takc up (and. hope that I can dispose of it rather quickly) is theetext of a revisCd draft of Article 65 which has been hsndede to :C thit aftCreoon by tCommicrCtary of Coirittee III. There was a _.emming ef a Sommio=etteC of Cc-.,ttoetIII m ni ,his norrdng which agreed to this text. ItshcuLd.uadd omm eee fall Ccraittcc IIs hasunot yet paSsed Upon it. _ eCpcomhe delgatc frCangtom United Kirzdsme ill I amemt !:Ceif 1 -. iistaeon im steting this rattcr, ao he is quite ccgnieaer of it. Ncvrcwheless, in vie-, ofmehe lack cg tinc for goinGethrrugh aes ohc fo.mlitici cf processing the report tommiugh a full Ccreittee, it was clt to be nmcessary to subrit this revised draft of Articomm65 ee this Ccx=ittcc this afternoon. The intention, as I undersmandeet, of Comiittcc IIow f theyefommec-; the roccircndations of their Sub-Conitee, is to indicate in their reeport thammunc have coi=rauaated to Cnnittce V. this text of a revioed. drnft ccntainirg -nat they thick should be the tlet of Articioc 65. That wuld, as I say, be a part of the report to the Confmmerence of Coittee III. Theirlreport llouid actua-iy contain this revised text of Article 65, with that notation. pI shat ld wove tht it v;uld ot be necessary mmr this Coriittee to undertakemat ahis tine .discussion of tha f shince oa t14s revised; ArtIcle 65. it represents the views of at -l st mni See-Cormdmmttce of C.iItee Ill- itme ems to =c that it is more _ 2s ;, w > f , Zi5 J2 E/PC/C.V/PV/14 their function than ours to decide what should be the fuctions of the Commission on Business Practices, and I should suggest, therefore, that this Committee merely takes note of the fact that it has received such a report and that the text of it is being contained in the report of Committee III, and that we let the matter rest there. MR QURESHI (India): Mr Chairman, I would like to suggest to the Chair that at this stage we should take no note of this document, because, in the first instance, we feel that it has only come from a Sub-Committee, and we do not know what its fate will be or how it is going to be changed in the main Committee. Again, we feel we have made a general recommendation that various Commissions will be formed but yet it has not been fully indicated as to what these Commissions will be. For instance, as was pointed out by us, we do not yet know what will be the functions of, say, the Industrial Commission when it is set up; so therefore I suggest that, as far as this Committee is concerned, we should not take note of any of the detailed functions of the Commissions; this should be done at the next stage of the Committee, when the full picture is before us It will not, in our Opinion, serve any useful purpose if a draft of a Sub-Committee which has not oven been passed by the main Committee is noted by this Committee. 26. K.1 E/PC/T/C. V/PV/14 THE CHARMAN: I should explain,. although I had thought I had made it plain, that the suggestion that we should take note of it end transmit it to the Interin Drafting Committee was qualified, to the effect that that should be contingent upon the approval of the sub-committee' s report by Committee III. Ordinarily of course we would wait for the approved report of the full Committee. We are confronted however with the situa- tion that we do not have time to wait for all these processes to be com- pleted, and my suggestion was that this be transmitted subject to the approval of the full Committee III. My interest in this so far as Committee V is concerned is only that we conform to the formal requirements of the procedure which has been set up, whereby these various commissions do come under the jurisdiction of Committee V, nothwithistanding that they really are concerned pri arily with other Committees of the Confer- ence. We do have to find some means of conferming to the formal require- ments of our assignment. That was my suggestion for doing so within the very limited amount of time we still have available. MR. HOLMES (United Kingdom) You have expressed almost exactly what I was going to say. Would it not be possible for this Committee just to take note - it would be gratifying, of course, if it were able to take note with approval - of this draft, on the assumption that it will be passed, as I think it will be, by Committee III ? It was I think always unfor- tunate that these Articles which deal with the functions of the various commissions should have formed part of the official agenda of this Committee. We should feel it a pity if that led to their falling between two stools altogether, but the general view of our Delegation, and I think of others represented on Committee III, is that the substantive part of the recommendations about restrictive business practices and the functions of the commissions are really interdependent., and that there- fore the present session should not really break up if it is to have; as it will have something like a text of the Articles dealing with restrictive business practices - that is, Articles 34 - 40 - and nothing- said about the functions of the commissions. This draft of course is ons' ' i ,,- :. , , , . , - , . 7 * . ,, - 27 - K2. E /PC/T/C. V/PV/1 4 V. ./ l in line A- thleOrticlos whi~ehhavado boon eoetd gcncrally; it is a trans inion C;reo ormsc tcrzs of the functions of mmie eerAittco - a frdthful transition, I think, but it maker it vozy difficult for the Coi-ittee, or for certaen momberm cf CerIitteo 3II, to give their final agreoment tc theeArticlos about restrictive business practices if they do net quw o kaoy; eh-t thc functions of the commission to be sat up on this subject are to be. So I eryld vcx strongly support what the Chairman has said ae to thc conveni nny at~art rate of the procedure whroby, if it is so thought fit, thms Com-witee rould at least. taee notch of this draft, thereby peehaps rocognising that itmwas a matter .ore for \ Coidittee III then for itself, on the assumption that thie is thu toxt wllch Pi_' be approvemmd byee Cince III itself. .R. QMBESHI (Indaa): Iryem sorI to speak again eand tho up valiuable tme but I do noy reallv thina that r useful purpose will ebe servd by taking the matter iform.s oWe. C do not know whotherthqmmxr Co-aittecs will eo - arc we only to a t as a's pt of 'oost office by just passing incom- plete drafts on to the genefal draeting committee ? If so I fo not 2eel vpry hap:y abopt the -osition of mhis Coomittee. On the otder hanl if we are to give our consideration to thafte dare-s end send it hn to tie Committee, we need more tine at our disposal. When thp full Picture is before us we could t ke it .ore completeay. Th.t is how I felt, but io the C-mmittee feels that we shall have to move in this matter, I personally should not mind very much. IRMANHA JATn I worder whether I can make the situatar cleeo in a few words to the satisfaction of everybody. including myself ? I do not Imawe-whethcr I can. I think that our. dilemma here arimes fron the fact that this Committee was, promiblyk iistahenly,am given ong its terms of reference rhose Axticles dealing with the Commissions. I think probably ithwould lave been better f the -Articles on the Commissions had never been included in the first place in the terms of reference of this Com- mittee. I think the experience of our conference nd theo work cf the Comittees, and more thou ht on-our part, have preety clcarl.aiedicotCd -28 Q K.3 E/PC/T/C V/PV/1 4 that that is the case. However, they were included in the terms of refer- ence of this Committee, and the Chair is meroly concerned with getting "off the spot", as it were, in the simplest way. The simplest way seems to be, if you please, to act as a post office in the matter - receive the report, not debate the report in the Committee here at all, but just pass it on to the Interim Drafting Committee, complying with the formalties and saving. time. It seems to me to be simpler to do that than go back to a plenary session at this late date in the Conforence and say, "Sorry, we think you made a mistake, you should never have given us these articles in the first place." MR. MERINO (Chilo)(Interprotation): I wish to ask one question: are we going to have another meeting, so as to cnable us to take note of the suggestions which will come from the Joint Committee of Committees I and II ? That Joint Committee, which is going to set up a further Commission on the question of industricalisation and economic development ? THE CHAIRMAN: If the situation develops in thatmanner, we could take note of the suggestions of the other Committees at our last meeting. MR. COLBAN (Norway): I quite agree with you, Mr. Chairman. We have already decided in that way, so why do we here reopen that question ? We have decided that the reports coming in from the other Committees of the Preparatory Comamittee will have to be sent on to the Interim Drafting Committee, and if they find then difficult to deal with, they will send them to our conference in Geneva. THE CHEAIMAN: If that disnoses of the matter, we have ,one more matter on the agenda this afternoon - a matter of some importance, and it is new six o'clock. I do not know what the pleasure of the Committee would be with reference to attempting to dispose of this last item, which is the report by the joint Rapporteurs on voting and Executive Board membership. I had hoped that we should have enough time to have not orly general comments on this report but, also, while we were in the process of commenting upon it, to have any detailed suggestions which the joint Rapporteurs would wish to take into account in redrafting end ihcorporatng it in their full report. What is the pleasure of the Committee with regard to -29- K4 E/PC/T/C.V/PV/14 , continuing our session beyond this point? RESHI iI.2i (Lndia): I oaee gcnc through tahisandft 'am I personally feel that whure -ille ot bs. much diff oerenew f vic owing toeth vcry. able manner in which it ea bemmanc sued upebywthc pro Ra.porteursee I fool that IdshoulI congretulemo thoa on very good job in very aulma sirmzrising ethe viws eecrcsscd in tmms Coenittec.ee I fool ehat wc should not have another meeting for a smill oh:ng cf thus nat-re but should continue to discuss it no-. Plrsona-ly, I can say thae thesm recotmondatiens arc quite acle bi oto us. It hee boorn vey fairly done and if there is not much discussion we could go ahead and finish, and that would give us a clear day. A.THELJBFY (Peancc)eInterprotation) w ish do acd mmmco;-endation to that exvecssod be tndc Idieangatecc.t;eendocd it marvemac-llous wob :hich hee boar c--ried out be twc tao o^pecrtcurs in finding thear w.y about me -:any andpcemolax discussions we haave hd. I thiek wr couompleces=lt our tnow rwe ;wce av%. reachee thdcen of.-our questioan id it -woued bo a pity ifdwe cid note akce thv lasopstc.. In order to clarify the position I khinI dhe -isios-2Ln shoued befbrie; ppshaos it could last one hour whichope wou uld enable us ompplemlete our task. If we do not finish it thise afsrr. r, ysCr I ask when we shall hano maotmeet:ag?in? TCHAIRMAN:!!g I a me vcry much encouraged by the remarks bade by the eglczates of India aFde?r-nce topeo;o that the second parf o` hisequcsnior will nart iso. e boleevo we can pleueltc this tgnipht and I would like to gorwsrorwd .ith iPe ?oph s -we shdula try; we ;c nocant finish we can paphn;s meetaan,-i, but I believee cghou,ot c save our time and go ahead no.. 0 3( - E/PC/T/ C. V/PV/ 14 Is there Objection to our going forward? Let us get that matter settled first. I take it there is not, and therefore the floor is now to be given to delegates to discuss the content of this Report. MR. DAO (China): Mr. Chairman, before discussing the content of the Report may I introduce a word of explanation as one of the Rapporteurs? I discussed with my colleague yesterday the conclusions and recommendations. We had no time to discuss the main body of the Report, but I am most grateful to my colleague for the comprehensive Report he has prepared. At the same time, I made a humble attempt, and my product is a short one and is not as comprehensive as his. However, we had no time to discuss my paper, either. In this explanation I do not mean to detract from the value of the paper as far as the main body of the Report is concerned. I have discussed the conclusions and recommendations with my colIeague and wiith our Secretary, and I am in accord with what is contained here. THE CHAIRMAN: Are there any remarks which any delegate wishes to make on the document as a whole, beyond. those that have already been made? If not, I think we ought to proceed to consider it probably page by page. MR. PALTHEY (France) (Interpretation): Mr. Chairman, since we now approach the substantive question I again wish to congratulate the Joint Rapporteurs, because they have faithfully reproduced the results of the discussions re had here previously. We find in this document a good many ideas, but few conclusions. I think, therefore, we should clarify the conclusions, because I cannot soe how the Drafting Committee which will-have to clarify the ideas expressed by this Committee can be in a position to ,draft these two Articles in the Charter and integrate them to the Report. We had. three drafts here - the United '-, , - -, * ;- , States dsrc ,(~hch7-ashe baSi'. owument), and then t,7o, amendmonts- one proposed by the United Kingdom delegation ::. . . : . ; 31 : r and the joint amendment proposed by the Belgian and Netherlands delegations. This last document does not seem to have been included in W.5. wich we now have before us, Could we not take up the question of the organization and the vote in the light of all the ideas which were expressed here, and then come to a dedision on the text submitted by the Belgian delegation? I think we might perhaps reach a compromise which would be satisfactory to all, and if any delegation here was not satisfied then the Interim Drafting Committee would receive instructions to draft an alternative text, but we must have precise instructions for the Drafting Committee, which must be in a position to write one, two or there e alternative texts and know exactly what is to be included in those texts regarding the question of the vote. Could we not, therefore, take up the question and have a full discussion of the Belgian proposal? MR. PARANAGUA (Brozil): Mr Chairman, a think I put forward a proposal, too There were not only three, but four. My proposal is not only on the record, but it is a document which was distributed. THE SECRETARY: The Brazilian proposal was distributed as Committee Document No. 28 . MR PARANAGUA (Brazil): Well, may this document be taken in the same way as the other proposals? Then I have some observations, not about the Report, but about the Conclusions. The first Conclusion reads: "The majority of delegates favour the principle of one country one vote in the Conference". I think the majority of the delegates favour one country one vote in the Conference and in the Executive Board. That is what is lacking here. It should be "in the Conference and in the Executive Board". Then with regard to Conclusion No. 2 -- THE CHAIRMAN: Before we go to that, we had better dispose of that 32 . E/ PC/ T/ C .V/ PV/ 14 point right now. I' think your observation is correct. I am open to be corrected on it, but if that is the case could we not agree to those words now? If there is no objection we simply add "and in the Executive Board". MR. PARANAGUA (Brazil): Then with regard to Conclusion No. 2, I am perhaps in a difficult position to say, but this expression "A strong minority" looks to me like wishful thinking. I cannot see any need to put "A strong minorityy. It was a minority pure and simple. THE CHAIRMAN: Before I recognise the delegate of Canada I think I had better let the delegate of Australia respond to that. MR. BURY (Australia): I see no harm in striking out the word " strong". We really put it in because we thought some indication should be given that this view was strongly held 3 (Laughter) - well, vigorously held by four countries, all of Whom count for quite a lot in international trade. However, it would seem to me quite in order to strike but "strong". E/PC/T/C. V/PV/14 MR LEPAN (Canada): As a member of the minority, I have no objection to. the excision of the word, "strong." I can see that this ought to be a very unemotional document, and in the interests of an unemotional con- clusion, I would agree. THE CHAIRMAN: Are we agreed to strike out the word "strong;" - either that or else add the word "large" in paragraph 1 bofore "majority, which I would prefer. MR HOUTMAN (Belgium) (Interpretation): Could we say "dynamic minority"? With a view to reaching a compromise I would like to suggest the phrase "very energetic", but I do not press my point. THE CHAIRMAN: I take it that we are agreed to strike out the word "strong"? (Agreed) MR PARANAGUA (Brazil): With regard to the three periods of membership of the Board set out in the United States draft Charter, that is largely unquestioned; it would be unquestioned here if you did not take into consideration my porposol of five years. But as I proposed five years, I think it is questioned. MR BURY (Australia): Mr Chairman, as the Delegate of Brazil will note, his proposition is mentioned on page 4 of the report, and it was just to cover that point at we did insert the words "largely unquestioned." But there is that one proposal, that in certain circumstances the time should be five years. That is the Whole point. We thought that the word "largely" would perhaps draw attention to that. But if the Brazilian delegate would be in a position to suggest some other way of indicating thatpperhaps in the vast majority of cases it was never in doubt, perhaps he would do so. MR PARANAGUA (Brazil): I should like to drop No.4 because we talked very little about three or five years; there is only the proposal of three years in each case. This proposal of five years was discussed very little in regard to the term of executive directors. The discussions was on other subjects. MR BURY ( Australia.): It was largely, Mr Chairman, for that very reason that 34. E/PC/T/C.V/PV/14 it was not discussed that we thought it advisable to insert it here to bring it before people's attention. It definitely was not discussed, but we thought it might be helpful if the fact that it was not discussed was made fairly obvious. MR PARANAGUA (Brazil): I am looking at the first recommendation about delegates favouring weighted -;htcd voingpreparing schemes. Irearirn, sc en~cs. T would like to prepare an alteeend that to readb, as^newrr ltornative schm Tu vie staft from the ericanew dra-eX and, ald be s an calortivc, t wouj;' another asacheme, not sewomething ndntrpy.p Thii mos you should -r-:e a sche-m like that; it isAm an trnative toi te 2'ncan scheme. That is, as it ipeaking abs alalreaday in Noa.2, s\; it v.tll ern.tie drifts Tha.tis a11 I have to sy. L HOiES (UK): e!LChaairmano, I would glikaboutc t s cy werdif I mi, ;^c1 tMhe fia rst reeecondaatwLn. iy aiep- h 'boo at vre re !gred in afting ,rirci,,l) thao-r. bcommee sh-uld e. nvited to illustrate in concrete terems for bconsidreatimeon y the nxt etipnga of the Preartory Coittcethe effect ernaof the mbinations alto:.e co.zAions of the suggested elementsg in weighted votiwon. I think that uld represent a little better guidanceommittee; to thed gdreafting citta; itwrul -ivc them something they could dboo quietly ith reference -ks pat their hand; and it re-esents a little more closely what we had in mind. MR BUmY (Austroia): jMTrCh.aran, the Ipientg Jut raised 1bythe dcl-ae of the United Kingdom was oecne that caused us so oncern, and we were not quite summre what we should As he recoend in this case. c scaid, that was suggested - in fact, he sugested it - but the ruling of the Chair at pthe time was that it erhoswould. me rathere eoutside the terrsof reforne of the drafting committee. There woas also another suggestin, that those who fahovoured weighted voting suldn form a psub-comrmittee ad draw u somethipng specific whicha wvuld erhaps form the bsis of consideration by the drafting committee. We felt tghat nothing yet had emered in a suiciently concrete form to send on to the drafting committee. I . 35. E/PC/T/C.V/PV/14 would suggest, however, that it may be suitable for that sub-committee still to function and draw up something specific which could be handed to the drafting committee. THE CHAIRMAN: The Chair would like to say that his recollection was that he did on at least two occasions in the course of one of our meetings urge that the delegates whc favoured a weighted system of voting should try to concert their views and come to some uniform set of recommendations as to how it should be carried out. I believe that this first recommen- dation does effectively reflect that, but there was no dissent expressed to that. On the question as to whether the interim drafting committee could appropriately concern itself with a study of the various alter- native possibilities for a weighted system, I did say that I had some doubt, in view of the discussions that had occurred at the meetings cf the Heads cf Delegations, whether that would be a proper function of an interim drafting committee. I notice that on that latter point there is a reference to that on page 2. I am not sure that I may not have Overstated the case, and perhaps it would have been better to have said on page 2, in the next but last paragraph, "though there might be a question as to whether this function would be outside its terms of reference." It is conceivable that an interim drafting, committee might give some attention to this matter an try to find a way out, although I had felt that it might be somewhat outside its terms of reference. The Chair would like to see Recommendation No.1 stand as it is and would like to urge, for a third time, that the delegates who favour a weighted voting system. draw up something more than has been prepared thus far for the use of' the interim drafting coomittee. MR HOLMES (UK): Mr Chairman, I had been about to suggest that that reference to yourself on page 3 was perhaps not altogether appropriate in this report, though I would have no objection whatever to it being altered to some such phrase as, "though it was questionned whether its function would be within the terms of reference", or something like that. THE CHAIRMAN: I should like to have that. 36. E/PC/T/C.V/PV/14 MR HOLMES (UK): Yes; but as regards the other suggestion, I think it is very difficult to include as a recommendation in a final report of this Session of the Preparatory Committee, but that delegates to the Session, who will then each of them be functus officio, should get together and produce a scheme. That would be, so to speak,projecting the activities of the Session beyond its close. That, I think, deals with what I want to say on that point. On the point as t whether we should still try to produce a scheme out of the various suggestions which have been made for the elements of weighted voting, the difficulty, as I see it, is this, that this requires a great deal of quiet research and study if you are going to try to translate that into terms of votes, because you have to study it rather carefully. N. fols. 37. '--A I woud illustrate my point by taking one of theteria crite here "national ":incom, If' you take that as an illustration, you would find that a certain amount of research would be required as to what national Income meant and. hat it was, which is a thiààng thita is vefrcylt difiu for us to do here and now in the welter of óthis Cnference. That is why we felt that it was nct imat aIppropriate that, with some generala cguidee as to the elements.which various people wished to be included, the Drafting Committee would be able to do what we cannot very well do ourselves here and now. For instance, they could takeo the riginal United Kmingdo scheme that we put up in a pe and sawy -W- they think that would look like; and they could say that if other elements were added, or one of them, it would make such and such an alteration in terms of votes. I think it is very difficult for us to do that here because, as I say, a good deal of research and quiet study would be needed. Of courses if the Cmomittee feels that it is not prepared to invite the Interim Drafting Cornittee to do any such thg,in then I take it that the view of the minority must be left on record, and it would be, I think, the ish ofm z delegation at least to .have it recorded thit a suggestion in these terms for an invitation to the Drafting Committee wasm ade. HE T HCAIMANR: The Chair desires to notethat on page 3 of this rpeort it is already noted that the Interim. Draftign Committee could take note of the schemes for weighted voting which governments might consider, and in addition it isp roposed that in the detailed instructions to the Drafting Cmomittee thee should also be a specific notation made of the desire of the United Kingdom that their suggestions as to weighted voting be taken into cacount. R. BURY (Austwalia): I think there is a lot 'of subdance inrwhat Ml Holtes says - that this is, when it comes to detailed study, much nore the kind of thing which the Drafting Committee might devote its attention to than a Committee of this character, where it would be quite out of place. But I cannot help looking at it from the point of view of the Drafting Committee. It does not seem to me that there is anything sufficiently concrete to guide them. If we could pass on to them a recommendation (or a minority recommendation) that they consider various schemes of weighted voting; the criteria which are to be taken into account are set forth and the relativeweights or some 38 N2 E/PC/T/C. V/PV/14 indication of relativeweights to be given to each kind of element, or a number of alternative arranargements between the criteria, and then they were asked to draw up a detailed scheme showing the points which would be allotted to each nation according to the weights given, then the Drafting Committee might have something to go on. It does not seem to me at present that they really would know where to start on the problem. THE CHAIRMAN: The feeling that I have about that is that it is really not a matter that can be satisfactorily handled by the Interim Drafting Committee, ncr is it a matter of which we can dispose at this time, and it would seem to me that about all that can be done is to leave the matter open for the next meeting of this Conference, and meanwhile one would hope that the countries that are interested in having a weighted voting system would eìther jointly or severally do a great deal more work on the subject and appear at the next Conference vith some streamlined suggestions for the implementation of their ideas. MRDAO (China): I am in entire agreement with your remarks. MR PALTHEY (France): So am I - wholeheartedly. MR HOUTMAN (Belgium): I also agree. THE CHAIRMAN: The Chair seems accidentally to have hit upon a solution of something! MR NAUDE (South Africa): Does that mean you will strike out of this report on page 3 the suggestion that it should be referred to the Interim Drafting Committee for the formulaticn and exposition of alternative schemes, etc.? MR. HOLMES (U.K.): That is a matter of faet. I thnk it was suggested THE CHAIRMAN: That suggestion was made and this is merely recording the fact. Now we are apparently agreeing not to follow up the suggestion. MR NAUDE (South Africa): In effect, on your interpretation., that means that the int rested members will not be able in the Interim Drafting Committee to raise the issue at all? THE CHAIRMAN: I take it that they are free to raise that matter individually if they care to do so, but this Committee is not recommending that that sort of thing be done on any systematic basis. Is there 39 N3 E/PC/T/C.V/PV/14 any further discussion on any part of this document? We have been considering chiefly the conclusions, and the delegate of France had raised a question at the beginning of our discussion of which I have not lost sight at all, but I thought meanwhile, since we are considering this as a narrative and not at the moment considering what the draft instructions might be, we might pass on it first as to its acceptability as an account of what the Committee did do. MR HOLMES (U.K.): If it is in order, could I raise a point on page 1 MR HOLMES (U.K.): I do not think there is anything controversial about this: it is the last line of the second paragraph. There is a reference to "dependent -territories, the economies of which differed radically from their own". I have no objection to that phrase, which is, of course, perfectly true, but it does not perhaps represent the full story, and I would suggest for consideration that some such expression as the following might be added, putting a comma instead of a full stop at "own": "some of which had an effective .measure of autonomy in matters within the scope of the proposed Organisation." THE CHAIRMAN: Is there any objection to that change? . Apparently not. Are there any other points? 40 E/PC/T/C.V/PV/14 MR. . NAUDE (Union of South Africa.): I am sure this weighted voting, will be heard of again, so in order that the Interim Drafting Committee may have the complete picture I would reccall that, in working out the formulac for weighted voting, not only would there be a minimum, there would also be a maximum. MR. HOLMES (United Kingdom): There might be. THE CHAIRMAN: Is that acceptable? There does that come in the text? MR. NAUDE (Union of South Africa): It does not appear, so far as I know; I only saw the document this afternoon. We could leave it to the Rapporteur to put it in. THE CHAIRMAN: Any further comments? MR. KELLOGG (United States): I would like to ask what this does to Recommendations No. 1? Is it totally struck out? MR. . BURY (Australia): I suggest it could well be struck cut, and left to the countries concerned. THE CHAIRMAN: Recommendation 1? I think that is a good suggestion, if I may say¹ so. MR. BURY (Australia): may say that in putting it in we did it just to draw attention to the conclusion we had come to, not so much because of its own importance. THE CHAIRMAN: The Chair would like to suggest one or two slight alterations, if it is in order. I do not want to get in ahead of the members of the Committee. They are not important changes and I think they could be very quickly considered. In the first place, on page 1, the next to the last paragraph, first line. Probably the Delegate of Brazil and probably some other Committee members would be pleased if we took out the words "seemed to" and just said "the majority of Delegations favoured in principle." MR. PARANAGUAS (Brazil): That would be in accordance with my conclusions. The CHAIRMAN: On page 2, near the bottom of the page, paragraph (a). I will read what precedes it. "Others only discussed the proposals on the hypothesis of a weighted system being adopted, without prejudice to their preference for the one nation one vote principle. The criteria put forward were cri- ticised on the following grounds: (a) Undue weight would be given to small interests at the -41- C. 1 E/PC/T/C.V/PV/14 expense of much larger ones". I do not recall that discussion, but it impossible, reading it in isolation here, to understand what could possibly have been in anybody' s mind in connection with (a) as related to weighted. voting. Let me add that. I do not say that it is wrong, but I am sure that it is not complete. MR. BURY (.Australia): I must confess that I was not quite clear myself, but I wanted to be complete and it is a point made by the Indian Delegate, and this is lifted. from the record. That is what was said. Perhaps it would be fairer to suggest that if the Committee would leave it to me I would seek some clarification from the Indian Delegate, and make it clearer. THE CHAIRMAN: It is not clear to the Chair how any system of weighted voting would have the result of giving undue weight to small interests at the expense of larger ones. I think the argument ran just the other way. Therefore I think the interim Drafting Committee is entitled to some clearer information. These are not instructions, but I think the Con- ference is entitle to have a clear statement on the point. My final point is on page 3, under "Executive Board". The first, sentence roads: "The sponsors of weighted voting suggested that an alternative might be the provision of permanent seats on the Executive Board for members of chief economic importance." It seems to me that to start that paragraph with that sentence is some- what misloading . It would be better, think, to start the paragraph in this way: and opponents. "Many of the Committee, including both the sponsors/of weighted. voting, felt that there should be provision of permanent seats on the Executive Board for members of chief economic importance." Then I think the rest would run along all right. MR. HOLMES:(United Kingdom): If I might just go back to the two paragraphs before that. It says, "It was generally agreed that delegates favouring the weighted. principle should constitute themselves into a small committee.." Perhaps it might be better to say "could constitute themselves" etc. "but the difficulties of dealing with the subject in detail in the middle of this Conference," or some such words, "were pointed out". - 42- E/PC/T/C.VPV/1 THE ChHAUMA:N I do not believe the Plenayr Confrenec ecuold miss it if w simply struck out that sentence. R.M HOS LME(United Kingdm)o: No. M. RDAO (China): On page 4 it is stated: "It was suesggted that it would be bettr eto establish criteria for selecting peranment members ther than to nacdteheinmn the Charter." bIelieve the suggestion was also made that they should be named in the Charter. {W have not come to any conclusion, but I think the ospsibility of naming thm eshould be mentioned. R.M LAURENCE (New Zealand): In paragraph 3 of gepa I we have alrajr ystruck out the wrdos se"redm to". We might soal stricken cut "it seeedm" in the fourth line of the smea agparrah pand substitute "was" - "it was generally agreed." .RM. BURY (Australia): I do nt othink that wulod be true. T1 E CW'HAIRN: The Chair is not in a ospitin oto say what wulod be the spmt likely rendering without having the record. The Rapporteurs have been over it; I do not nokw if .mM Bury thinks it is bettr ethat way; I will stand with him. R.M JRUY (Australia): I ulwod not worry. It is not a point of substance, but I do not think you could say very strongly that it was agreed. it does nt osee tmo me to matter. MR. HOESLM (United Kigdna)m: I ouwld like to support the suggestion that the word "seemed" be omitted, if the Comaittee would agree, because I think it is in accordance with the general spirit in iichh we have been meeting that we should not press for agreements quite so much perhaps as for getting a full exchange of views. That is really what we came here for MR. BY-UR(Australia): I ouwld agree to that. Let us put "asw". M RECHEMANIR: Apparently the preponderance of view : tio make it "WS generally agreed". Are there any other points to be brought up with reference to this document as such? The Delegate of rancFe raised a question at the beginning of our dis- cussio thnat really has not been faced by the Committee. We passed on C3 0.4 E/PC/T/C.V/PV/14 to a consideration of the content of this document, but he raised a very pertinent question; would he like to take the matter up again? MR. PALTHEY (France) (Interpretation): The conclusions which have been reached seem to me to be correct but in pargraph 5 of the conslusions there are a number of questions which have not yet been answered. I there- fore want to know whether the Committee wishes to give no answer to these questions for the time being? In that case they would naturally wish to take them up in the second session of the Prepartory Committee. Or do they, on the contrary, want to give instructions to the Interim Drafting Committee? THE CHAIRMAN: I should te glad to hear the views of the Committee on that. It is a very pertinent question. MR. HOUTMAN (Belgium)(Interpretation): I for one would be satisfied if we referred them to the second session of the Preparatory Committee. MR. PALTHEY (France) (Interpretation): I think in that case we should add another sub-paragraph regarding the system of voting on the Executive Board, because if the majority has been against the weighted system in the Conference it may very well be that the same majority will be in favour of the weighted system in the Executive Board. At least, the question may arise again.. - MR. PARANAGUA (Brazil) (Interpretation): This question has been dealt with aIready and we have approved a suggestion to the effect that in paragraph 1 we should mention the Confrence and the Executive Board. However, if the majority is in favour of having one vote one country in the conference and in the Executive Board, then the question is settled. We dealt with that when we dealt with the setting up of the Executive Board. MR. PALTHEY (FRance)(Interpretation): I only thought it had been dealt with regarding the Conference, and it might be taken up again. MR. PARANAGUA (Brazil) (Spoke in French - not interpreted) MR. PALTHEY (France) (Spoke in French - not interpreted). THE CHAIRMAN: I think some of the English-speaking members are getting into a corner. Could we have the translation please? Or start again? 0.5 E/PC/T/C.V/PV/14 MR. PALTHEY (France) (Interpretation): The situation is this. I raised the problem of the vote in the Execxutive Board, then the Delegate of Bra=il said that the voting in the Executive Board was decided when we dealt with the question of the Conference, and he said that the system of one vote for one country had been adopted with respect to the Executive Board. I Myself agree, but I wish to know if the Committee has now adopted that proposal. THE CHAIRMAN: I think the Committee have adoptod that proposal but I think it might be possible to go a little further in the case of voting in the Executive Board. As the Committtee adopted this it was with a majority of the Delegates favouring the principle of one country one vote in the Conference and, in the Executive Board, I suspect that if we separated the two and asked whether there was any dissent from having the principle .of one country one vote in the Executive Board the answer would be that we should not have a majority, we should have unanimity, I wonder whether we cannot agree unaninmously here, that in the Executive Board there should be one country one vote? In the absence, I should add, of any system of weighted voting in the Conference. If we agree to that we can set out the conclusions that way. I believe the Delegate of Belgium asked to speak? MR. HOUTMAN (Belgium)lnterpretation) I wish we could come to a conclusion, because it is 7 p.m. We have studied the problem in all possible ways and the Belgian Delegation has played a considerable part in that study So far we have not reached any conclusion. I do not believe we shall. MR. LEPAN (Canada): I wonder if I might suggest, especially. in view of the fact that some of the members have had to leave, that we leave (1) exactly as it stands at the moment? THE CHAIRMAN: There is apparently no unanimity, so the only thing we can do is to leave It to stand that way. - 45- E/PC/T/C.V/PV/14 THE CHAIRMAN: Very well. There is apparently not the unanimity I was hoping for, so let it stand that way. It is getting very late now and if we can close now I think we should do so. There are just one or two things I want to say. MR. HOLMES (United Kingdom): Might I say one word Mr. Chairman? That is, I think it might be found, if we had more time to look at the whole Report, that he sole Recommendation reads rather peculiarly, because most of the objections which have been made to the Interim, Drafting Committee being instructed to prepare something about weighted voting on the basis of the rather conflicting views and elements which have been mentioned really applies to them being told to produce alternative drafts about seats, or the number of seats, for instance. Would it not be better to leave the whole Report with the Conclusions, without a Recommendattion at all? MR. BURY (Austrtalia): Mr. Chairman, our initial reaction, I think, was just the same as that of the delegate for the United Kingdom, that there really was not enough meat for them to draft alternatives, and, even if they did, that it would not really serve very much purpose because there are such major questions of substance to solve, and probably it has not yet reached a suitable stage for drafting. THE CHAIRMAN: Is there any further discussion on this matters MR. BURY (Australia): It is a question of whether the Committee wants them to do anything about this or not, Mr. Chairman. THE SECRETARY: Mr. Chairman, as far as the Recommendation is concerned it will be my underdtanding that that would not remain in the Report in that form, That was put there more for the purpose of focussing discussion this afternoon, unless the Raporteurs correct me Naturally, any instructions to the Drafting Committee will be set out in the appropriate part of the report, namely, 4 Part 2. It would not come in Part 1, which is intended to be rather narrative in its form. 46. E/PC/T/C.V/PV/14 MR. BURY (Australia) That is correct, Mr. Chairman. This is merely what people in this Committee should do about it. It is not what they should necessarily pass on. THE CHAIRMAN.: The Chair would just like to say that it shares the view. stressed by some others iin the Committee, that the R-pprtoers have_ dne an e~xcllernt job on trhs part of the oReort (:"Hear,rhear");cnad, secondly, t onmntion the plans fro tnhe xet e meti.ng hTe tentative plan, I think, is to emet a ain o nTeudsay rmon ing, :Now There willy be, I sup:poses a great .deal of material for thi,o Co mitt eeto ogo vre as the aRopprtuers Ocomplete their work, and Isshould!usoppse that if *Ke Report 'could be available sooner than htta and could/eb considered late _on Monday, it would be better' to :meet soonert than Tuseday Mmorning, but I ac not suupposethatanoybdy knosw. no- twheher it 'would be rpossible to have a meeting latreon Monday. I suggest, therefore, that weJeplan that at th elatest therc Ishould be a meeting on Tuesday, but that there lmight be a nnotice on Monday t ohave a 'meeting earlier than that. I ownder _whether that is a suitable dispo4itior of theSmatter hwether htat is asuit-kbe ~disposition ofthe amtter? BMR. URY (Asutalia) : I hate t oprolon- tihs meotin,g rM. Chairman, but it would cbe some help to the Rapporteurs to heav the efe ling of the Committee on whether the Rerpot should be fai ly oln; and dteailde. In the Caseo f voting it aws so umch a subject fo dissent and varvin gvisew that it :ws perhaps desirable to deal wit hit in rgeratet detail than som eof the othre matter, but cw uwold like, the feelin gof the Comimttee on ho wdetialde they owuid ilk. thier Report to be. THE ?CHAIRMAN: Of colrse, I d onot awnt to anticipate the viesw odf e =members of the Conmitte,e but one tghing occurs to me immediately, and that is that it seems to me that som eeffort should be made to find out in hwat detail the Rapporteurs of the othre Comtmitees are treating their material; that there ought. to be some consistency in th eamnenr of treatment of 74. E/PC/T/C.V/PV/14 the subject-matter as amongst the various Rapporteurs, and I should think it might depend in part upon how much detail relative to what there is to be done - it is all a relative matter- is worked out by the other Committees. MR. PALTHEY (France) (Interpretation) : Mr. Chairman, I think the Report should be fairly brief, but it will be up to the Rapporteurs to decide on what points they are going to dwell at greater length than on others. In fact, I think there would be every advantage in having a short Report, because it will be, more quickly completed, and we will have shorter discussions. THE CHAIRMAN: Some body once asked President Lincoln in my country how long a man's legs should be, and he answered "Long enough to reach from his body to the around" Maybe that is the answer to this question. If there is no further discussion we adjourn. The Committee rose at 7.17 p.m. 48.

GATT Library

df116td7022

Verbatim report of the Fourth Meeting Committee I : held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. 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 and Preparatory Committee of the International Conference on Trade and Employment

14/11/1946

official documents

E/PC/T/C.I/PV/4 and E/PC/T/C. I/PV/3,4

https://exhibits.stanford.edu/gatt/catalog/df116td7022

df116td7022_90210201.xml

GATT_157

A.1. E/PC/T/C.I/PV/4 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FOURTH MEETING COMMITTEE I held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Thursday, 14th November, 1946 at 10.30 a.m. CHAIMAN: MR WUNSZ KING (China) ERRATUM : The following corrections are to be made to the verbatin report of the Third Meeting of Committee I, (E/PC/T/CI/PV/3): Page 4, line 5: for "conquer" read "correct"; Page 8, line 9: should read "we will now proceed"; Page 12, line 3: from the bottom: for "undeveloped " read "under-developed"; and Page 19, line 3 from bottom: for "further obligations" read "future complications". (From the Shorthand Notes of W.B.GURNY, SONS & FUNNELL, 58, Victoria Street, 1. Westminster, S.W.1. ) 3 THE CHAIRMAN: Gentleman, I am sure you have all received copies of the Verbatim Report of the Third Meeting of this Committee. You will notice that there are a few minar corrections to be made in it. Now we have before us an admirable report, which was) prepared by our Rapporteur. You will remember that at the last meeting we studied, examined and approved the draft clauses, seven in number, together with a draft resolution, and in the course of that meeting we had a very useful exchange of vievs and as a result of it the Rapporteur was asked to introduce some slight modific .tions in the texts as well as some referances in the report in regard to certain clauses. Mr Meade, in the meanwhile, worked very hard on the report. At first he wrate a report wihch was distributed on the 9th November; then he wrote another report, which bears the number E/PC/T/C. I/14/Rev.1, which was distributed on the 12th. This draft, which is the final one, introduces no change whatssever in sub- stance; it was so drafted as to be in conformity with the prescribed form which is to be applied to the reports of aIl Committees which are to be submitted to the Plenary Session of the Preparatory Committee for adoption. Speaking, for myself, I have nothing to add to this finaI report, except words of praise and admiration, which I an sure are shared by all my colleagues. This document is now laid before all my colleagues for their examination and approval. I wonder if Mr Meade has anything to add to my very brief remarks. THE RAPPORTEUR (Mr Meade, UK): Mr Chairman, there is one substantial change in the revision of the Report to which I would like to draw your atten- tion. In the p,revious draft I included a paragraph 6 which I would like to read out: "Before we conclude this short account of our meetings, we wish to express our appreciation of the skill, tact and friendly but firm guidance with which our Chairman has conducted our meetings and to which we owe, in large measure, the agreement which we have been able to reach. Our work has also .been greatly facilitated by the efficient services of the Secretariat." I understand that the Legal Adviser, Mr Chairman, has A.2 E/PC/T/C. I/PV/4 A.3 E/PC/T/C.I/PV/4 given his opinion that such a paragraph would be out of order in our Roport. This I very much regret, as I feel myself it makes a very substantial change in the emphasis of our Report, but it was not by any wish of my own that that parargraph was excluded from the final revision. Ag to the other parts and paragraphs of the Report, as you say, Sir, there are absolutely no changes at all any substance between the two reports, and if any members of the Committee have read the first Report and not read the revision, I think they need feel no hesitation at all in accepting the revision if they accept the former report. 3. B1 E/PC/T/C. I /PV/4 From the point of vicw of oceohomic substance the changes are absolutely nil. There have simply been alterations to avoid the first pcrson. In the. former report I talked about "We have suggested this" and now I have to talk about "The Committee has suggested this"; and also I an not allowed to say "The Committee has set up a Sub-Committee" but have been given the opinion that I should say "A Sub-Committee has been set up". These are the changes which have been made. On the more substantial points in the report I think there is nothing really for me to say, because what I have donc in Part II, apart from the short general narrative statement in Part I, is to go through each of our provisional agreements and try to put down, simply expressing the various views of the various delegations, the reasons why we have included such clauses. I do not think it would be useful for me to go through then myself in any detail. THE CHAlRMAN: I thank you, Mr Meade, for your remarks concerning myself. I feel rather embarrassed by the insertion in the old report of this paragraph, because it gives the erroneous impression that the Chairman has all the virtues and none of the vices, while the Rapporteur has neither virtues nor vices. But I must hasten to add that I myself and we all of us appreciate very much the efficient services of both the Rapporteur and the Secretariat. I am very glad that this substantial change has been made. MR PIERSON (USA): I would just like to say, before we bury this subject of paragraph 6, that I am sure I speak for the rest of the Committee. in saying that we must bow to the law in this natter but nevertheless we have our opinion concerning the work of the Chairman and the work of the Secretariat. THE CHAIRMAN: Thank you. Are there any other observations or comments on this document? May I take it that this document has been approved? MR PIERSON (USA): Mr Chairman, I do have about three small points there - I think not so small as not to be worth raising. They are not matters of substance; they are matters of interest, I think, from the point of view of how the report night bc read by others who had not become thoroughly familiar with our work. I should like to point out the sentences to which they refer. On page 4 of both drafts tht last sentence of what is now (B).4. reads: "This choice should be unfettered, provided, of course, that the measures B2 E/PC/T/C.I/PV/4 chosen-are compatible with the other purposes and provisions of the Inter- national Trade Organisation". It occurred to me that it might not be a good idea to suggest that the choice of a country is fettered by the purposes and provisions of the ITO, and I wonder whether the sentence would not be more happily phrased if it road, "This choice should be unfettereed, although, of course, it is recognised that the measures chosen should be compatible with the other purposes..." I do not think we wish to suggest that other countries are fettered, so I thinik the change I have suggested might be desirable here. The second point is on that same page in the next sentence, "Full employment of labour in any country is not the sole condition which deteraines the level of effective domand on the part of that country for the products of other countries", I think it would be well to say there, "Full employment of labour in any given country is not the sole condition, aside from trade barriers, determining the level of effective demand". I think we have our point of view in this Committee concerning the importance of employment for the level of effective demand for the products of other countries, but, nevertheless, I think it would be only.fair if we noted the relation of this to the question of trade barrier reduction, just as we have on the previous page. I am simply suggesting that sojeone reading this might say, "0f course it is not the sole condition, bccause another condition of great importance is the level of trade barriers"; so, without changing the sonse at all, I think it would be well to insert, between the comnas, the phrase "aside from trade barriers", and then "determining the level" or "which dotermines" The third point is not in the form of a suggestion but is in the form of a question to our Rapporteur on page 8, in the paragraph now numbered 14(a), It is said here: "In this connection it has been noted that the Articles of Agreement of the International Monetary Fund contain some important safeguards .-(a) First, there is nothing to prevent the control of capital exports". I wonder whether a reader would, feel that when you say merely "there is nothing tc prevent" you have noted the safeguard that does appear in the Articles of Agreement. I wender whether it would be possible 'to choose sore other form of words a little more specific without being too specific or detailed. Do you see my point, Mr Meade? B3 E/PC /T/C.I/PV/4 THE RAPPORTEUR: Yes. MR PLERSON (USA): If we could say "lt is explicitly stated that", or "The control of capital exports is contemplated", or sormacthing that would provide a more direct reference to what the Articles of the Monetary Fund actually say, I think it would be helpful if that could be donc. I do not know whether Mr Mcade has an alternative draft that he would suggest there, but I think it might be helpful if we could make the note a little cleader to the reader. THE RAPPORTEUR: Mr Chairman, the point I had in might might be expressed perhaps something like this: -"The provisions against exchange control do nothin; to prevent the control of capital exports". The point is that the Fund has certain provisions against the use of exchange controls, but it is explicitly stated in the Articles of Agreement of the Fund that they nay bc used to prevent capital exports. That is the point I had in mind. DR COOHBS (Australia): Could not you say "The provisions of the Fund relating to exchange control pormit the control of capital imports"? THE RAPPORTEUR: Yes. DR COOMES (Australia): Could I make a minor suggestion on the same paragraph, while we are on it? Would it be possible to include, after the word "contain" in the second line of paragraph 14, a note reading, "for members of the International Monetary Fund"; so that it would read, "... it has been noted that the Articles of Agreement of the International Monetary Fund contain fer members of the Fund some important safeguards"? THE CHAIRMAN: Let me dispose of this third one first. The United States, the United Kingdom and the Australian delegates have amended part (a) of 14 in such a way as it will read -- perhaps the Secretary would be good enough to read it out in the new form. THE SERETARY: "In this connection, it has been noted that the Articles of Agreement of the International Monetary Fund contain, for members of the Fund, some important safeguards." THE RAPPORTEUR: And then: "(a) First, the provisions of the Fund relating to exchange control permit the control of capital imports". THE CHAIRMAN: Does that meet the point raised by Mr Pierson? 6 B4 E/PC/T/C.I/PV/4 MR PIERSON (USA): Yes.... THE CHAIRMAN: Then we have the two amendments on page 4, under (B)4. The first one is in the last sentence: "This choice should be unfettered, although, of course, it is recognised", etc., etc. MR LOKANATHAN (India): I should like to suggest that the first portion of the sentence boginning, "Here again the choice of moasures should be loft to the government of cach individual country" be loft as it is, and then we would include Mr Piersen's amendment, "although, of course, it is recognised that measures chosen should be compatible", and so on. MR PIERSON: That was not the passage in which I had suggested a change. The passage is. on page 4, the last sentence of (B)4, and I think it would be better if it read, "This choice should be unfettered, although, of course, it is recognised that the measures chosen should, be compatible", and se forth. Doecs that meet you? MR LOKANATHAN (India): Yes. THE CHAIRMAN: Then the second one relates to the first sentence of .(O)5: "Full employment of labour in any country is not the sole condition, aside from trade barriers" - you want to insert those words after the word "condition"? MR PIERSON (USA): Yes. We recognise there are at least three conditions: full employment, effective development of resources, and the level) of trado barriers. All of those bear on the leve of effective demand, and it would seem to me wise to put in this parènthetical phrase between commas se as not to seem in this Committee te be completely overlooking the work of the other Committees. We have made the sanm recognition on a previous page, and it is purely a matter 'of form, as far as I can. ,judge. MR MEADE (U.K.): Mr Chairman, I should have no difficulty in aecepting that on behalf of the United Kingdom delegation. DR COOMBS (Australia): It would be quite acceptable to the Australian delegation also. MR JOHNSEN (New Zealand): I was wondering whether you are not limiting it a bit by putting in "aside from trade barriers". There might be some other factors which might affect the po sition. You could visualise a shortage of exchange, 7 B5 E/PC/T/C.I./PV/4 for example, which is not necessarily accompanied by any procedurc to 'restrict trade. It might not merely be trade barriers. I am, just wondering whether that is not a limiting factor. MR LOKANATHAN (India): If we add the words "aside from trade barriers" the meaning of the sentence bccomes this, that full employment of labour and the removal of trade barriers would be the sole conditions for determining the level of effective demand. What is the idea of bringing in one particular matter? You see, as it is, the sentence clearly shows that there are several other matters, but if you bring in "aside from trade barriers" I think you have to brig in all the things that affect the level of effective demand. MR PIERSON (USA): I would indicate further the reason why I am suggesting this change. At the bottom of page 2, the last sentence starts like this: "In orderto maintain international trade at a high and stable level, it is necessary to maintain a high and stable level of demand for goods and services throughout the world as well as to achieve a reduction in trade barriers." It seems to rne that the thought would be completed if we re- introduced a reference to trade barriers, although I will concede that there are possibly still other factors that will affect this, and I do not think our sentence in any case would soem to be exhaustive. It does appear to me that in this context it :might be well to have that further allusion to one of the other main objectives of this Conference. THE RAPPORTEUR: Mr Chairman, may I suggest a slight compromise which I think might cover both points? Might not one road the sentence as follows, "Full employment of labour in any cpuntry is not the sole condition which, in addition to other factors such as the level of trade barriers, doterminos the level of effective demand." MR LOKANATHAN: (India) I think that is better. THE RAPPORTEUR: I think se. THE CHAIRMAN: Is that acceptable to all of you? So it will read: "Full. employment of labour in any country is not the sole condition which, in addition to other factors such as the level of trade barriers, determines the level of effective demand." Or we might. say "reduction of trade barriers" instead of "level of trade barriers". Perhaps that would be a little better. 8 C.1. E/PC/T/C.I/PV/4. THE HAPPORTEUR: "The level of trade varies". THE CHAIRMAN: Are there any other commennts on this document? THE RAPPORTEUR: The observer from the International Labour Office raised wiith me before the meeting a very small point of drafting on page 6, paragraph 8, of the revised version of the report, which Legins: "On point (a) it is generally agreed that, if any agree- ment on labour conditions is included in the employment provisions, it must be made clear that there cannot be any single standard of fair labour conditions appropriate to all countries, but that the standard must in each case be related to the productivity of the country concerned." I think the point which the observer brought to my attention is that there may be some factors in the general standard of fair labour conditions which can be common to all countries. It is only in particular the remuneration that we have in mind. I was going to suggest inserting, the word "comprehensive" -- "there cannot be any single comprehensive - standard of fair labour conditions" -- to make it clear that it. is when you bring in remuneration and everything that you cannot have a single standard. to accept THE CHAIMAN: Are we prepared/the addition of the word comprehensiveve? If there are no comments, I take it that is accepted. MR. DESCLEE DE MAREDSOUS (Belgiun-Luxembourg) (Interpretation): I would like to raise a question about the text as accepted and redrafted mostly in English. I have had occasion to compare the two texts. The French .translation is excellent, Lut on some points it might be improved. There are some technical terms about which I do not know whether the translation is the absolute exact. On page 3 of the new French text, in paragraph 2, one translates the English term "under-employient" as "the reduction of the volume of employment." In Belgium, at least, we have a technical term which 9. C.2 È/PC/T/C. I/PV/4 is generally accepted, and which is "partial unemployment". I do hot know whether this term is technically accepted in France, too, but I think it is clearer than the term which has been adopted, In the sale paragraph "primary producers" are also discussed, and this is translated as "producers of raw materals." I wonder whether it is "basic products" rather than raw materials which are being considered. I have not had occasion to see the whole of the French text, but I think that several amendments and/provements of this sort could protably be made. MR. IGONET (France) (Interpretation): I have likewise not had occasion to study with enough attention the French text, but I am also of the opinion of my Beligian celleague that the translation, which is ir general excellent, yet deserves some improvements, either because the terms are not absolutely appropriate, or because 'the balance of the sentences seems to give an impression of heaviness in French. Some sentences are perhaps too long, and could be Made a bit lighter. If you wll permit us, we will refer this to the Sedretariat, with some detailed remarks. THE CHAIRMAN: Yes. MR. MARTINS (Brazil) (Interpretation): I have a remark to make concern- ing the amendment which was suggested in the French text by the Belgian Delegate. I would like to ask the BelgianDelegate whether the meaning of the English expression "primary products" is not truly the producers of raw materials and agricultural products, and not all. basic products. THE CHAIRMAN: I think the Delegate of Beligium will te glad to answer that question. MR. DESCLEE DE MAREDSOUS (Beligum-Luxembourg) (Interpretation): I think I would rather ask the English rapporteur what exact meening in his language the tern "primary producers" has. 10. C.3 E/PC/T/C .I/PV/4 THE RAPPORTEUR: I am not sure what pararaph we are dealing with, but I think that by primary production I meant, if it is anything. which I drafted, that range of production which is really Lein dealt with by Committee IV. I will define it as such. THE CHAIIRMAN: I thank the Delegates of Delgium France. and Drazil for having pointed out certain discrepancies in the two texts, and I am quite sure that the Secretary will be good enough to call the attention of the Secretariat, in making translations, to those points. Are there any other comments on the French text? I presume I am now justified in saying that we have finally approved this document. There is a second item on the Agenda - Consultation with the _presentatives of the International Chamber of Commerce and with the representatives of the World Federation of Trade Unions. I invite those representatives to attend our meeting. (The representatives of the Interntional Chamber of Commerce, Mr. WALLACE B. PHILLIPS, SIR HERBERT DAVIS, and MR. RICHARD BARTON; and the representatives of the World Federation of Trade Unions ME. JEAN DURET, MR. EDOUARD SILZ and MR. RENE ROUS, took places in the Committee). THE CHAIRMAN: On behalf of the Committee, I would like to express our warm welcome to the representatives of the International Chamber of Commerce and of the World Federation of Trade Unions. As these gentlemen have not perhaps followed our deliberations too closely, it might be useful if I were to explain very briefly the substance of our work, which has just been achieved. We have agreed upon certain provisions -- we call then draft clauses -- regarding employment, which have been drafted in the form of Articles to be included in the future Charter of the International Trade Organisation. A detailed explanation of the thought behind these undertakings, the condition which they seek to 11. . C.4 E/PC/T/C. I/PV/4 achieve, maintain, or indeed avoid, is contained in Part II of the Report which has just been adopted, the number of the document being E/PC/T/C.I/14/ReV.1. In addition to these draft clauses, the Committee has approved a draft Resolution on international action relating to employment. In this Resolution you will see that the Economic and Social Council is asked to undertake some special studies on certain types of international action which, in the view of this Committee, will make a significant contribution to the achievement and the mainternance of effective demand, and a full and productive emloyment. Four types of international action.are listed in this Resolution. In view of the close interest which the international Chamber of Commerce and the Word Federation of Trade Unions have in employment muatters, I know that the Committee will be very grateful to you, Gentlemen, if the representatives here, in their turn, could make a statement to us on this subject. I call on Mr. Wallace D. Phillips, of the International Chamber of Commerce,.- -.. . ... 12. D fols. E/PC/T/C. I/PV/4 MR WALLACE D. PHILLIPS (ICC): Mr Chairman and Gentlemen, on bohalf of the International Chamber of Commerce, I am deeply greateful tor the opportunity given to z to come here accompanied by Sir Herbert Davis, one of the Members of the Amercan Committee on Maximininf Employment of the International Chamber of Commerce, who has just returned from Paris where that Committee has adopted a resolution based on the report of Mr Hoffman's Committee in the United States, which I think ney be of considerable interest to your Committee here. - Before asking Sir Herbert Davis to present in detail the comments of that Committee, may I say that in principle we have naturally lookod through your. Committee document to which you have just referred, and we heartfily subscribe in general principles to that. Inconnection with our own Committee, that is purely at the moment a committee matter; it has not yet been passed by the Council of the International Chamber of Commerce, where it will come up for presontation at our next meeting in Paris in December. Therefore, we can only speak to-day informally, because we are not authorized by the Council to present to you a finalized document. But I an going to ask Sir Herbert Davis to discuss this document with you and to tell you what we have accomplished in Paris. May I present Sir Herbert Davis? SIR HERBERT DAVIS: Mr Chairman, if it is aggable to you, I think that the best plan will be for me to read to you our recommendations which we in Paris are going to make to the Council of the International Chamber of Commerce. I am, not sure if a copy of our recommendations has been presented to you yet. THE CHAIRMAN: Yes, it has been. SIR HERBERT DAVIS: Is it your pleasure that I should just rost upon that, or would you like me to read the recommendations to the Committee? THE CHAIRMAN: Will you please read the recommendations? (Sir Herbert Davis then read. document E/PC/T/C.I/16) THE CHAIRMAN: Thank you. SIR HERBERT DAVIS: I should explain, Mr Chairman, that that last sentence is a recommendation to our own Council of the International Chamberl of Commerce and to the National Committees. If there are any points which are not 13. E/PC/T/C. I/PV4 cloar in our recmmendations we will do our best to try to clarify them. THE CHAIRMAN: The Secretary has something to say. COMMIITTEE SECRETARY: Mr Chairman, I would like to draw the attention of the Committee to the fact that the draft resolution of the International Chamber of Commerce was submitted to this Committee under number E/PC/T/C.I/16, as well as a document headed: "Questions submitted by the World Federation of Trade Unions to the Intornational C inference on Trade and Employment," dated 13 th November, 1946, E/PC/T/W. 21. THE CHAIRMAN: Now I have the pleasure of calling, upon Mr Duret, of the World Federation of Trade Unions. MR DURET (WFTU) (Interpretation): Mr Chairman and Gentlemen, the 'World Federation of Trade Unions has exerted great pressure in ordor to be heard by this Committee. It is a fact that the Word Federation and the presence of thousands of workers within the Organization give to the problem of full employment the greatest possible importance. We do not think that the problem of full employment is confronting only those countries which have already achieved a high. level of economic devolop- ment; we believe that the problem of full omployment is a problem generall in its scope and that it has got to be faced and dealt with in a different way by different countries. In certain countries, that is to say, the aconomically more advadced countries, it is most important ,:k± the whole of the labour force should have the assurance of regular employment, or, following the accepted formula, of reaching a position in which the demand for labour slightly exceeds the supply. To accerplish this, it seems essential both to limit working hours and to raise the wrages of the workers. It is also necessary to resort to a general policy of redistribution of purchasing power. Only thus is it possible to achieve a constant and regular increase of national income and ensure that it is equitably shared. This policy should be carried out in such a way as not to obstruct policies of full employment in other countries. If, for instance, a country should try to ensure full employment for its economic system through the maintenance of salaries and wages at a very low level in I4. E/PC/T/C. I/PV,/4 order to force its explrts up, we believe that such a policy would injure the policy of full employment in other countries of the world. In economically backward countryes - countries called by some economically backward we believe that the problem of full employment presents itself in a different guise. Such countries can make full usc of all their resources in manpower without arriving at a situation which could be described as satisfactory. If production methods are absolete, an un- absence of visible/employment may exist in conjunction with a very low national income and wretehed conditions of living for the vast majority of the population, and we believe that in such countries, even if there is not visible unem loyment, there is a latent or masked unemployment which must be feught. A full employment policy in such countries implies, therefore, increasing national income to a maximum, equipping the country with modern plant and, at the same time, conserving full employment of manpower under the new conditions. It is essential that these countries should gradually be able to reduce the disparity oxisting between their economic development and that cf countries economically E. fols 15. E1 E/PC/T/C.I/PV/4 'We should give to those countries every opportunity of levelling this disparity. It is therefore a question of actually reversing, the present trend, since for the last twenty years the gap which exists between the more advanced countries and the so-called backward countries has constantly tended to widen. Lastly, there are countries where tho possibilities of economie devolpment are considerably in excess of the reserves of manpower, and which must therefore make use of imported labour if they are to realise to the full their productive potential. I am here thinking of countries such as, for instance, France or Czochoslovakia. In such countrics it would therefore be incorrect to presume that full employment had been attained wher. the whole of the national labour force was fully employed. The edonomic development of those countries, particularly since the war and occupation, has guite often been impeded by. a lack of tools and raw materials. A full employment policy should aim at putting at their disposal a more plentiful supply of labour and the most modern plants. This will enable theb to develop their productive resources and increase their national income, and so greatly assist the cause of world trade. But such a policy rill succeed only if the two aims outlined above are kept in mind. Technical improvamen will certainly reduce the demand for manpower, but not always to an extent enabling such countries to dispence with imported labour. In a word, we believe that in such countries the policy of full employment inust not be limited to ensuring only to the country in question full employment of native manpower but also full employment of the potential of productivity and economic possibilities. A full employment policy of the kind described above has therefore wide implications. It implies the adoption in all countries of policies designed to increase national income and redistribute purchasing power in favour of the working classes. It also calls for a redistribution of purchasing power among the various nations, rich and poor. It follows that a coprehensive system of international loans should be envisaged. This is essentially the position taken by the World Federation of Trade Unions, and we should be happy to learn how far our position coincides with 16 E2 E/PC/T/C.I/PV/4 the position takEn by this Committee, and later by the Conference itself. That is why we ask whether the definitions adopted by the Conference are in agreement with this conception of the question of full employment. But we should also like to cnquire what mcasures the ÍTO will take if a country fails to implement a full cmployment policy as defined above and so does not succeed in stabilising its effective demand in the world merket. Let us suppose, gentlemen, for instance, that there exists a country of great economic power which obstinately remains faithful to the principles of economic liberalism as they have been known and understood. We believe that, without any doubt, after a longer or shorter spacc of time such a. country will face a crisis of over-procduction,or rather under-consunption. Such a country will expecrience deflation, and from that moment on it will no longer be able to absorb sufficient quantities of products produced in other countries, and inevitably the crisis so concecived and centred in this country will spread all over the world. Therefore we should like to know what neasures the ITO will take in such circumstances. The policy provided in the paragraphs I have read is in our opinion the only policy which might prevent a crisis of under-consumption in such a country and, through that crisis, grave troubles of world economy. Lastly, the World Federation of Trade Unions wishes to know what measures are contemplated to ensure that the demand of individual states in the international market is free of fluctuation so far as physical factors of production permit. This question relates closely to the preceding one. We wish to find out what will be the policy of the ITO aimed at saving member counries from cyclical fluctuations and permitting then to have on the world market a demand determined only by the natural variations of natural conditions. It is cloar that the best trade organisa- tion cannot save a country from bad harvests. Lastly, it seems to the World Federation of Trade Unions that Articles 19, 21 and 22 do not appear to meet this requirement. We believe that, in order to ensure to countries whose economies are weaker, the opportunity of harmonious development, we must give them the opportunity of having a planned economy. It is impossible for countries devastated by the war and 17 E3 E/PC/T/C.I/PV/4 for countries which are rather late in their economic davelopment to make up this lost ground without using methodss of directing and planning their economy, and it scens to us that the climination of methods of quantitative restrictions and thc elimination in external trade of discriminatory methods might very well endanger the chances these countries have of successfully directing and planning their economics towards prosperity; and that is why the World Federation of Trade Unions, which has within its organisation countries which are very much developed economically and alse countries which are under-developed, and also countries which have been devastated by the war, has felt the need to ask these few questions, and we should be most happy if an answer could be given to them. THE CHAIRMAN: Thank you very much. Now, having heard the statements from the representatives of the International Chamber of Commerce and the World Federation of Trade Unions, I think I am expressing the feeling of this Committee when I say that most of the points raised by those Organisations have also occurred to members of the Committee during our deliberations, and and they have been taken care of/to a large extent covered by the employment provisions which have been adopted by this Committee. Nevertheless, as these two statements have been of considerable help and interest, I feel sure that the Committee will have pleasure in putting them on record and also, as far as possible, calling then to the attention of the Drafting Committee of the Preparatory Committee and to the attention of the next session of the Preparatory Committee, so that they night be considered again more carefully. I would like to thank these two representatives on behalf of this Committee. NOw, gentlemen, I have some closing remarks to make. This Committee has dealt with problems of outstanding importance. The mass unemployment of the inter-war period has frequently been contrasted with the war-time realisation of full employment. Unemployment was then cured for the sake of waging war. Considerable work and attention have been givem to devising means by which anemployment can also be avoided in peace time. A nuniber of countries have committed themselves to the realisation of this aim. The prevention of mass unemployment is generally accepted as an important aim of economic policy; some countries would even say the main aim. It scems, 18 L4 E/PC/T/C.I/PV/4 however, that the shape of tho chief omployment problems varies from one group of countries to another. The fact of hidden unemployment causcd mainly by lack of sufficient education, tochnieal skill and capital resources, means that for the less developed countries the chief employment problem is the productive utilisation of their human as well as their material resources, and consequently the diversification of employment. While the arguments for a modern omployment policy in an industrialised country are sormetimes based on such considerations as the loss of national income which would result frorn a decline in employment, the corresponding arguments in the less developed country are likely to stress the potential loss of national income resultng from failure to carry out a programe of over-all economic development. The imlementation of policies adopted with a view to abolishing under-employment and avoiding uncmployment may seen to be a matter of domestic concern. Howeever, the interdependence of countries should always be borne in mind.. Most countries cannot easily achieve these aims without feeling a serious decline in their standard of li.ing. The mutual exchange of goods and services on a multilatcral basis is one of the main means of increasing the welfare of all nations. Foreign trade should be, encouraged and facilitated but attention must also be paid to the possible repercussions of domestic economic policies on other countries; but, if the multilateral exchange of goods and services is to be of real value, development opportunies should bc provided and measures taken to avoid a serious or abrupt decline in, effective demand. 19 F.1 E/PC/T/C .I/PV/4. When developed and less developed countries stress the different aspects of the employment problem, this is chiefly due to the unequal distribution of wealth between countries, and the subsequent disparity in their standards of living. All countries, however, have a comon interest in the developient of the economic resources of the world. I an happy to say that this Committee has reached agreemennt on all important aspects of, the employment problems put before it. The clausès on employment will be included in the Articles of Agreèment of the International Trade. OrLanisation, thus linking, the undertakings relating to employment and effective demand to the obligations assumed in the other parts of the Charter, At the same time, duplication with other international specialised agencies and the Econoimic and Social Council is to te avoided. The draft Resolution on international action relating to employment emphasises the (reat importance which the Committee has attached to the probleums which it has been considering. In an economically integrated world, employment problems are of an inter- ' national character, and ask not only for national, but also for international, action, It is, therefore, our hope that the Resolution will be subject to serious consideration by the Econcmic and Social Council and under its guidance, ty the international specialised. agencies concerned. 20. F.2 E/PC/T/C.I//PV/4 In conclusion, I must say a word of thanks to all my colleagues and to the rapporteur for the spirit of collaboration which they have shown in the deliberations of the Commiittee and the Sub-Committee. May I also add my thanks to the gentleuan who sits on my right and to all his colleagues in the Secretariat, and on the interpreters staff, for the very efficient services thcy have given, which, together with the contributions and cooperation of all my colleagues, have so far made this Committee a success. I thank you. I now declare that the Committee is adjourned sine die. (The meeting rose at 12.11 p.m.) 21.

GATT Library

kz076tj1183

Verbatim Report of the Fourth Meeting Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W. 1. on Tuesday, 29 October 1946, at 3.00 p.m

United Nations Economic and Social Council, October 29, 1946

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

29/10/1946

official documents

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

https://exhibits.stanford.edu/gatt/catalog/kz076tj1183

kz076tj1183_90220006.xml

GATT_157

N/n. A.1. E/PC/T/C .II/PV/4. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL. PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the FOURTH MEETING COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S.W. 1. on Tuesday, 29th October, 1946, at 3.00 p.m. DR. H. C. COOMBS (Australia). (From the Shorthand Notes of A.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1.) 1. Chairman: A.2. E/PC/T/C.11/PV/4. THE CHAIRMAN: Gentlemen, at our last meeting we had a general discussion concerning several items of the agenda. There were quite a large number of specific suggestions and criticisms put forward by different delegates, and, since they bore on the materials submitted by the United States Delegation both in their Draft Charter and in their Delegate's statement to the Committee it was felt that we would advance considerably if we were to get from the United States Delegate a comment on the various views put forward, so that before we refer this to a Drafting Committee for the preparation of a detailed draft for our consideration, it would have been possible for all delegates to have expressed their views to the Drafting Committee, to know broadly how far the various proposals had widespread support. I do not think it is necessary for me to run over the main points. I think they will become clear as Mr Hawkins deals with the various matters. I suggest, therefore, that we proceed immediately to hear the United States Delegate. MR HAWKINS (U.S.A.): Mr Chairman, I shall try to cover all of the points raised so far as I understood them. If I omit any, I shall be glad to have the delegate concerned raise the point at this meeting. We were discussing Articles 8 and 18, and I shall take up the points in the order in which they come up in connection with our draft of the Charter. The first questions related to public works contracts, and were raised in connection with the last sentence of paragraph 1 of Article 8. The last sentence of paragraph 1 of that Article reads: "The principle underlying this paragraph shall also extend to the awarding by Members of governmental contracts for public works, in respect of which each Member shall accord fair and equitable treatment to the commerce of the other Members". The first question raised on that sentence is whether the commitment relates to purchases of materials for public works as well as to the awarding of contracts for public works. Our purpose was to confine it to the awarding of the contracts. Purchases of materials by govern- 2. A.3. E/FC/T/C.II/ PV/4. -ments for public works or other government use would be covered by the preceding sentence, which requires the granting of most-favoured- nation treatment in respect of all laws and regulations affecting such purchases. You will note from the draft that certain provisions of article 9 are incorporated there by reference. In determining whether the governmental purchases themselves, as distinct from the laws or regulations governing there, are in fact on a non-discriminatory basis, the rules laid dowm in Article 26 would apply. That Article requires that purchases be made where they can be made to best advantage; in other words, the so-called commercial considerations. There was a further question: whether a country which receives bids for public works and awards the contract to nationals of a country lending money to finance the project violates the last sentence of paragraph 1 of Article 8. Our answer to that would be "No", provided all countries were given the same opportunities to offer the financial assistance. I am referring here solely to the obligations of the borrowing country, under this paragraph of the Charter. I will mention the lending country later. There was a further related question as to whether the borrowing country which uses a tied loan for the purchase of materials for public works violates Article 25, that is to say purchases. You will have to refer back to that because it is not one of the articles immediately under consideration; it is closely related to this. In the circumstances I have just cited, as we would see it, the borrowing country is merely taking advantage of the opportunities available to it, and would in no way violate the letter or spirit of its undertakings. Mr Chairman, I have been speaking so far of the obligations of the borrowing countries. It is quite natural that the question should have arisen out of the discussion whether the tying of loans by lending countries is consistent with the general object of promoting multilateral trade. This is a point which may very properly be discussed, although I 3. E/PC/T/C.II/PV/4. am not at the moment in a position to take any definite attitude on it. I am merely trying to point out that I do not consider the question raised, I believe by the Netherlands Delegate, to be irrelevant. A further question was whether the obligation to accord fair and equitable treatment in awarding contracts for public works applies to contracts of local as well as central governments. Our view on the point -- a tentative one -- is that the obligation should apply to contracts of local governments in those cases in which the action of the local government can constitutionally or traditionally be controlled by the central government. I cannot speak with complete authority as to what the position would be on this in the United States, although I think that I know the answer. I believe that in the United States, by analogy to some other cases, a commitment by the central government would control the state government in respect of this matter. 4. B. fs. B. 1 E/PC/T/C .II/PV/4 We would be content to leave it, however, that it depends upon the constitutional situation in each country, the idea being to have the obligation go as far as it could. We are open to change on that point, however, if it does not seem appropriate. A further question was raised whether the obligations in paragraph 1 of Article 8 apply to crown companies. If this refers to procurement agencies obtaining supplies for governmental use, the answer is that paragraph 1 of Article 8, requiring most favoured nation treatment, and Article 9, which require's national treatment, would apply. Now, if such companies were trading companies purchasing for re-sale, our view would be that Article 26 would apply, namely, that they should buy in accordance 'with the commercial considerations. There was one suggestion made - not in the form of a question - which I would just touch upon, and that was that the exception from the national treatment provision for purchases by or for the military establishment be limited to purchases for the military establishment only. The point there was that the purchases might, under the language as we had it, be made by the military for other than military purposes. We agree with the suggested change. A further question was raised, as to whether preferences other than those in the form of import customs duties, for example, preferences awarding public works contracts, would be excepted under paragraph 2 of Article 8. We think not. The preferences dealt with under paragraph 2 are preferences which would come under negotiation along with tariffs, but we are not quite able to see how you could negotiate preferences in the form of a mere inclination to award public works to particular countries. There was another series of questions relating to the B. 2 E/PC/T,/C. II/PVL/4 exceptions to most favoured nation treatrment as provided in paragraph 1 of Article 8, that is to say, the rule for most favoured nation treatment being provided in paragraph 1 of Article 8. One of those was the dates in paragraph 2, where there are two alternatives, and an additional one was put forward. The exceptions in cur draft provide that certain long established and universally recognised preferences existing as of a specified date shall be excepted from the automatic application of the most favoured nation clause. In other words, all such preferences in excess of those in effect on whatever late is agreed upon would be a??lished automatically; and questions were raised then as to what that date should be. Our draft provides that preferences or any product in excess of that in effect on July 1 1939 or that in force on July 1 1946 - whichever is lower - will be abolished . How, the reason for the 1939 dating is that preferences increased during the war and presumably as a war time emergency measure would not be retained as a bargaining, weapon. The reason for the 1946 date is that if preferences had been reduced or eliminated they should not be re-established. However, since it can be argued that it would be more equitable to treat all war time alterations in preferences as emergency measures, we are prepared to drop the 1946 date. There was a further suggestion made that preferences existing at the time of signature of the Charter should be excepted from the most favoured ration clause. We would not favour this, because it would permit the retention of war time emergency preferences which were not reduced as a result of the tariff negotiations which are contemplated. In other words, it is conceivable that you could have preferences or, some products even after your negotiations which would be considerably higher than they were pre-war. 6. B .3 E/PC,/T/C . II/PV/4 Now, there were a number of suggestions for preferences in addition to these of paragraphs a. and b. of our paragraph 2: those were preferences of the group or regional sort. The kinds of exceptions that were mentioned during our last meeting seemed to fall into two categories. The first: those which are set forth in paragraph 2 of Article 8 of our draft, which are excepted only on condition that they would be subject to conditions looking towards their elimination. That is one kind. The second kind were exceptions of a permanent character which would not be subject to negotiation and would not go on indefinitely. Now, with reference to what we might call the temporary exceptions, such as we have in sub-paragraphs a. and b. of paragraph 2 of Articles 8, suggestions have been made that there are other preferences that ought to be added to this category. We are aware that various clauses have been included in bilateral agreements relating to preferences between neighbouring countries or those having special geographic or other relationships, but, as the Brazilian delegate pointed out the other day, many of these exist only in theory and have never been made effective. The long established preferences of the kind to which we are referring in sub-paragraphs a. and b. have resulted in the creation of patterns of trade the changing of which would present difficulties - and very material difficulties - for the countries concerned. It is for that reason that such preferences are made the subject of negotiation with a view to enabling the countries concerned to obtain compensating benefits. In the case of preferences which have been provided for but which have not been made effective, or have been made effective only to a very limited extent and which have not 7 . B.4 E/PC/T//C. II/PV/4 therefore created important trade patterns, no reason, as we see it, exists for retaining them for the purposes of negotiation. Now, as to the permanent suggestions, those would be exceptions of a kind which would not be subject to elimination by negotiation. There were a number of suggestions for exceptions of that general type. We have provided for certain permanent exceptions in Article 33 of our draft charter, and the exceptions provided for in that Article are those relating to customs unions and frontier traffic. I assume thre is no controversy about those. But three additional exceptions relating to preferential arrangements among groups of countries have been proposed. First, regional preferences which have been put forward as desirable per se, either for the purpose of creating larger markets for smaller countries which wish to industrialise, or for other reasons. The second type: regional preferences which are transitional stages towards a customs union. The third kind mentioned were open end arrangements under which unusually favourable customs treatment is accorded by the parties to each other but which are designed to be only temporarily preferential, inasmuch as the arrangements would be open to other countries on the same terms. 8. PAE C-1 E/PC/T/C.II/PV/4 I would like to comment briefly, on each or those three types. With respect to the first type, that is to say, regional preferential arrangements put forward as desirable in them- selves, we feel that regional preferential arrangements are open to the objection that they tend to create rival and some- times hostile blocks and to reduce the total volume of world trade. In our view, the aim should be to create an open world market where trade may flow more freely by removing the partitions created by preferential arrangements. It is for this reason that we hope to eliminate by negotiation long- established practices. It would not be consistent with this objective to provide for new preferential arrangements. It has been argued that regional preferences might never- theless be accepted if they are transitional steps leading towards customs unions. The objection to this is that such preferential arrangements may never get out of the transitional stage, with the consequence that other supplying countries would be placed at a disadvantage without the compensating advantages that they would obtain from the larger volume of International trade which full customs unions may be expected to produce. The greater volume of trade in the case of a full customs union is a result of the enlarged free trade area and more prosperous conditions within it. In the case of the regional preferential arrangements no such free trade area exists; the protective barriers between the parties still remain. In our opinion, the difference between regional prefer- ences and full customs unions is so great as to amount prac- tically to a difference in kind. Now, with reference to the open end preferential arrangements which I believe were mentioned by the delegate of the Netherlands, we do not object in principle to the idea; that is, it is the 9. PAE C-2 E/PC/T/C.II/PV/4 same idea that underlies our draft of the Charter. We are doubtful, however, whether in practice agreements among only a few countries can be truly open to adherence by other countries. The discussions of this Committee make it perfectly clear that any multilateral agreement in order to be truly open must be formulated in the light of the situation and needs of a large and representative group of countries such as we have here. There ??s a further exception proposed to the most-favoured- nation provisions in Article 8; that was the amendment proposed by the Cuban delegate, which is designed to promote the denial of most-favoured-nation treatment to goods produced by exploited labour. This apparently means that most-favoured-nation treat- ment could be dented by a country having higher labour standards to products coming from countries having lower labour standards. We are very much afraid that instead of helping to raise labour standards, such an exception might make bad working conditions even worse by destroying the market for the products of countries where wages are low. The exception might result in widespread discrimination, international f'riction and lower levels of inter- national trade. Now, there were a number of questions on Article 18 which provides for or contemplates the substantial reduction of tariffs, the elimination of margins of preference and has in view negotiations at a later time with that end in view. The question was raised by the delegate of India as to what is meant by "substantial" in Article 18 of our draft Charter. Our proposal is that tariffs be reduced and preferences eliminated by a process of detailed negotiation. What is substantial in respect of each product would be left for determination by the negotiators. I should add that we have already indicated that in such negotia- tions as much value would be attached to the keeping of a low rate of duty against increase as to the reduction of a high one. 10. 3 E/PC/T/C.II/PV/ 4 The delegate of India also in connection with his question as to what is a substantial reduction of tariffs referred to paragraph 3 of Article 18 and questioned the desirability of withholding the benefit of tariff reductions from country es which fail to make adequate tariff reductions in return. I should like to make clear our own ideas on that point. Our idea is that countries on the Preparatory Committee would first negotiate detailed tariff schedules among themselves, and that other countries joining the Organisation should also in due course be required to effect comparable tariff reductions by negotiations with the countries comprising the original group and with others. Paragraph 3 of Article 18 is designed to ensure that this will in fact be brought about. Now, in such negotiations, that is, with countries other than those on the Preparatory Committee, it is our view that full weight must be given to tariff reductions already effected by countries comprising the original group. The mechanism for carrying out this procedure is set forth in Article 56, which provides for an interim tariff committee, The interim tariff committee would consist initially of members of the Preparatory Committee which would JUDGE wether any other country had complied with the obligation toreduce tariffs in paragraph 1 of Article 18; in the light of what had been done by members of the Prepara- tcr Committee themselves. Another question raised related to the negotiating process and had to do with preferences. The proposal was made by the delegate, of Australia and supported by the delegate of New Zealand that certain preferential quotas should not be abolished under Article 8, but should be subject to negotiation in the same way as preferential tariffs. Mr Chairman, while this subject relates to quantitative restrictions and might seem properly to be a matter for consideration in connection with that subject, 11. PAE C-4 E/PC T/C.II/PV/ 4 I am in lined, to agree that it is closely bound up with the subject of tariff preferences; but it also seems to me that it represents a very special case and might best be looked into by the countries most concerned with it. I just do not feel in a position to comment much further on it in the light of the dis- cussion that has been had so far. The delegate of Australia also raised a technical question on this subject; that is, on the subject of negotiations relating to tariffs and preferences. He asked whether a negotiated reduction in a preferential rate of duty would be consistent with the provisions of Article 18, paragraph 1.b, whereby reductions in most-favoured-nation rates should operate automatically to reduce or eliminate preferential margins. Our answer to that would be: Yes, provided that the most-favoured-nation rate is correspondingly reduced, even though not a subject of.negotiation. This is provided for in Article 8 which prevents increases of margins of preference. Now, if the most-favoured-nation rate is also negotiated, the preferential rate may nevertheless be reduced, provided that the maximum margin of preference result- ing from the negotiations does not exceed the negotiated most- favoured-nation rate and the preferential rate in force in 1939. 12. E/PC/ T/C.II/PV/4 There was a further question on the negotiations. The Australian delegate inquired whether under the Charter it would be possible during the negotiations for one country, such as Australia, to obtain preferential treat- ment of a given product which is extended to other Empire countries, but not extended to Australia. In our view the answer to the question would be No, since it would be an increase in preferences contrary to the provisions of Article 8. A further question, again on the proposed negotiations, which was raised by the Australian delegate, was whether in the tariff negotiations such negotiations should be confined to products of which the participants were the principal supplies. While we contemplate that tariff concessions will be negotiated with countries which are or may become principal suppliers, we do not consider it wise to lay down any rigid rule on the point. In the main our view would be that the negotiations would be confined to actual or potential products of which the participating countries are actual or potential principal suppliers. A further question was raised by the Australian delegate. He referred to the provisions giving flexibility to tariff commitments and inquired whether similar flexibility should be allowed with respect to preferences. In our draft Charter there are two let-outs of the sort he had in mind. The first, Article 29, which provides that, if unforeseen developments require, a country may withdraw or modify a concession temporarily, but most notify interest- ed countries before doing so, and goes on to say that failing agreement on the action contemplated an injured country may suspend application to the trade of the offending country of benefits already granted, We have some doubts about the applicability of Article 29 to preferences. We 13. OM D2 E/PC/T/C .II/PV/4 would, nevertheless, be prepared to discuss the point when the escape clauses are under consideration and in the light of the exact nature of the clauses. There are differ- ences which we should like to bring out when we get on to that subject. The other provision that I mentioned, Article 55 -2, provides that the organization may set up criteria and procedures for waiving any obligation; that is, any obligation assumed under this Chapter IV. That Article already covers the point raised by the delegate of Australia, since it applies to all commitments. A further question raised, I believe by the delegate c.f France, was whether the granting of most-favoured-nation rates should not be limited to direct shipments. Our draft Charter would prevent such a limitation, in two places. There is Article 8: the most-favoured-nation clause contains no exception on the point. Para. 5 or Article 10, relating to freedom of transit, would prohibit such discrimination.We believe that these are sound provisions, since it/seems desirable to permit goods moving in inter- national trade to use the most convenient and economical routes. That, Mr. Chairman, I think covered most of the questions raised. If there are any others I shall be glad to try to answer them. THE CHAIRMAN: Gentlemen, you have heard the reply or the United States delegate to a number of points raised at the last discussion. It is my hope that we will be/able to refer all of these matters dealt with to the Drafting. Committee at a fairly early stage this afternoon, so that we can proceed to a consideration of the next item on our agenda, which deals with quantitative restrictions. (At this point the delegate of France asked for a further translation of the statement of Mr. Hawkins.) 14. E/F. 1 E/PC/T/C. II/PV/4 MR AUGENTHALER (Czechoslovakia): Mr Chairman, I would like to ask the honourable delegate of the United States if he would give us the opinion of his delegation on one point. There are certain countries, especially in Europe, which have not yet got stable currencies. What is to be the situation in their case? MR HAWKINS (USA): Mr Chairman, I want to be sure I have understood the question. I believe the delegate of Czechoslovakia has asked this: Where there is a depreciated currency and increased prices, the effect of which is to reduce the protection accorded by the specific rates, should allowance be made for that? Have I Correctly understood him? MR AUGENTHALER (Czechoslovakia): I do not think that is quite my point. I am asking this: What is to be the position with countries which have not yet proceeded to stabilise their currencies? MR HAWKINS (USA.): Mr Chairman, it seems to me that the tariff negotiations should proceed on the basis of relying on another institution, namely, the Fund, to bring about a stabilization of the currencies, I do not think it would be a function of the International Trade Organisation to deal with that. There is, however, this relationship: there always is a possibility that where tariffs have been reduced the arrangements may be upset if there is a material change in the value of the currency. In our bilateral agreements we have allowed for that possibility by making provision that in the event of a radical change in the value of the currency there would have to be re-consideration of 'the tariff concessions. I think that a similar provision conceivably could be incorporated in whatever arrangement comes out of the tariff negotiations next year. THE CHAIRMAN: Is that an answer toyour point? MR AUGENTHALER (Czechoslovakia): Yes. 15. F. 2 E/PC/T/C. II/PV/4 THE CHAIRMAN: Before we go further I would like to remind you that I am anxious to get these matters referred to to the Drafting Committees as soon as possible. The matter referred to by the United States delegate, covering the last sentence in Article 8(1), dealing particularly with public works contracts, is, I understand, already being discussed by the Sub-Committee set up for this purpose, and I would suggest that, since they are making some progress, I understand, we do not seek to discuss that matter here further. That would leave before this Committee the other references to the most favoured nation clause, certain suggested modifications of it,-- and the matters relating to Article 18 covering tariffs and preferences. If any delegate feels that he wants to get further clarification or would like to discuss further any of the matters dealt with by the United States delegate, he should do so now. MR BARADUC (France) (Interpretation): Mr Chairman, I think we must all thank Mr Hawkins for his careful answering of all the questions which have been raised. I would not like to prolong unduly this discussion, and I hope I will not give offence by saying this, but I regret that he answered a question which I had not raised, concerning direct traffic. However, I would like to ask his opinion on a question which I asked the other day, which is not very important, but which concerns the last sentence of Article 8. I had asked if in the minds of those who drafted the charter it was well understood that the principle of the most favoured nation clause would not apply to grants which states on account of their sovereign rights might give to their national production. MR HAWKINS (USA): I must first apologise for answering a question not asked by the French delegate; it was asked by 16. F.3 E/PC/T/C. II/PV/4 someone and I did not remember who it was. As to his it present question, I take/you are referring to the last sentence of the first paragraph of Article 8; and the question is whether it would in any way interfere with the awarding of contracts to nationals of the country which is letting the contract? It would not. This is a most favoured nation clause. 17 PAE G-1 E/PC/T/C .II/PV/4 M. BARADUC (France) (Interpretation): Mr Chairman, I must apolo- gize, but I have another questionto ask Mr Hawkins, and I may be more lengthy on this topic. Last Friday the French delegation insisted very much on ulterior negotiations towards the reduc- tion of preference and on the date of July 1st, 1939. If I under- stand correctly what Mr Hawkins said, he would not insist on the provisions of the Charter according to which preferences which might have been increased would not have to be considered, I apologize: I mean, if I understood correctly, the phrase in Article 8 (2) providing that these preferences should not exceed their level in 1946. On this topic I must insist again on the importance of the state of things in 1939 for France and for the French Union, and I apologize, Mr Chairman, for using this opportunity to make a very brief declaration on the general position of France and of the French Union in order to avoid any misunderstanding in regard to ulterior negotiations. As M. Alphand said in his speech on the first day in the Plenary Session, and as we have had occasion to remind the Committee several times, we represent here not only Metropoli- tan France but also all the territories which constitute overseas France. You know that France and its overseas terri- tories constitute a political unity and a financial and economic unity. The political unity has just been confirmed with new vigour by the French Constituent Assembly, which, by founding the Constitution of the Fourth Republic, consecrated the French Union. The financial unity reveals itself in the fact that the currencies of the overseas territories, even if they have different names, such as the Indo-Chinese piastre, or different exchange rates with respect to the £ or the dollar, yet consti- tute a single group, which, as you know, is represented by France alone in the International Monetary Fund. 18. PAE C-2 E/PC/T/C.II/PV/4 I will remid you that there is a common fund of foreign exchange, for all the overseas territories from which those territories draw for their foreign purchases. As to the economic unity, it is confirmed by traditional commercial trends which give a very important part to the relations of each territory with other parts of the French Union. I might remind you, as an example, that for the transitory period which we are now experiencing, a period in which we find ourselves obliged to restrict our imports, this economic unity reveals itself by the establishment of a general programme of imports in Paris drafted by the Government after having consulted the various territories and as applied to the whole of these territories. It is, moreover, well understood that these restrictive measures will follow the fate of those which interest directly the Metropolis according to the provisions which we will dis- cuss ulteriorly and which will be adopted in the Statute for the transitory period. But within this French Union there exist different tariff organisations which are determined mostly by historical reasons and have been consolidated by economic developments. There are some territories which are purely assimilated, from the tariff point of view, to the Metropolis. That is the case, for instance, of the French West Indies., French Guiana and the Island of Reunion, which have recently achieved the status of Departments of France, as already exists in the case of Algeria for a long time. These territories have the same tariff regime as the Metropolis, with some changes which may be instituted by local situations. Other French territories of the overseas empire are not at all assimilated to the Metro- polis, for instance, French West Africa, but exist in a regime of reciprocal preference towards the Metropolis. The other terri- tories such as Indo-China enjoy tariff autonomy, that is to say, a tariff regime which is peculiar to that territory, Finally, 19. PAE G-3 E/PC/T /C.II/PV/4 some territories as a result of international treaties grant to all products, whatever their origin, equality of treatment. This is in particular the case, of which I do not have to remind this Conference, of Morocco, as alse of Cameroons and Togo. I have no intention of relating to you in detail all these very complex regimes of our overseas territories which are the result of a slow evolution. I wanted only to use this opportun- ity to say that the French Union forms an economic confederation which will maintain its fundamental unity while at the same time perhaps containing different tariff regimes. Assimilated colonies will be considered a being part of the Metropolitan territory. Non-assimilated colonies or those which enjoy autonomy might be maintained as at July 1939. I wanted only to confirm the general principle by affiring again the unity of the French economy. This union becomes more concrete in tariff matters by an internal preferential system, end, of course, as I said last Friday, we will come to those future tariff negotiations according to the principles in the Statute which we are dis- cussing, but also we will take as the basis the system which existed in 1939, and I shall insist very much on this point, because only the date of 1939 is justifiable for us. I need not remind you now of all the events which since then have upset the relations of Metropolitan France with its overseas territories: the war, the invasion of our Metropolitan territory and of part of our overseas territory, separation of overseas territories from the Metropolis, and since then the liberation and the considerable difficulties which we have had to face both in the Metropolis and in these territories. For these various reasons, the only period which we can consider is that which preceded all these upheavals, the only normal period, and it is the date foreseen in the Statute of July 1st, 1939. Mr Chairman, may I ask you if Mr Hawkins followed this in English? 20. E/PC/T/C.II/PV/4 Mr HARRY HAWKINS (USA): Yes. Mr NADIM DIMECHKIE (Lebanon): Mr Chairman, I should like to ask: in case of any disagreement with the point of view of the United States delegate on the points mentioned in his statement now, is it anticipated that we should discuss it now, or is it intended that any point of disagreement should be expressed in the form of an amendment? THE CHAIRMAN: I suggest that it would not be appropriate to submit suggested amendments here. If you feel that there are phases of the matters raised in the discussion which were, dealt with by the delegate for the United States where your point of view is not fully clear or not fully amplified, I suggest that you speak on that matter now. If it is a question of suggesting an amendment in line with a statement you have already made in the earlier part of the discussion, I suggest the proper way to deal with that would be to submit your suggested amendment or addition in writing, and it can be dealt with by the Drafting Committee. However, if you feel that anything that you have said requires application before it goes to the Drafting Committee, it would be proper to speak on it now. Mr NADIM DIMECHKIE (Lebanon): Then, Kr Chairman, with your permission, I shall adopt both ways. When the delegate of the United States spoke of the exceptions of preferences, he divided them into two sections: the temporary sort of preferences and the preferences of a determinant nature.Mr Chairman, my remarks are only about that section which deals with permanent preferences. Those preferences which are of a permanent nature also were sub-divided by the delegate of the United States into three sections. One deals with regional arrangements because of the permanent nature of small countries the economies of which are complimentary and that lead in effect to a customs union, an another kind which might be open at any time for other 21. G-5 E/PC/T/C .II/PV/4 States to join. Here, Mr Chairrman, my remarks concern the first two - those that lead to a customs union and those which are advisable by themselves. The delegate of the United States thought fit to reject those two considerations that were offered here in the meeting, on the ground that hostile blocks, in the first case, might develop which might hinder international trade. Well, Mr Chairman, if that is the only objection, I do not think it is a very strong objection, because every question has two sides to it: It has a black side and a white side. Why the delegate of the United States has taken the black side of it I do not know. He says not all such regional arrangements in the form of prefer- ences lead to hostile blocks being created. Such regional arrangements as we suggested last time were only for one purpose. Where there are small countries which happen at the same time to be under-developed, as has been agreed by the people who drafted the Charter, seme sort of protection for infant industries should be granted. Threfore for such small countries the market should be widened for them in order to stimulate industry and thus raise the standard of living of the populations con- cerned, and thus increase international trade and not decrease it. The aim is not at all to produce a block hostile to any- body. Then the delegate of the United States stated that whereas a customs union would provide such a state of affairs, preferences would not, I am sorry to say that I disagree with him, because, after all, a customs union is an extreme form of preference. A customs union has a lot of complications in it. I know that from experience, Mr Chairman, because we have a customs union with a sister State. Preferences might be entered into much more easily. A customs union involves questions of sovereignty, difficulties of administration and division of revenue, as to who is going to administer the customs union; while a sort of 22. E/PC/T/C.II/PV/4 preference that would bring down to a very large extent the barriers between countries would certainly stimulate industry in the countries mentioned. 23. E/ PC/ T/ C.I I/ PV/4 I know it is difficult for the delegate of the United States to appreciate that, he coming from a highly industrialized country which enjoys a very large market, but we do appreciate it, Mr. Chairman, and if that is not taken into consideration the countries who happen to be in a position similar to ours will feel that they are condemned to remain under-developed for good and condemned to keep the old standard of living which they have nor. Furthermore, when that suggestion was made we never intended it to be put as a general rule. What he suggested was that there should be an opening left for it in the Charter and then such a scheme could always be studied on its merits. We never intended to have an item saying that preferences in a region are permitted. If, when we study it, we find that such a thing leads to the creation of hostile groups, then we will not recommend it, but if we feel such a stop is essential in the development of a region then we must recommend it and leave an opening for it. The second prart of my argument, Mr.Chairman, relates to Customs Unions, and I think I can cover that by saying that Customs Unions have a lot of complications in them with regard to division of revenue, administrative questions and questions relating to sovereignty. All the same, where it is possible to reach such a goal a transition period is essential to find out the different revenues of the States concerned, and no two States can just form a Customs Union in one night. Therefore, a transition period is essential. MR. SPEEKENBRINK (Netherlands): Mr. Chairman, I hesitate a little to again ask the attention of this meeting on the question of these open conventions, and I only do so because I think it is a very important point on which Mr. Hawkins made certain remarks, and I would only like to make our ideas 24. E/PC/ T/ C.II/ PV/ 4 clear in that respect. Now we have just submitted a Paper, No. 20 of this Committee, to which I would recommend your attention. I will only deal with a certain part of it because I think that gives the answer to certain remarks made in this meeting. I quote as follows: "The Netherlands Delegation wish to put it on record that in their opinion, as a rule preferences should be limited both in number and in extent. But, on the assumption that thepresent Conference will be successful in finding and defining such a set of rules, it is suggested that with regard to the members of countries involved, preferences should be given the possibility to be expand and to grow, so as to/applicable - on a reciprocal basis - to an increasing number of states and to all countries as a final stage and as an ultimate end. If this should not be possible, the line of conduct should be to diminish the margins of preference gradually and ultimately to abolish thesealtogether, with as the only exception, a customs-union as defined in the Charter. The Netherlands Delegation therefore suggest that the Preparatory Committee study the possibility of admitting "open conventions' within the framework of the Charter as proposed above, and of defining a set of rules applicable to those multilateral agreements on a smaller scope than the suggested Charter and Protocol in which the latter agreement, the result of the coming tariff negotiations would have to be embodied and which would have then to come into effect at once. These rules should in any case imply that the participating countries should accept the ruling of the International Organisation, to be set up, and - as the case may be - of the International Court of Justice with regard to the settlement of disputes arising out of such multilateral action of a number of countries." I quote this specially because here you observe that we do not. like to go very far and are fully prepared to submit ourselves to the Rules of an international body with regard to these conventions. 25. E/PC/T/C .II/PV/4 I would only lake one or two other remarks. I note specially that the rain argument of Hawkins is that the negotiations should lead to substantial reductions in the tariffs and in the preferences. Now, I should like to take here a realistic point of view. You may even call me a cautious Dutchman, but I see a possibility of all these wishes not being fulfilled and then this problem will crop up again. Therefore, I think it useful to make that remark now. The last remark I would like to make is this: Mr Hawkins spoke of the existing preferences mentioned in paragraph 2 of Article 8 as being universally accepted. I would like to make a small change there and would like to say only that while they are there we have to take the into consideration, but as for "universally accepted", well, that is a little too streng. Thank you. THE CHAIRMAN: Is there any further discussion of these matters or can we now refer them to the relevant drafting committee? I take it then that the Committee is agreeable to the reference of Articles 8 and 18 to the Drafting Committee set up to deal with procedure, tariffs and preferences. There is only one exception to that, I think Mr Hawkins 'suggested that in relation to the question of the negotiability of preferences which take the form of quotas, since that is fairly limited in its application and rather specialised in its form it might be discussed, first of all at any rate, between the countries primarily concerned. They would be, I presume, the United States, the United Kingdom, Australia, New Zealand, and Canada. Is it agreeable to the Committee that we ask those countries to have a preliminary look at that question and report either to this Committee or to the Drafting Committee dealing with tariffs and preferences according to which they think is the better procedure? All right. We will take it then that Articles 8 and 18 have now been referred to the Drafting Committee with that exception, and that goes 26. E/PC/T/C .II/PV/4 ecial to the committee for the purpose. I suggest we adjourn now for 20 Minutes and that when we resume we deal with the subject matter of quantit- ative restrictions, with the understanding tlat in the first place we deal with quantitative restrictions in general excluding those imposed for the purpose of restoring equilibrium in the balance of payments. I think we will keep our discussion clearer if we reserve that particular question to special discussion. in Mr. RODRIGUES (BRAZIL): Mr Chairman,/the Sub-Committee on procedure of Committee 2 certain doubts appear to have arisen in respect of the interpretation of the Brazilian proposals as to general most-favoured- nation treatment. In view of this fact and since this sub-Committee is discussing a question of substance on which Brazil has been one of the first countries to submit agreed proposals, the Brazilian Delegate would like to be included amongst the members of this Sub-Committee on procedure of Committee 2. THE CHAIRMAN: I suggest that we might get over that question by asking the Chairman of the Sub-Committee on procedure and tariffs and prefer- ences to invite the Braxilian Delegate to be present when that phase of its work is being discussed, would that meet your point? MR. RODRIGUES (BRAZIL): Thank you. Mr. SPEEKENBRlNK(NETHERLANDS): Mr Chairman, we discussed that in our meeting yesterday and we cole to the conclusion that it would be advisable to keep to the American draft. I am quite prepared to discuss it again, but that was in the first instance the conclusion arrived at. THE CHAIRMAN: I presume that when you are discussing under the headings of the American draft the letters on which the Brazilian Delegation have ..ade specific proposals you would be prepared to invite then. MR. SPEEKENBRINK (NETHERLANDS): Yes, quite. I only wanted to make the position clear in case the, Brazilian Delegate came into the Committee and thought he found there a bloc with one opinion, because we did the discuss it and took /Paper into consideration. THE CHAIRMAN: I can well understand that, but it should not prevent the full consideration of the proposals put forward by any other Delegation. (The Committee adjourned from 5 p.m. till 5.20 p.m.) 27. I.1. E/PC/T/C .II/PV.4 . After a short adjournment: THE CHAIRMAN: Gentlemen, we will resume our discussion now on the item of the agenda dealing with quantitative restrictions, noting that we defer for the time being those aspects of this question which relate to action to restore equilibrium in balance of payments. This covers Article 19 and in some respects Articles 21 and 22 of the United States Draft Charter. I think it would be of assistance to us if we commence by asking, as before, the United States Delegate to outline briefly the ideas which lie behind the work of the United States experts in these matters. MR HAWKINS (U. S..A.): Mr Chairman, with the elimination of the balance of payments exception, I think I can be fairly brief. The basic provision laid down in Articlee 19, in the first paragraph, is that the use of quantitative restrictions would be prohibited. However, that rule would be subject to a considerable number of exceptions, which I will go over briefly. The first type of exceptions are those covered by paragraph 2 subparagraph (a). They relate to restrictions of a temporary sort which could be imposed under the more or less emergency conditions following the war. They could be used, as specified in our draft, until July 1st, 1949, but they could be extended,in particular cases where the need is apparent, by the trade organisation for successive six months periods. The first of these early post-war transition period exceptions would permit quantitative restrictions to be imposed where this is essential to the equitable distribution of products in short supply. That is probably self-explanatory. It would cover quite a few things, but as an example it would take care of the case in which a country had agreed under an allocation plan to import only from some specified source. It could, under the exception, exclude imports from other sources. The second of these early post-war period exceptions relates to the orderly liquidation of surplus government stocks. Under that exception, a government having surplus stocks could keep out imports until the stocks 28. I.2. E/PC/T/C.II/PV.4. were liquidated, or it might perhaps enter into an agreement with other countries that had surplus stocks under which exports would be controlled, with the idea of limiting the amount of exports during specified periods in order not to create a serious effect on prices for current production. Those are examples of the kind of action contemplated under the exception. There are doubtless others that you could think of. The next exception, subparagraph (b), would permit restrictions at any time -- at any time in the future -- when local supplies of a product are scarce. It might be necessary to prohibit export, for example, where food is very short and where conditions may even be approaching famine. There is an obvious need for an exception of that kind. Subparagraph (c) would permit import or export restrictions on substantive products. That might be done, for example, to protect the liquidation of a particular product abroad by not letting inferior products go on to the market and spoil the name for other producers in the country; or a country could have an import restriction to keep out substantive products in order to protect consumers. J. fs. 29. J .1 E/PC/T/C.II/PV/4 The next exception, d. , would permit obviously quantitative restrictions under recognised or accepted commodity agreements, since by their very nature those agreements would involve trade controls. The next exception, e. , is a bit more difficult. Perhaps to some extent there may be doubt about it. I should just like to explain what we had in mind in putting it in. In fact, that clause is a national treatment clause as applied to quantitative restrictions. It would permit the imposition of import restrictions equivalent to restric- tions on domestic production. In other words, if a country is faced with a surplus problem at home and decides that it is necessary to restrict domestic production, it seems to us it should be possible and permissible to apply the same degree of restriction to imports. Now, on the question of what is equivalent, in other words, what restriction on imports would be equivalent to the restriction on domestic production, equivalent is here defined as not reducing the ratio of imports to domestic production as compared with the ratio of imports to domestic production in a previous representative period. I am not going to read all that lang- uage; you will see that is qualified, taking into account any special factors which would make it difficult to apply the representative period idea. There is a further exception, (ii) in paragraph e., which would permit import restrictions imposed when a temporary surplus of a domestic production is being relieved by making quantities of the product available to needy consumers free of charge or at low cost. It seems to us that the right to impose the quantitative restriction is desirable in such a case in order that supplies removed from the market at public expense will not at once be replaced by imports from abroad. 30. J.2 E/PC/T/C.II/PV/4 The largest exception of all, and the most important and the most difficult, is in the next Article, Article 20, which, in accordance with the Chairman's suggestion, we will pass over for the present. That is one of the major problems to be dealt with by this Committee and would deserve, I should think (and I believe the Chairman thinks) a meeting to itself. Now, there are other pertinent provisions which I might describe briefly. Article 21 relates to the administration of such quantitative restrictions as may be imposed under the authority of the recognised exceptions. The basic rule laid down is the rule of non-discrimination. The rest of that Article is an attempt to define what i?? meant by non- discrimination. There may be some difficulty with the definition in view of its necessary complexity when spelled out in the way in which we have done it; but I should like to indicate the type of measures which would be permitted and which would be regarded as non-discriminatory. I shall not attempt here to take the text in any particular order; I will merely indicate the types of things which under that language would be permitted. First, a country in administering quantitative restrictions could provide for global quotas, that is to say, could indicate and lay down the total quantity of the product that could be admitted from all sources in the world during a specified period of time. A global quota, in other words, is one which is not allocated among sources of supply. Now, as to the adminis- tration of a global quota, the imports could be distributed among traders by any system it chose, provided it did not require them to import from any particular source of supply: in other words, provided it was left to the trader to choose his source. Now, a second type of permitted arrangement would be to allocate the global quota among the supplying countries on 31. J . 3 E,/PC/T/C.II/PV/4 the basis of the shares of the total trade obtained in a previous representative period, with due account being taken of special conditions, that qualification being rather important now because of the greater difficulty that exists in finding a representative period owing to the fact that there has been six years' war. There is, of course, wide room for disagreement as to what is representative. However, we feel that the importing country should choose the representative period which it thinks appropriate but that its choice would be a matter for consultation with interested countries who raise questions regarding it, and that there should be a possibility of reviewing any differences by the Organisation. You will note that it is not required under our draft that there be an allocation. If the global quota were used without allocation you would avoid the problem of the representative period. That is for the country to choose, however, as to which it would prefer to apply. Now, finally, there is a third possibility permitted under our draft, which would be a pure licensing system, without any global or country quotas. That is subject, however, to the qualification that importers must not be required to use the licences they get for imports from any particular source. If licences are issued the importer must choose the source from which he will buy. There is the further proviso that full information will be provided as to the licences granted over a past period. The purpose is to enable supplying countries to see what the distribution among supplying countries in fact was. Now, there is one further Article I could touch upon, I think, without getting too much involved in the balance of payments exception, and that is Article 22, which provides for certain exceptions from the rule of no discrimination 32. J .4 as I have just described it. There is first the exception that members would not be held to the rule of no discrimina- tion in respect of trade with a country whose currency had been declared scare by the International Monetary Fund. There is a further exception related to the Monetary Fund agreement under which it would be permitted to discriminate in view of the provision of the Monetary Fund which permits of establishing fixed rates of exchange among countries having a common quota in the Fund, the point there being that in order that the rates of exchange remain fixed in relation to each other it may be necessary for the countries concerned to take joint action in respect to the trade of outside countries which would involve favouritism among themselves. 33. E/PC/T/C.II/PV/4 E/PC/T/C.II/PV/4 There is a second exception from the rule of no discrimination which relates to the case in which inconvertible currency of another country is accumulated and can be utilised only by discrimination in favour of imports from that country. There is a time limit on that: it refers to discrimination in order to utilise inconvertible currencies which have been accumulated up to December 1931, 1948. The purpose of the time limit is to avoid encouraging countries to accumulate inconvertible curren- cies. There may be some doubt in the minds of some of the people here as to the reasonableness or desirability of that time limit. To any such delegates I would point out that under a later provision -- I think it is Article 52 -- the Organisation can set aside or waive any commitments undertaken under the Charter in particular cases, and it is possible that such cases might arise under this provision. Mr Chairman, I think that covers everything in the quanti- tative restriction section except the balance of payments Article. THE CHAIRMAN: The subject matter is open for discussion. Mr VIDELA (Chile) Mr Chairrman, first of all, I would like to call the attention of the Committee to the words "like product", which are mentioned not only in Article 19 but also I believe in Article 9, and it was the subject of discussion yesterday in one of the Subcommittees. It is very important for discrimina- tion problems to refer to Article 19 (2) (a), and I would like to call the attention of the Committee to the words "on any agricultural product". It seems to me that the agricultural countries are in a very unfair position beside the industrial countries, and my first idea is perhaps that it would be conven- ient to delete the words "agricultural", and to put on the same level the agricultural countries with the industrial countries. It is only a first idea and I would like to have a general dis- cussion, and afterwards I will see whether it is possible to arrive at a solution. 34 PAE K-2 E/PC/T/C.II/PV/4 THE CHAIRMAN: That refers to the use of the phrase "agricultural product" in Article 19 (2) (a)? Mr VIDELA (Chile): Yes. I would also like to mention the doubt that I feel with reference to Article 8 (1) (a), in connection with imperial preferences, and I would like to ask this question: Is there included here in this extension any quota system? Because before the war the economic policy of Great Britain was to reserve first to the national production its market, then to the Imperial countries and afterwards to foreign countries. I remember that in some Conference dealing with quotas we had to deal with this question because in respect of some particular products it was resolved by the United Kingdom and the Imperial Conference to reserve a specific quota to the Imperial countries, after reserving a specific quota to the national production. We see clearly that this extention under Article 8 (2) (a) has nothing to do with quotas. THE CHAIRMAN: The position is that the United States delegate was asked whether the preferences referred to in Article 8 (2) (a) included preferences expressed in the form of quotas. His reply was that it did not include those preferences in the form of quotas, but he was prepared to discuss the question of whether preferences in the form of quotas should be negotiable, that is to say, should be reduced and ultimately eliminated as the result of negotiations in the same way as preferences in the form of tariff margins, and it was suggested that that discussion might take place between the countries primarily affected. If the delegate for Chile feels that the interests of his country are affected by that matter, then I would be happy to add him to the group who will discuss them in the first instance; but it is understood that the preliminary discussion is only preliminary and that the results of it would be brought back to the full Committ- ee. But it is quite clear that Article 8 (2) (a) refers only to preferences in the form of tariff margins and not to quotas. PAE K-3 E/PC/T/C.II/PV/4 My understanding was that Mr McCarthy was speaking of only one or two products of a\ special character: it was not a long list of things, but just one or two, Mr VIDELA (Chile): Mr Chairman, another small question that I want to put before the Committee is this which was also discussed in another Subcommittee: what is the meaning of "previous repres- entative period"? I have already heard the explanation given by the United States delegate, but I would like to point out that this was a matter of discussion in another Subcommittee. THE CHAIRMAN: Is there any further discussion on this matter? Mr BRENNAN (South Africa): Mr Chairman, a number of delegations have stressed the need for quantitative control, As Article 19 (1) now reads, quantitative control is excluded except under special circumstances, and Article 19 (2) (e) provides for a fairly wide range of such circumstances. Now, I would just like to mention one example of the control we might impose in respect of Article 19 (2) (e). In South Africa we have a central co- operative control of the wine industry, and that industry limits the planting of vines in order to limit the output of spirits, In terms of (e) (1), in other words, we presumably find. reasons and excuses for controlling the importation of raisins in order to stabilise the production of wines and spirits -- of potable spirits and I expect we should go down to Industrial spirits. Now, is it fair to prohibit quantitative restrictions and then leave it open for such roundabout methods to be followed? The other aspect which has to be considered is that if quantitative control is not recognised as a legitimate means of controlling trade, you will have a large number of countries resorting to a greater extent to State trading, because it is not very difficult to convert from an existing basis of trade to a State trading basis, and then, simply on the basis of commercial considerations, you would have the same type of control; but the question is whether it would be desirable to revert to State PAE K-4 E/PC/ /C.II/PV/4 trading in preference to keeping trade on the normal basis within the requirements of a legitimate set of rules and quantitative control. Br McCARTHY (Australia): There are A few points which we should like to raise on the exceptions which are stated in paragraph 2. The first is in relation to the price-control measures which our Government, at least, introduced during the war, and which it considers should be continued for some time. This price control means, to give an example which is current at the present time, that in many products the local price which has been laid down by the Government is considerably less than the export price and this means that unless some action is taken to restrict exports by a process of quantitative regulation, no goods will remain in the country for our own use, It does not. appear to be covered, from our examination of this draft, We examined a and b rather carefully, but in a it refers to a post-war tran- sitional period; It narrows it to certain classes of regulation or certain conditions which do not appear to meet our case. It could occur, of course, though it is not apparent at the present time, that the reverse would be the case: that our prices might be at a level higher than the import parity, and we would require to protect that higher local price by restricting import. This price control is a war measure and it is being continued under special powers taken by the Central Government in collaboration with the State Governments, and it seems to us that an exception should be made. 37 E/PC/T/C.II/PV/4 If it were included in a c think it would be a later date than July 1st which would be required, and the qualification made a little later, "Extraordinary and abnormal circumstances", might not be considered applicable. b. seems to refer only to conditions of distress, which perhaps we could not claim. Another point which we should like to raise might be met by some amendment of sub-paragraph d. We contemplate the possibility of an intergovernmental organization being set up which does not come under Chapter VI, or the delay which might take place in bringing it under Chapter VI. The arrangement which I have in mind is our wool arrange- ment. We are not quite certain yet what steps they will have to take to carry out the agreement, and we could wish to keep that open until we have conferred with the other countries party to that agreement and see whether we are sufficiently protected from a charge of a breach of this particular section. The third point relates to the impossibility of using quantitative restrictions for some protective purpose. It does seem to us that in all cases the protection of a new or growing industry by quantitative restriction was necessarily more restrictive than if other means were used. That is, it does occur to us that there might be cases where the imposition of a high tariff to secure an appropriate share of the market to domesticproducers rould exclude the imports. The use of a quota might achieve both lower prices to consumers and a guarantee of some imports where the high tariff might exclude imports altogether. We ask whether that might not be included as an exception. We would agree, I think, that it would apply to special cases only and 38. E/PC/T/C.II/PV/4 perhaps should receive the approval of the organization under some machinery that might be set up. In regard to paragraph e, I followed Mr. Hawkins explanation as carefully as I could, but I suggest that the Drafting Committee consider whether the wording of that all particular sub-paragraph carries out/that it is designed to do, without a loophole being created for some practice which might not be altogether desirable. It seems that the safeguard stated under(i) - that is, the last sentence of e - might not be sufficient to protect exporting countries against action by an importing country whereby that importing country, by introducing a small measure of restriction of its own production, could impose an embargo against imports which might injure supplying countries, I am not certain that the point is valid, but all I want to ask is that it be considered by the Drafting Committee when it is reviewing this particular sub-paragraph, MR. McKINNON (Canada): Mr. Chairman, I would like to reinforce something Mr. McCarthy has said, namely a problem that arises when a country is endeavouring to ma intain price control, when a neighbouring country may not be doing the same thing at the same time, and there could grow up under circumstances of that kind or may grow up quite a wide disparity in prices of products, and if the country has no way of protecting itself it may be completely denuded of various goods, thereby making price control wholly impossible. I.do not think that either a or b of 19 -2 cover the situation adequately at the present time. We have price control in our country at the present time. We cannot say now how long that will continue. That depends upon results, and from the standpoint of our domestic policy it is a matter of very considerable importance. 39. OM L3 E/PC/T/C.II/PV/4 Also, Mr. McCarthy referred to 2.e. We are also concerned about the section under(i), which says "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, account being taken in so far as practicable of any special factors which may have affected or may be affecting the trade in the product concerned." Of course, in many cases where tariffs have been exceedingly high in the representative period the proportion is almost zero, and in many cases this limitation is really not of any consequence. I think some regard would have to be had, if this limitation is to have any effect, to the tariff situation that prevailed in this previous representative period. That is all the comment I want to make at this time, Mr. Chairman. MR. JOHNSEN (New Zealand): Mr. Chairman, I have submitted in Paper No. 22, which has been distributed, certain proposals for an addition to Article 19, designed to cover the position of countries like New Zealand which we think are not covered by the provisions in the draft Charter. Just to make our position clear I would like to give a general outline of that position. In view of New Zealand's high productivity and small population only a relatively small proportion of the products of her primary industries are consumed within New Zealand, the balance being exported. So far as secondary industries are concerned, while there has been a certain amount of development in that direction, this has been limited, not only by the relatively small domestic market available, but also by the fact that 40. OM L4 E/PC/T/C.II/PV/ 4 many basic raw materials require to be imported. In the circumstances our import requirements are heavy and cover a wide range, including not only consumer goods, but also capital goods. To name a few, we require to import, for example, essential foodstuffs in the form of citrus and dried fruits, tea and sugar, textiles for clothing manu- facture, fertilizers, industrial machinery, iron and steel, transport requirements, motor vehicles, motor spirit and oils, railway equipment. To provide for such requirements we must necessarily have a satisfactory market for our export products which will give us the wherewithal to pay for the imports. I might say here that before we commenced to draw on our overseas funds for airports we must set aside a substantial amount to cover the servicing of overseas debts, thus reducing to that extent the amount available for imports. From this it will be seen that New Zealand has a very high level of overseas trade, both imports and exports, in relation to population. Her per capita trade is probably higher than that of any other country in the world. In 1938, according to the League of Nations Review of World Trade, New Zealand' s total merchandise trade Lcr head of the population was twice that of the United Kingdom and seven times that of the United States. This will, I think, give a fairly clear indication of New Zealand's abnormal sensitivity to conditions which affect her overseas markets, and of the necessity, there- fore, that she should have means constantly available to her whereby she can adjust her position to such conditions. It has become apparent also that in order to provide avenues of employment for her people and an increased population, there is need for a diversification of her 41. OM L5 E/PC/T/C II/PV/4 economy. The scope for increased employment in primary industries is'limited, the increased use of improved machinery being,a factor in that connection. An endeavour must accordingly be made to find other avenues of employ- ment, and the only scope offering in that direction is the development of suitable secondary industries. This trend, as -e have already discussed, is in conformity with the objects of the I.T.O. proposals. In considering, therefore, the question of quantitative or qualitative import control, two issues are involved wrom the point of -view of New Zealand and countries in a similar position, the first being the use of that procedure as an aid to development of suitable industries, and the second being the use of that procedure to safeguard the general economic position. Taking twe first question, New Zealand is, I think, recognized as a low tawiff country. In vie. of the Necessity for New Zealand's primary products normally to compete in overseas markets it is essential that costs of primary producerswshould be kept as lo, as possible. To that end it is desirable that the cost of manufactured goods which are used by such producers should not be inflated through high tariffs. A further point to be considered in that connection is that the market for a secondary industry is generally so small as to necessitate that a major share of it should be available to the industry if it is to be condWheed succwssfully. where a ne- industry is being developed, involving high capital outlay, some assurance of a market is necessary in order to encourage such an undertaking. 42. E/PC/T/C.II/PV/4 A tariff is an inflexible implement. There can be no certainty as to its effectiveness, unless of course a rate is fixed so high as to be absolutely prohibitive. This is undesirable, particularly since it would probably be desired from the outset to allow some imports of a competitive nature. Furthermore, the duty might necessarily require to be applied to a wider range of goods than might immediately be available from the local industry, or at least avail- able in quantity sufficient to meet a reasonable share of requirements. It is not normally 43. M.1. E/PC/T/C.II/PV.4. It is not normally possible readily to alter the tariff to meet circum- stances of that nature. Another factor regarding the use of tariffs is the difficulty in determining at the outset at last what might be a reasonable and adequate margin of protection. This applies also in the case - ever, of subsidies. apart from this,how-/a country like New Zealand would have difficulty in resorting to the general use of subsidies as a protective measure for secondary industries. Not only is there the difficulty of financing such a procedure, which is possibly not so evident in the case of the larger highly industrialised countries, but there is also the prospect that once such a policy of subsidisation were embarked upon, it would require to be generalized to other industries. We are strongly of the opinion, therefore, that having regard to its effectiveness and flexibility to meet changing conditions, the use of qualitative regulations on imports as an aid to development of industry has much to commend it, and can be fully justified when considered in relation to the facts governing the position. With respect to the general use of import control, as is possibly well-known, the policy of New Zealand is one of full employment and improved standards of living. As a result of this, there is a high level of spending power in New Zealand and a consequent strong demand for consumer goods of all classes, many of which require to be imported. At the same time, under a policy of planned national development, large importations must be made of industrial equipment and materials. There is little doubt that, in the circumstances, there will be a constant pressure on overseas funds, and it is necessary, therefore, that priority should be given to the most necessary imports. Our overall position -- that is, our sensitivity to overseas conditions -- is dependent on a very narrow range of exports, and our heavy import requirement is such that it is necessary that we should have constantly available a considerable amount of overseas funds, but also that there should be readily available means whereby the position could constantly be controlled. As will probably be appreciated, it is not 44. M.2. E/PC/T/C.II/PV.4. possible periodically to institute and remove controls. Such a procedure would have too disturbing an effect on trade. It is recognised that any control exercized over imports should be operated with a view to expanding trade; that is, all the funds available for that purpose should be expended on imports. Subject to that condition being observed, it is considered that the maintenance of quantitative or qualitative regulations on imports, in the circumstances outlined, can be justified, and that provision should be made accordingly. That is all I have to say on that aspect of it, Mr Chairman, but there is just one question I would like to ask Mr Hawkins if he would be good enough to enlighten us about, and it is in article 21, to which he referred. The procedure employed where quotas are used, as distinct from that employed where import licenses without quotas are utilised: in the first place, in paragraph 2 it is provided that quotas should be, when they are apportioned amongst supplying countries, related to a previous representative period. We just cannot see how there should be a distinction there between the use of quotas and the system of licences. Is there any particular reason why the licenses should not be related on the same basis to the previous representative period? MR HAWKINS (U.S.A.): Mr Chairman, the only purpose in relating allocated global quotas, that is global quotas allocated among supplying countries, is to try to get a fair distribution of the global quotas located amongst the suppliers. In the case of licenses, always provided that the licenses are issued without restriction as to where the importer can buy from, there is an automatic allocation, so to speak, and you do not need a previous representative period; in other words, the supplying country best able to supply the market, under a licensing system administered in that way, would supply the market. Does that answer the point? MR JOHNSEN (New Zealand): No, not quite. We have a system whereby we do not necessarily fix a global quota, but we grant licenses on the basis of imports in some previous period; it might be 1938 or it might be 1940. 45. E/PC/T/C.II/PV.4 In that particular case there is no discrimination as between countries. The importer gets a licence related to the imports from the country that was the supplier in the previous period. M HAWKINS (U.S.A.): Then I take it, Mr Chairman, that you are applying the representative period; you are really allocating your global quota there. MR JOHNSEN (New Zealand): There is no global quota. MR HAWKINS (U.S.A.): You have allocated the total amount permitted to come in on that basis, MR JOHNSEN (New Zealand): Yes. THE CHAIRMAN: I suggest, gentlemen, that we adjourn now and re-assemble for our next meeting at 3 p.m. tomorrow. Is it agreeable that we meet at 3 p.m. tomorrw? Then the meeting is adjourned. The meeting rose at 6.25 p.m. 46. E/PC/T/C.II/PV.4 Corr.1 PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Corrigendum to E/PC/T/C.II/PV.4 On page 44, in the statement attributed to Mr. JOHNSON (New Zealand): "Our overall position - that is, our sensitivity to overseas conditions - is dependent on a very narrow range of exports...." should read: "Our overall position - that is, our sensitivity to overseas conditions, our dependence on a very narrow range of exports, and our heavy import requirements - is such that it is necessary not only that we should have constantly available a considerable amount of overseas funds, but also that there should be readily available means whereby the position can be constantly controlled."

GATT Library

rc205ym0179

Verbatim Report of the Fourth Meeting of Committee III : Held in The Convocation Hall Church House, Westminster, 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.III/PV/4 and E/PC/T/C.III/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/rc205ym0179

rc205ym0179_90220059.xml

GATT_157

E/PC/T/C.III/PV/4 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the FOURTH MEETING of COMMITTEE III held in The Convocation Hall Church House, Westminster, Wednesday, 30th October.1946. at 3 p.m. CHAIRMAN: M. PIERRE DIETEPLIX (France). From the Shortand Notes of W. E. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1 1. THE CHAIRMAN (interpretation): Gentlemen, I call the meeting to order. The first item on our agenda today concerns a point of procedure. I have received letter from Mr. Wyndham White, informing me of a request from the French Delegation concerning the system of translation. W have been using the system of simultaneous interpretation in the main room, but the French Delegation says that that system does not enlabe the Delegates to follow the oringinal and the translaotion and to see whether the translation is really faithful , and, as a technical discussion make it very difficult for the team folIow the original text, inccauracies can creep in, and, it is very difficult for the different Delegates to correct those inaccaurcies. Therefore, they suggest the the system of successive interpretation and athe original statement may be requested sometime in the case of ver important and substantial statement. Naturally, that does not concern today's debate, but I should certainly like the Committee to express their feeling so as to enable me to answer the question which was put to me by Mr Wyndham not White Personally I think, it is useful that we should/be content with the simultaneous interpretation but that in some cases me should allow Delegates to request to subsequent translations in particular in the case of important and substantial statements Are there any objections or remarks on that question? As there is no objection I take it that my suggestion has been adopted. o the substance of our Agenda. Inthe course of I pas coursesNfo ta, te ubtane-oh our jd fn egn c.heIo Deurg tprewovio cus &oen e- aeem thstgwachgYlea ldDosiderwohe genelighral aspect of o Prolwms in uerthligtthe statemhentshich have beende' aund this ma tle here I have been .incose contact rt diwfpthent Deleatitsx hego m exoeessdw.thr vipews t e. e Delegates cllognesuso noltet d wmithhat o their coaus w isees tur epotsan itt waina,is .oh eagt-r oh ain,tseweek I om. I dwo rothnk agI a e in a wposition to text hich is Iagreeable to all. think 2. Mr ? has prepared a draft in the light of his own contact and his own experience. Mr. McGREGOR (CANADA): MrChairman, what is submitted in the suggested re-draft of Article 34 which has been distributed is not presented as the proposal of any one country . It is rather ? compoite product .lts basis is the United States draft, but it incorporates changies which have been suggested by several countries. As we all know, our very fair-minded Chairman, Mr. Dieterlin, has had taiks with many of the delegates; Mr. Korican has been conducting confessionals in his office; and any of us have been having infomal talksz amongst ourselves. This document is an attempt to put down the kind of thing that might be acceptable to us all. The Chairman has had his hand in it, but I do not think he w ould claim or admit sale authorship. He would probably say, with K2pli-g'sn SbrraEk-r-omcplxgaariRis ? n tC -r.e ;hisyr t .-inr' l e ' ng eez-; landern diE,a ' Lz asele,., ghaat Z tmighour quir -t ' zht e=e am ,a hme." sne s ne~ ' ';ze~r'tsforr-draetArts the 1ricloe, jointis cur s roesarstV tw;& sset it i- rArighlt. t4ice so 3L is £0 assc to teap e-coich-tt-it i rszracl-vusiness practices ttwhuldabt i o lifL rtunates^un if _ w it.ere cedpte by thismm Coi.aiwtthouteitloam- ce tionxof, eve-yi-element_ v- nti_. r. it. few dayU ago.COnadarwa. pr~ss~ng. fo- -he criterion.of urdzeness or unreasonableness; we thought too that _ p ovir-ozrn suld2- 'bmadee orfw c bonCr by e Coamii ion o_ isio2n initiative as wewll ason compla-ntcr T 7ew *girt f opcn on -as rather rorcedaus tor"unreasonableness5 and our- initiative".-mos of us, CanadaL incl-d~d, would agree' with- the U-ited, ingdom dhata "harmful^ Uffects" s a.better :crvtecionr that "undies for our purposes. As for the "initiative' provision, if it finds no place in this purposes. As for the "initiative' provision, if it finds no place in this Article, some of us certainly ? for its retention in the ? a line of Article 36. E/PC/T/C.III/PV/4 May I suggest that we might have the original draft before us as well as this document which. I call the new draft? The question of who can make a complaint to the international body will come up for discussion under Article 35; but I take it that we can confine ourselves for the moment to Article 34. Mr Wilcox has given up what many of us thought were his "specific prohibitions" and he may yet yield on his "presumption" pro- vision. Neither is include i n this draft; but the practices which he listed are retained in this draft as illustrations of the was in which harm may be done. We are alI agreed, I think, on that. In paragraph 2 (a) of the original draft the word "service" appears,. and India and South Africa and others are keen to have it re- tained; others would like to strike it out. It is left in, in this new draft, but the exceptions to it will have to be discussed when we come to Article 40. Some think that only combinations should be dealt with; others, that we should include the single large enterprise if it sub- stantially controls the supply of a product. Paragraph 2 (2) of the new draft reflects the latter view. The idea we had in mind was that a combination or monopoly in one country, even though it had no restric- tive agreements with commercial interests in other countries, should come within the score of the Organization's work, but only if its con- trol were wide enough to affect international trade seriously. Should we include government agencies in one country which enter into restric- tive arrangements with private enterprises in another? The original draft provided that we should include them. With this the new draft agrees, but it spells out in clearer terms, in a separate paragraph 2 (1), the definition of "commercial enterprises" which appears at the end of the first paragraph in the original draft. Some of us have objected to the words "frustating the purposes of the Organization" as something that could never be proved. It is like suggesting that a single violation of the Ten Commandments would upset the E/PC/T/C.III/PV/4 whole moral order of the universe, and frustrate the purposes of the Almighty. The simpler wording suggested by the United Kingdom, "when- ever such practices have harmful effects", is less resounding but it is probably more realistic. The phrase, "if they appear to have harmful effects", at the bottom of paragraph 2, is plainly a compromise between two suggestions: one, "are capable of having harmful effects." Canada would prefer the latter, "appear likely to have harmful effects." Canada would prefer the latter, and wouId definitely oppose "capable of" on the ground that every combin- ation is capable of doing harm, but it is only the ones that are doing harm or are likely to do harm that the Organization should be concerned about. "Whenever, " by the way, is the Brazil uses in its sugges- tions, and it looks like a good word. The words "shall be subject to investigation" at the end of paragraph 2 of the new draft are substituted for the idea in paragraph 2 of the original draft, that certain practices "shall be presumed to have" certain undesirable effects "unless shown to the contrary in - specific case." No doubt the United States delegate will have some strong words to say about this proposed change. Some of us tried it on Mr Wilcox yesterday, and it is putting it mildly to say that he did not like it. These are the main points of any significance in the new draft, but there are one or two other suggested Changes that should be noted: (1) France's suggestion that the exception noted in paragraph 2 (b) of the original draft should be inserted as ? at the end of the paragraph and should be applied to (a) as well as (be). That strikes us as an improvement. (2) In the veey first words of the original draft it is suggested that the words "take appropriate individual and collective measures" should be changed to "take appropriate measures, individually, and through, the Organization. " There are one or two other chacgh--nes in thedi gworn of that sentenhichce rew of a o great c nqonseue Fromnce.. reding -reaof pto seseemchs ade lawstk aed feom nrv coanernstios Ie hav whd -th sealver m mb e.of rs Jouommir CectIeo 7should gjudea th- thpri- t- E/PC/TC.III/PV/4 posed ro-draft of Article 34 would be acceptable to the delegates of most - and probably all - of the countries represented, as a substantial foundation. for the subsequent sections, which relate more to matters of procedure. These other sections are important, some very important, but it is most desirable to subject this Article to close ? and anal- ysis and to achieve substantial and intelligent agreement on whatever provisions are finally accepted. Would it be appropriate, Mr Chairman, if I were to move the adoption of this re-draft of Article 34 as a basis for full discussion of its provisions? THE CHAIRMAN (Interpretation): I should like to express my profound thanks to Mr McGregor for the very important contribution he has made to our debate and for the explanations which he has given to us I. think he wants to say something further, and I therefore again call upon MR McGREGOR (Canada): May I just' inquire about the French translation? My own knowledge of French is very slight, 'ut I wondered if the tran- slation of one phrase should not have been that Canada has been accused of being unreasonale but as lacking initiative. No one would here dream of accusing us of being unreasonable; they think us undully modest and shrinking and perhaps, in that sense, lacking initiative. May I therefore ask if perhaps one of our own delegation could examine the French text. I should have let the reporters have a copy of my remarks. They were written in advance but not far enough in advance I am afraid to enable us to give them that service. This is just an aside, but I presume that can be arranged. ? 6. THE CHAIRMAN (interpretation): I must say to the Canadian Dlegate that' I thoroughly agree with his proposal and I support it whole-heartedly, with all the weight of my Chairmanship. Now May I ask Mr ?, who took a very active part in the inter-delegation talks which have been taking place lately, and also took a very important part in drafting this text, to give us an explanation concerning the United States attitude as regards Article 34. MR ? (U. S. A.) Mr Chairman, it seems to me that this text, for which Mr McGregor declines to accept fathership, does represent a distinct contribution to our work in many respects, and in some respects a decided improvement to the original. I suggest, for instance, that the moving of the exception out of paragraph 2.b. to the end of that section is a decided improvement, because that exception clearly, I think, should apply also to 2.a., that is, that the ordinary resale price maintenance arrangements between a producer and his distributors should not be included there. I think the changing of the working about which Mr McGregor spoke are also improvements. l will not try to deal with those in detail. There are tiwo points here that I think are of very great importance, and I should like to confine my remarks to those points, to emphasize the significance of the difference between this text and the original text in the United States In Article 34, paragraph 1, of the original draft, it says: "Members agree to take appropriate individual and 5. colIective measr-es to prevent siness praLiiaecsam.ogi ommo-cial ente-prrses w-wch restrain competition, restrict access to markets monopolistic control in international trade, and which thus have the effect of frustrating the purpose of the Organization", As that wording stood, it involved a judgment. It did not leave the question open to determination whether they did or did not have this effect in individual cases. Some of those who have analysed and criticised this passage said that as we had written it we really begged the question and did not leave it open to determination; and the important E/PC /T /C.III/PV/4. C.2. E/PC/TC.III/PV/4. change there is that the new draft says "members agree to take measures", etc . "with respect to those practices, whenever such practices have harmfuI effects" - the implication the e being that in some cases they do have harmiful effects and that in other cases they do not have such harmfuI effects, and that whether or not they have these harmful effects is a matter to be determined. I think that this is an improvement over our original draft. At least, it sees to me that it expresses the ideas of all of the other Delegates with respect to this latter and that our original wording did not, and it see s to me that this is a very important change. The other change that I should like to point out is that relating to paragraph 2 of our original. In that original paragrah it said: "Members agree that among the practices, which shall be presumed, unless shown to the contrary in specific cases, to have the effect specified" -- are a list of practices. What that wording did was to establish a presumption against the practices listed; and it put the burden of proof on the enterprise against whom the complaint had been brought. Now, our purpose in that was primarily , procedural; that is, it was cur view that if we said to this enterprise: "Now, it is going to be presumed that the effects of these practices will be harmful unless you show us that they are not", there would then be a much greater pressure upon them to appear and to present actual evidence rather than to make a purely perfunctory reply. Our judgment was that to the agency which we sha1l establish, unlike an agency with an inividual country, would not have the power of ? it. It could not send a Marshal to arrest a man and seize him and order him to appear, .and seize his books and papers that we had in mind in establishing the presumption was to make sure that this was regarded as a serious matter, that the concern against which a complaint . was brought actually did regard it seriously and actually did make an appearance and actually did argue its case in defence of itself. This point of view I explained patiently and persuasiveIy and at some length, I thought, and with clear and ? logic to ? McGregor and to some length, I thought, and with clear and ? logic to some of the other delegates. For some reason that I ? unable to understand, they profess to be unable to see the force of that argument, and I must confess that failed to elicit support for my point of vfew. Now, the 8. difference in the draft as ? McGregor has submitted it is that, with respect to these particular practices, there is no longer established a presumption that they have harmful effects. The only thing that ? is that they shall be subject to investigation if they appear to have harmful effects, and the presumption is removed. Now, in these two respects this version involves a very substantial - softening of the original text, and in the first place I think that change is quite justified. I think our position was mistaken, as I look at it. In the second case, I think was are right, but nobody else seems to think so. I just want point put the importance of that change, that the presumption disappears and we have left an illustrative list subject to investigation. Now, I do prefer the wording that Mr ? or suggested: "If they appear likely to have such harmful effects". I would like to see the word "likely" inserted,-but if, as I believe, these two changes ? meet the concern which other Delegates have felt - about the original text and will contribute towards bringing us to an ? position, I think that we should be prepared reluctantly to accept the revised text as a basis for our further work. THE CHAIRMAN (interpretation): I think we should express ? feeling of gratitude for the explanation which ? Wilcox has given us and which ? the importance of the modifications which are now included in the new draft presented by Mr ?. I think should thank hi.. whole- ? for the understanding and objective spirit he has shown in the preliminary studies that have led us to an agreement as to this new draft presented by ? Mr ? If all present showed the same understanding and objectivity, I think agreement would be easy; and I do not doubt that everyone will show that amount of understanding and objectivity. I now Mr. ? (?): Mr Chairman, the ? Delegate would, I think, be fully agreeable as the first paragraph of the suggested new text. With point or which we are not quite certain whether we would ? it included or not. It is said in paragraph 2 that "without ? ? : morality of paragrah one, members agree that the practices listed below" etc. - "shall be subject to investigation if they appear to have such harmful effects". Our view is that is ought to be up to the organisation to investigate ? a practice has that effect or not. ? means that it should not be up to the organisation to discuss ? there is a complaint, whether that complains is sufficiently well founded as to make the organisation believe that it appears that such and such effects have happened. I think that in order that the organisation should be sufficier. ly effective to be able to really prevent the harmful practices, it should be generally accepted that whenever there is a complaint then the organisation shall put in to say, the investigation, and that should be an investigation, a procedure, which should take place without discussing before hand whether it is likely that the investigation may show this or that result. In other word's, if there is a complaint the organisation should make investigation, and ha vinw investi.a el, th or'n risa 5 t 12. I ol2 *r S_ j'UC.: ernt 2S to .-h et her the practices complained ? have the effect which is specified in paragrah one. THE CHAIRMAN (interpretation): I thank you, Mr. ?, for your very interesting remarks. I call on the United KingdomDelegate. Mr HOLMES (UK): Mr Chairman, it would have given me very great pleasure, especially after the devoted effort of Mr ? and Mr ilcox, to which you have referred, to be able to say that new revision of Article 34 of the Draft Charter of the United States was wholly acceptable to the United Kingdom. I cannot say that immediately, and I think that you would agree, Sir, that on this very crucial point in the deliberations of this Committee, we are all perhaps entitled to have time deliberations of this Committee, we are all perhaps entitled to have time to consider the draft. At, the same time I should like to say that we here do recognise, speaking for the United Kingdom, that this marks a very great improvement in our view on the corresponding Article of the United States draft Charter, and that in many ways the manner in which the 10. E/PC/T/C.III/V/4 problem is dealt with is a satisfactory one and entirely on the right lines. Now, I do not know that it is necessary for me at this stage (especially as I am bound to reserve my position to some extent) to say very much, especially as the remarks made by the Canadian Delegate show the profundity with which he plubed the depths of the thinking of the United Kingdom; indeed I feel, if I may refer to his own reference to the "confessional", that i might appear that we had been into the confessional with him and through all the estrictive practices which that involves. I might perhaps refer to one or two of the more important points which arise on this suggested revision, so far as they are of particular interest to the United Kingdom. 11. D.1. E/PC/T/C.III/PV/4 In the first place, I feel considerale sympathy with what has been said by the Delegate of Norway in real to paragraph 2 (b), the ex- pression, "if they appear to have such harmful effects." All I think is wanted - and perhaps, indeed, this may be the intention behind this - is something - which shows that a legitimate complaint will be investi- gated by the Commission on behalf of the Organisation. I say "legitimate complaint:" I think that a complaint should be directed to something which in the Commission's judgment is a practice which is having, or is likely to have, a harmful effect. In this connection I might refer to the words of Article 35 of the United States draft Charter. We may be coming to that, but if I may use it for purposes of reference, that Article, sub-paragraph (4) opens with these words: "when it deems that a complaint deserves further examination. " Behind those words in the new draft may be the same thought, but I suspect that that could be im- proved on; and I am wondering whether perhaps the question does not arise afterwards as to whether we ought to specify to whom the appear- ance is given. At the moment it is simply, "If they appear to have such harmful effects" without saying to whom they appear to have those effects. Mr McGregor has mentioned I think a certain difficulty that the United Kingdom delegation feels about the mention of services in this revision. We had ourselves felt that perhaps it would be are in line .ith the Charter -anerally if this w-.ore limited to Zoodz; that "services" perhaps would be carpable, as we may find later on, of being dealt with in another way. The reference to services. I might mention, is not made in the United States proposals of December 1945, and there have been references in the discussion we have had this afternoon to the original document. In the minds of the United Kingdom delegation it is necessary to realize that the original document really is the proposals rather than the draft Charter. Thirdly, we have some doubts about the reference in the suggested revision, in article 2 (2), to one or more commercial enterprises, just in sofar as that would involve the appli- cation of this procedure, or might involve it, to a single firm, which, 12. E/PC/T/C.III/PV/4 especially ? feel in relation to the subsequent reference to a particular area as well as to the generality of areas, might involve us in some difficulties of minutiae, in the sort of difficulty with regard to the sale shop in a village which is dealing in international trade in the sense that it is providing the inhabitants of that village with imported goods. That is a difficulty which no doubt coud be discussed and per- haps brushed aside. Furthl y rI woLul like to -za that would ha'ueto reserve o ur position at this moment in regar dto the very -widLtexension of aprargahp >2 (1) to public commercial enterprises which of course, in- volves a hwhole host of problems, major and minor -No., Sir, I think that that probably concludes 'he remark iwhich I need make at this stage. you in your wisdom will' no doubt b eevolging for us a satisfactory procedure whereby we may carry th matter a furthers? Genertlly, however, I would like,to repea -hat I said before, that I think this suggested revision,is a document -which we should welcome and which may well prove the basi of th ssolution of the major points with which this very impor ant Committe is cconcerned. We have in it a rather different approach wherebt w trecognise the difuiculty of cnmdemning, or the ana:propriateness o ncomdemning, in advance, all pratices, or presuming wha, all pratice of this so rt are harmful; and my concluding words at thi stage woul Ssimply be this, that we must, I feel; not perhaps ovel-estimate th eextent to which we may be able to deal with the problem alt a ronce. On 7does not want to give people the impression that we willsbe able to d hthings we shall not be able to do; and I would link thos remark -.-.:cjust on word which appears is the second line of t.eof ggest v i- vion, -.the word "prevent." If one looks at the pr o one wil Cv t.'contained ? this ? merely the word. "court." We m he - to _r~t~tintention of ? in internationl traade these^ -r of pra ir. soin so far as tey hafve been or can be, shown to e hoharmful effe think that is I '.1 have to say at tnd nomhe m 13. D.3 THE CHAIRMAN (Interpretation): The explanations given by Mr Holmes, the delegate of the United Kingdom, are of two kinds: some of them are general , some are more : particular, and express the personal preoccu- pation of the United Kinddom delegate. They will be taken into account. is regards the general explanation given by the United Kingdom delegate concerning the time which should be given for delegation to examine at leisure the new text for Article 34. the remarks made by Mr Holmes meet myself and I was going to make a some what similar suggestion later on. I am sure also that these remarks will meet the feelings of most delegates round this table, and I share, on this point, Mr Holmes's concern. I now call upon Mr Hakim, the delegate of the Lebanon. MR HAKIM (Lebanon): Mr Chairman, I wish to support the remarks that were made by the Norwegian delegate concerning the weakness of the last phrase in paragraph 2. The last phrase reads, "shall be subject to investigation if they appear to have such harmful effects." Now I would like to ask here one question: Shall be subject to investigation by whom? Is it to be by the Organization only or by the Members also? Because the first paragraph says,. "Members agree to take appropriate individual and collective measures to prevent business practices among commercial enterprises" and so on. Then I would like to ask another question: That follows this investigation, what is it going to lead to? There seems to me to be here a weakness in the link between paragraph 2 and paragraph 1, paragraph 1. says. "measures to prevent these restrictive business practices" ; then porapraph 2 says simply that an investigation will be made. I know, Mr Chairman, that the two former articles speak about studies to be made, followed by recommendations, but agaain this is. basc article aanda ll hte oOllowing art icles aey that they aer i order to implement t this Article 3.4 So that if we state hree the basic principle of what the rgoanization and the members re to do, it seems to ie that we should not be satisfild.with s ying that an investigation will be made. I think we should go on here to say that the investigation will be followed by certain recomendations E/PC/T/C.III/PV/4 or actions .that are appropriate. Therefore, Mr Chairman, I think that this last phrase should read something like this - I will just suggest wording which may be changed, according to the ideas of the members present here - "shall, if they appear to have such harmful effects, be subject to investigation by the organization" (I do not know whether it is necessary to have "and the Members")- "who shall take appropriate decisions regarding them." Then in the following articles these de- cisions which the Organization will take will be spelled out; but it seems to me that it is necessary, in this paragraph, to say something as to what will be done after the investigation is made. THE CHAIRMAN (Interpretation): I think the remarks which have just been made by the Delegate for the Lebanon are very pertinent, and I wish to make a few remarks by way of explanation of the gaps in the present text which he has emphasized. I think that at the present stage we cannot give final form to this Article 34; the final form only be possible in the light of future discussions when we discuss Articles 35, 36 and so on to Article 40; these articles deal in more precise form with the question of procedure, and once we have come to agreement on Article 35 to Article 40 inclusive, then we can go back to the drafting of Article 34. I think, for the present stage of our discussion, it is quite useless to dwell at excessive lenght on Article 34 in its present form, and we shall have ample opportunity later to do that, necessary amendments. MR ? (India): Mr Chairman, I am afraid that I cannot share the view held by those at this table with regard to the revised draft, particularly subparagraphs (2) of Article 31 as presented by Mr McGregor.The whole approach in that subparagraph is entirely different from the approach put before us in the draft Charter by the United States delegation. The Indian with regard to malpractices which are being carried on by various charter and combines and which have been proved withhout any doubt restrictive -usiness *-=rcticos. .: 2'.cGro^,_r's su~:--sti=n :eroly lay-s ;'_ -.-.t these )ractices should ba suibjct toi s nstia -tion. 2-uroly thi s C,:.- rnittee is cor=-etent encu.gh to assert _einitoly that certain -.ract ices resorted to by certain -oDxties or coi-bines in intatior .l trde are restrictive unless they ^ e shovxa to oe to t"he cvntray y those con- oe.rns thneaselVs. It Should nct be left to the n 7oinin -- Mjo c to lodge , c^,laint .h th e I . U. . thct te se ra-ct'cs in c'-ct harmful to intern.atior-al trae. Another wcakness in the rc- sed -o--,csaal or draft is that every country is. not lilc the U. S. _ n z: the U. K. or other -well-finaCed c~antrios. T.r : a.r^e s mil sunto es hin ch suffea f-rom these =clr-ac-tices, a thljvould r.t only not haveth necessary finance buti t2he lenal ac-u.en and a1l other necessary ec ui-a;ment to f;iht action against a very bi, cartel. So that sugest the -cz attee should seriously consider whether the f-ft - ,ut fz,,-m on this -roblen by ;Ii:;cGreor is a correct or.e, or w.ether we should follow. t-he lead givenrr byt t.'he ,Jited States Delerate. Th.t g-ives rise to sub---,arag-raeh (2) -; of ;rticla 34, wrhat 7 'h- avre ,,ust said.. -s- regards. the g-eneral trend of the revised draft, -,=ticullarly sub-pragph (1) and sub- .rgrc:;h (3), r should Lko to ea)rcss w thanks. to i&r !AcGegor for his statement that. he hr.s taken note of tuhe -points of vievr submitted by India and other countries; 'but I cm afraid that I do tot fired any inication of the fa^ct that wo stressed at the third meetin-of t$hiis- Co~i ttee_ _ is true that the d-raft includes services; but what we~ wanted. tc ss-7 was that taere should be a specif ic- mention, of services such- s bankine insure and shi-yixng Tri:h a.rc --- - an ia liay- to. trade. The-- .Incii delegation will in due course su'bit ., '.-='m nm n .- -- - ....e....... -- :- - e drt- in: order to get those services snecificclly mentioned - either under subri-argra;h. \1) or- subpc- ragh (3) in the revised draft. Then there is another wecaess which was pointed out' by our delegation at the 4lst meeting =1d trnat is with refero-nce to certain exemntions claimed under Article 24.3 of the pro-osa; l, - T-hen. thtt article is reached we -would like to oress for the deletion of certain subcl.auses in that 16. s~~~~~~~~~~~~~~/c . ./ v/ -xticle becc'use the exerntions t'he-e as ir,2icatea in th-e -rz.t - Ch?--":er are i corfli ct with the references to =z1practices lndictea in 'article, 54; lbut I---zasur-e tir the Co..2. ttee vo~uld take nct-e -of u *u'sz~estions Wnen we z~e ach ?'t-lcie ZXX~ s. . - ,, - - \ ,.:: ...erv .: .o . , - -^.: .;zg .-z .t:,;,t -With -these o-hzt ns d t~ s~~agr~.7h f . :-.icle .-,.- .hzi .e -ral.c -y c.rge,, .r .hat the - i-- ' 3-zra. by the *Uie Coa es aelel t hoi be -- !r.". - - 7.- ,, - 17- " , ?U. . - --.: =-=. E. 1. E/PC/T/C. III/PV/4. THE CHAIRMAN (interpretation): I think we should express our gratitude for the way in which Mr Mulherkar has taken a firm stand. I think he goes to the root of the problem. His attitudio confirns 2 previous attitude he expressed in a general discussion at an earlier stage of the corference. I do not want to have general discussion on this question now, but I think very soon I can present a suggestiom acceptable to all, and in which we sha. give ample apporturity to Mr. Mulherkar to express his own views. MR. LEENDERTZ (Netherlands): Mr. Chrman, first of all I would like to join the ranks pf the gentlemen who have complimented Mr McGregor on his draft, and Mr Wilcox for his attitued taken. It was only just before lunch that I retured from the Continent and read this paper, and so I should want so time before I could express myself more definitely concerning this draft, but I do think that a very material step has been taken by these gentlemen in arriving at a basis on which we could deal with the thing in a fair and satisfactory way. There is one point which I think I might raise now, and that is regarding the 4th and 5th lines of the first paragraph of the Article: "or foster ioonnpolistic control vwhenevor such -ractices 'nave 1nIul effects on the expansion of production and trade and the maintenance in all countries of high levels of real income". I think there might be one or two questions in this wording, which might be altered without doing any harm to the intentions of the author of the draft. There are a few countries which think that under certain circumstances cartels may have some harmful effects. For instance, stabilisation might be arrived at by some kind of salutory restriction. So it should, to my idea, read in this way: that it might have harmful effects on the expansion of real useful production. But that is only one small point. The other one is this: It seems to me, from this draft, that the expansion of production and trade would automatically lead to maintenance in all countrieas of a high level of real income. That may or may not be so That is point that is being questioned in literature, and it is also 18. C. 2. E/PC/T/C.III/PV.4. being dealt with here in a lot of Committees. To say whether a thi -is harmful, or has a harmful effect on all those things together, is rather one begging the question. It may be useful from/point of view, and it may be of very little use from another point of view. I have not had time to word it effectively,, but I would suggest a translation in this way "whenever such practices, by their influence on the expansion of production and trade and the maintenance in all countries of high levels of real income, produce harmful effects". I should like to think it over myself and discuss it tomorrow, but I should like to put it forward here for consideration. I shall be very glad to study this further and to have an opportunity of discussing it further tomorrow. THE CEHAIRMAN (interpretation): i think we should express our gratitude to Dr. Leendertz for his remarks. Before we proceed with the work of the study of Chapter 5, I wish to submit a few suggestions of a. general character. First of all, that I would repeat/the text which has been presented at the beginning of today's meeting by Mr McGregor was cirlculated at the last minute, and Delegates, therefore, must have full leisure and ample qpprtunity to consider it, before they can present any amendment which would be useful or desirable. Yet I shall request them to be so kind as to present their amendments in writing to the Secretariat. Secondly, it seems obvicus that this text is only a mere propoisional basis for discussion and that it can therefore modified subsequently in the light of the conclusions reached concerning the othher points on Chapter 5 discussed in the frame of this Committee. I do not think, therefore, as we have no time to consider this question in a leisurely manner and as this is not the final wording, that it is useful now to ask the Committee to come to formal agreement on this point. On the other hand. I think that the explanation we heard last week, or that which we have been hearing today, have given us sufficient clarification to enable us to proceed with the study of the other items of our agenda, the subsequent articles of Chapter 5. As these 19. E. 3. E/ PC/ T /C. III/PV.4. bear on practical questions, legal and technical problems that perhaps may arise, I think it is very hard, at the present stage of our discussion, to have an overall discussion within the frame of our full meeting. I therefore propose to set up a Sub-Committee which would be entrusted with the task of studying articles 35 to 40. This Sub-Committee naturally will make this study taking into account all the original observations wich will have been presented to the Secretariat. All Delegates will have ample opportunity to make-contact with the Committee. Subject to this reservation, I hope this Sub-Committee will do useful work only insofar as it is limited in number and insofar as it is not made up of our full committee. I hope that corsideration will be given to the importance of the part played in earlier meetings by different delegates. Naturally the delegats nominated for this Sub-Committee would be acting in their personal capacity as regards the study of Articles 35 to 40, and would ,/ not be representing their delegations. In the light of these explanations, I should like to nominate Mr Wilcox, Mr McGregor, Mr Holmes, Mr Thiltges, Mr Leendertz, Mr. Mulherkar and myself as Chairman. Are there any comments on these nominations? M. LECUYER (France) : (interpretation): Mr Chairman, I want to put a question as regards amendments. You have said that the delegates wil have an opportunity to submit amendments to the articles but I wonder whether you mean amendments to Article 34 or to all articles, because as the other Articles 35 to 40 will be re-examined by the Sub-Committee, I think it is no use Delegates moving amendments to articles which will probably be modified by that Sub-Committee. Therefore, I. think it would only be useful to have amendments to Article 34 at the present stage. THE CHAIRMAN (interpretation): I wish to express my gratitude to Mr Lecuyer for the very pertinent question regarding a point on which I am afraid I was not precise enough. In my view,. the amendment to be handed to the Secretariat with a. view to passing it on to the Sub-Committee, can relate to Arrticle 34 as welI as the foliwonag articles, tho too naturall' being 20.. E.4. E/PC/T/C.III/PV/4. very closely inter-related. I think now, whon we come to the practica aspect of the questior., that the Sub-Committee must not lose sight of the general aspect which I took care of at the begining. So they will be fully expetent to deal with A articl e 34sar well as the subsequent tirlcles. We ha nowve berfoe as a proposal for anm aemndent tramnsitdte by the Cloaxbm Delegation oczmerningAr,?icle 4.C' hTls amendmentwill bv I p assde& yIhe Secretari- toc he Sub-ComD-tt.e, who w -l consider it in d&u t mi.e I wisht o expressm yg artitdue to the Chilean Delegation for the excellent exaplme of enegreitc ork wwhihc they areg viing now. I alsohjeart hat we hav ebefore usa suggestedadd ition to theA gedna. submitted by theB aziliin.Zelegfte. The B3azili1n D elegationp rpooses that hte folloingw ddiaionn bem dae otiotem1 : " (c )With reefrence to the ceoommi developement of the Iess ndustiralizide countries." dz now think th-re are ary objactio'r to our adop,ing the.amendmeat suggested, by the Brazilian Delegation, yet I should like to know if there are ary observations which any Delegations may wish to make on this matter. MR HOLMES (U.K.): I am not quite clear how thia fits in. Does the suggested addition to the Agenda r-late to c. in the second page ofd_ocmi.nt 1 of this Cmmiottee: S"udiise adnC noferences relaitng to restrictive Business Practices"? HE CHAIRMAN (interpretation): In aniwer to the united KiEgdom=Delegation, may I ask the Braaziilan Delgetaoni if they are n ai position to give us the epxlnaatoin theaeyhas b en rreqested? R DE BARROS (Brazill)(interpretation): My Chmir an, the spiritibehindrthis amendment is that the Agenda in its flirst item, points a and. b, studies the problem of restrictive practices on trade, first of all as concerns the future arganisation env%-isaged, and then as regards specific practices. T'he Brazilir. Delegation has thought that it would also be useful to add another point to this item concerning the countries which are now beginning to be industria lized, because they suffer from cartels more than other countries and from r, o ;her practioex also. So it has seemed to the Barazilian Delegation that it would be useful to study this problem as well as the others, and the Brazilian Delegation have thought that adding this reference to the Agenda woud not ertail any difficulties in further discussions, and would, on the contrary, be useful. 21. F. 1. E/PC/T/C.III/PV/4 THE CHAIRMAN (Interpretation): I feel sure that the concern which has been exressed by Mr de Borres is fully shared by everyone of us here. If I understand the remarks of Mr Holmes wighty I think that this concern is connected with the general objective not only of the pres- ent Committee but also the full Conference, and if this concern is to be specifially expressed then that expression of opinion and concern can come within the fromework of Article 34 (1), at the and of the clause which says, "whenever sich practices have harmful effects on the expansion of production and trade and the maintenace in all countries of hgh levels of real income." I hope I expross the views of those delegates who drafted this document if I say thait in their opinion the maintenance in all countries of high levels of real in- come was tantamount to the maintenance of full employment. in those countries which are really concerned with this problem andthe question of industrial development in those countries which are preoccu-ied with the necessity of cnsuring their further industrial development. May I ask Mr de Barros if he is satisfied with the oxplan- ations which I have been giving and if he doems it necessary that we shouId devote a special chapter of our discussion to this question? MR DE B ARROS (Briazil) (Interpretation): I would. agree to that suggestion from the Chair, provided, of course, due study was given to it. THE CHAIRMAN (Interpretation): Mr de Barros can rest folly assured that I shall not lose sight of this question, neither will the delegates in the course of our furture metings. Now, does anyone wish to make any comments regarding my proposal concerning the setting up of a working sub-committee, or would any delegation have other proposals to make in this respect? If no one wishes to speak, I take it that we all accept the proposal for the setting up of working sub-committee, the members to be: Mr Wilcox, Mr McGregor, Mr Holmes, Mr Thiltges, Mr Leendertz, Mr Mulherkar, and myself as Chairman of the present Committee. I would ask them to make a trl..ondous Cffort- because I think it is desirable that we should finish our work within the next eight or ten 22. 2. E/PC/T/C.III/PV/4 days. We shall have a meeting: tomorrow at 3 p.m. and the Secretariat will inform members of the place of meetig in due course. MR HOLMES (UK): Mr Chairman, according to to-day's Journl of this Pro- paratory Committee there may be a meeting tomorrow afternoon of another Committee with which I concerned. If thai is so, I certainly would not wish to hold up the proceedings of tae subcommittee which you have appointed Would it be posible therefore for my alternate to attend on that occasion instead of me? THE CHAIRMAN (Interpretation): Before answering Mr Holmes, I should very much like to have the feeling of the Committee. But may I say this, that in my cpinion delegates should attend the meetings of this sub- committee in their personal capacity, so that if the Committee is agreeable to the suggestion. that Mr HoImes has made of boing replaced b.y an alternate delegate, my proposal would not of course constitute an absolute rule, but in so far as it is possible for delegates to attend I think it is desirable that the members elected to this Committee should attend meetings personally. Does anyone wish to make any comment regarding the request made by Mr Holmes? If no one has anything to say I take it that the Committee agrees to Mr Holmes's request. Does anyone wish to ask any further questions? If no one else wishes to speak., I confirm that the working sub-committee will meet tomorrow afternoon at three c'clock. As regards the next meeting of the full Committee itself, the time and place will be told you in due course by the Secretariat. I hope that the working sub-committee will complete their work without a fulI meeting of the Committee being necessary, but if an important question cropped up which required general consultation with members of the full Committee I should cer- tainly not hesitate to call here a meeting of the full Committee, be- cause I think the sub-committee should be kept in touch with the general feelings of the full Committee. As no one else wishes to speak, the meeting stands adjourned. (The meeting rose at 5.15 p.m.) 23.

GATT Library

sy829cx8705

Verbatim Report of the Fourth Meeting of Committee IV : Held in Hoare Memorial Hall Church House, Westminster, S.W.1. on Thursday, October 24 1946. 1946-10-24 at 3 p.m

United Nations Economic and Social Council, October 24, 1946

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

24/10/1946

official documents

E/PC/T/C.IV/PV/4 and E/PC/T/C.IV/19-20 + E/PC/T/C.IV/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/sy829cx8705

sy829cx8705_90220088.xml

GATT_157

E/PC/T/C.IV/PV/4 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the FOURTH MEETING of COMMITTEE IV held in. Hoare Memorial Hall Church House,Westminster, S. 1. nter. 1 . on Thursda,.Oct,ober 24th. 146. at C .HELMOE, C. M. G. (U.-L.: ^G 0 (Fz theShorthaNotnd i7B.eof RNEY, .SOS& BFUNNELL, N. G0INLL, 5 Victo,,ra Streete s,tmW,1.ntcrS . OM J1 OM J2 E/PC/T/C. IV/PV/4 THE CHAIRMAN: Gentlenen, before we come to the first item on the agenda I think perhaps I ought now to express my apologies to the Committee for something that arises from the fact that the United Kingdom delegation is playing this complicated international game on its home ground, and I am sure I have the sympathy of everyone here, or at least of those who are Civil Servants, when I say that I have been particularly asked by my Minister to be present with him at 4 o'clock, and therefore I shall ask our Vice-Chairman - who I know expressed the hope that he would never be called upon to function - to/take over from me at ten mi nutes to four, and I shall come back and relieve him from that task which he never wished to fulfil just as soon as I can. Now perhaps I might say a word about the amplified agenda which was arranged by the sub-committee to which you delegated this task. It has been circulated as the 4th document before this Committee. You will see that the note at the top in brackets suggests that we should start at Item 2; that is, the general provisions which night be applied to all intergovernmental commodity arrangements. Item 1 refers to special difficulties relating to primary commodities. Now those your sub-committee felt had been very substantially covered in the general debate which took place, and they therefore felt that it was not necessary for us to spend more time on debating them. Of course, any delegation which wishes to refer to special difficulties in the field of primary commodities when discussing any of the other points is perfectly free to do so, though we did hope that we should not see developing a burdensome world surplus of difficulties relating to primary commodities, and perhaps at the/end of our work on 2. OM J3 E/PC/T/C . IV/P V/4 the remaining items of the agenda we can sec what wo should. then do with the general subject of special difficulties. It might be that we should feel ourselves ready at that stage to entrust to a drafting committee the task of assembling the in the form cf a draft for consideration. So your sub-committee feel that it would be right that we should start right away with general heading 2 on the agenda and should take each of the points in turn. I think I ought also to say that it was very definitely the opinion of your sub-committee that several of these points had. already been touched on in general terms, and the principle which we wish to discover and agree upon could be very quickly agreed. So if we could turn to point 2(a) I think: that we might start straight away with that. MR. GUERRA (Cuba) : Mr. Chairman, will there be any particular cpportunity to introduce amendments? THE CHAIRMAN: I cught to have added that when we have gone and through this list of points,/any delegation feels there is a particular point which has not been/discussed or has not been sufficiently discussed, we shall certainly offer an opportunity then for tlhose to be suggested and, I think it would be the view of the Committee, discussed, and, we hope, disposed of. MR GUERRA (Cuba: I mean, w have certain points before the meeting. £No amendeznts that delegations have should be introduced 24 hours before the discussion is scheduled to take place; or no-s hall Ie proceed? TGH CHAIR-MA : I aMmnoTt quite clear hwether you are referring to amendments to a text or amendments to this a-enda? 1MR GREERR (Cuba): To the text. I 7as referr'ino t the discussion. 3 OM J4 E/PC/T/C . IV/PV/4 THE CHAIRMAN: This agenda does not relate itself to any particular text though it does happen that in the margin there are references to the United States text. I should have thought it would have met the convenience of the Committee generally if we considered the question of text when we have dealt with all these points in principle. MR. GUERRA (Cuba): Pardon me, but I made the statement the other day that we agreed on the agenda, but that if we had any point to be included in the discussion it would be a good thing and would facilitate the work of the Committee to have a text on which to work. It would be much easier as a method of work and a help for the Secretariat. If we worked to a certain text we could find cut if there were any points of agreement or disagreement, and we are prepared to move that the suggested Charter be adopted as a basis for discussion. THE CHAIRMAN: I am in the hands of the Committee on this. MR. BRC.ADLEY (United Kingdom): would it not be best if at our discussion today we built up a text, as it were, which later we shall have before us in complete detail? What I had in mind was that on this first item, 2(a), for instance, we might suggest that that is very well expressed in the text of Article 46(1) of the American documents, and I was going to suggest that in due course. It might be, however, that in the case of 2(f) we might suggest a different text. So that the text would be built up as a result of our discussion this afternoon. As the discussion proceeds amendments or changes can be suggested and ultimately we should have before the Committee a full text covering all the points, ard then detailed amendments could be taken, but to try and amend nor a text which we may not have in front of us might be a waste of time. 4. E/PC/T/C. IV/PV/4 MR. GUERRA (Cuba): I really do not have any objection in principle, but I think that would be more difficult and loss orderly. As I understand it, that does not prevent anyone from entirely substituting any text for that in the proposed Charter. However, it is only a question of method of work. THE CHAIRMAN: Is that agreeable to the United Kingdom? MR. BROADLEY (United Kingdom): I think so. MR. WORMSER (France) (Interpretation) Mr. Chairman, if I have understood the explanation given a moment ago by the United Kingdom delegate, we shall take step by step and examine the several sub-paragraphs of the agenda and we sha.ll also study the corresponding articles of the proposed Charter. I believe this method has great advantages. It will, among other things, allow us to examine in a concrete fashion an idea which is indicated in an abestract fashion in the agenda. From the point of view of the French delegation I should like to see it made clear that ever if the Committee is in agreement with the substance of the idea expressed in any such paragraph of the proposed Charter, it will always be possible for the different delegations to lattr present amendments touching the form and wording of these Articles. THE CHAIRMAN: I think the French delegate has put for us exactly the best way in which to conduct this discussion. Perhaps we might informally take that as our directive for the way we proceed with our business nor. Then shall we turn to point 2(a), on which there is, I think it would be right for me to say, a text suggested in the United States Charter, Article 46(1) . MR. BROADLEY (United Kingdom): That I was going to suggest we might adopt as covering this particular point, Mr. Chairman. 5. E/PC/T/C. IV/ PV/4 THE CHAIRMAN: The suggestion from the United Kingdom is that we might agree that point 2(a) is adequately covered by the words ol the United States Charter, which read as follows: "Such agreements shall be open initially to participation by any member 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" MR. E. de VRIES (Netherlands): Mr. Chairman, the Netherlands delegation can quite well agree with the general idea that is expressed in this Article, but I should like to ask the United States delegation what they mean by several things in it. It is said that it shall be open to any member of the I.T.O. Now it is very important that small countries can enter into such an agreement, and it is one of the essentials for success that such an agreement should cover all the nations which have an interest in exports and imports, the production and consumpiton of a special commodity On the one hand, we must avoid having a rule that small countries cannot easily enter into such an agreement. On the other hand, we must keep in mind that these ageements are ?? t= apply to a special commodity, and it would not be a good thing that all the United Nations should enter into all the commodity agreements that exist . So that there are words used in this draft Charter such as "Substantially i nterested" "principally interested", "largely interested" in a commodity. If all countries interested in a commodity become members that is a very good thing, but countries who are not interested in a commodity should not be in, and it is mentioned previously that non-members can join a study group. It is not said in this Article that non- members can enter at the beginning of an agreement, but I think. it is essential that not only members, but also 6. E/ PC/T/C . IV/PV/4 non-members who are interested in a special commodity can come into the agreement at the moment it starts. A further point is this. It is said that after an agreement has come into being other nations may enter on such terms as may be approved by the Organization. The question is, are such terms general terms - a set of rules of the game to be given by the Organization? If that is the case we can agree to that but if such terms mean special terms, such as the amount of the export quota given to a country which previously was an outsider, then I believe it is not a usual thing to leave such specific terms in tne hands of the Organization. That could be left in the hands of the Council, but general terms can be put in the hands of the Organization. Again, there is this question: can the Organization force some members to become members of an agreement? The Netherlands delegation believes it is not desirable that some member should be forced to enter an agreement, but that it should be open to a member to come into it if it wishes. There is another point: if some country does not want to participate in an agreement, what are the members who are entering into the agreement going to do? In the Chapter, dealing with tariff Barriers, there is something like the idea of a low tariff club. : e know from experience that an agreement can be spoiled by outsiders, who grow up like 7. E/PC/T/C . IV/PV/4 mushrooms, protected by the efforts and measures of an agreement, but do not take the burdens of that agreement, and we might suggest the idea of an obligation on members not to import more from outsiders than they did in the previous period. The last question which I should like to put before the United States delegation is about the exact meaning of "members" in this Article? As a general rule "members" have to be members of the United Nations, but in certain commodity agreements whaich exist at this moment some independent countries are members of such agreements, and there may be an idea something like Article 33 in Chapter III of this draft Charter, that a special customs territory can be treated like a member in the sense of the Charter, and in order to avoid confusion in the rules of existing agreements maybe such a thing could be kept in mind here. I put it as a question, as to what has been the meaning of the United States delegation on this point. Thank you. 8. K.1. E/PC/T/C. IV/Pv/4 MR. WILLCOK (USA): Mr Chairman, I am not sure that we can give a straight answer to the question as to what might be agreed, but in terns of what we were thinking in the article in this particular paragraph I believe the first point made by Professor de Vries concerned the participation by members not interested in the agreement, suggesting that it might be better, I understand, if such members did not par- ticipate. Now in the drafting we have thought in terms of tlhe kind of a.greement in which the voice of a participant is ??easured by some objective criterion of his interest in the commodity to which the agreement applies; so that while porhaps some particular member was not interested, where another member thought that he was interested he could particpate without having a disproportionate influence on the discussions on the agreement becuse of the fact that his voice woula boe very small voice in proportion to the participation of that member in internatinal. trade production and consumption of a commodity. Therefore, for that reason we felt that it would be best to leave it open to al members interested and not have to draw any line as to the degree of interest. The second question was whether we had contemplated that non-members might participate. I think the answer is that we have. The point is expressed clearly as concerns consideration of an agreement in paragraph 1 of Article 45, the last sentence: "Tha Organization may invite the participation of non-Member countries having a similar interest." It may be that it has inadlvertent- ly fallen by the wayside in :Article 46, but the same idea was in mind there, and the point that is expressed here explicity was intended to guarantee the right of non-Members to participate. The third point I believe was concerning the kind of term that was understood under this and the question of whether it was desirable to leave the determination of those terms in the hands of the Organization. I do not know whether I can give an entirely full answer upon that; but it Was our thought that the terms would not be arbitrarily decided upon but would have a relation to the agreement and to the wishes of the 9. E/PC/T/C. IV/PV/4 members who were also participating at the time, that the members thus far not participating wanted to come in and that the organisation really represents there the Commodity Commission based upon the existing agree- ment. Perhaps that would have to be worked out - the exact way in which the terms could be determined - if that were desirable. The fourth point concerns the forcing of members to enter the organization. It was our thought that no member would be forced to enter a commodity agreement. I believe that there were two other points, but I do not have them quite clearly in mind, ever from my notes. I think perhaps they are points that would merit some discussion. One of them was whether the areement could provide for importing from countries not participating in the agreement on the basis of their previous imports. Was that correct? MR DE VRITS (Netherlands): No; if some producer countries stayed outside and could not be forced to come in and under the terms of the ogreement to expand their exports in ar abnormal way, that importing countries would find themselves obliged to check that by giving a quota to such a country not to import more than they did in the period before the agreement existed. In that way you would prevent mushroom growths by outsiders. MR. WILCOX (USA): Do you think that in this as a principle it needs to be specified for a agreement? MR DE VRIES (Netherlands): I was just asking what was the idea of the United States delegation on that. MR WILEOX (USA): I think we need to discuss that a little further. MR GUERRA (Cuba): We want to get some clarification or interpretation of this first paragraph of Article 46 to see if it is correct. A.s we understand it, the distinction as between members and non-members refers only to the question of granting members the right of taking part in any agreement on terms not less favourable than those accorded to any other country. Then we say that that is the only distinction. It is a question of giving more favourable terms, which is I suppose a consequence of being a member of an organization in which the question of the agreement is 10. E/PC/T/C . LV/PV/4 contemplated as a port of the whole. The second thing is the question of approval by the organization for the memiber who may enter an agreement thereafter. In this connection we think that considering the character of the agreement, after all it will be made on the Charter and that will involve probably the allocation of quotas of production and of export quotas by their own nationals. This will have to be decided in each particular agreement, therefore, with the approval of the organization or the members who are parties to the agreement, because otherwise it cannot be accepted. Then if thore is any possibility of the organization granting equal terms or such term if those termas are different from these other particular things or regulations they will be different from one country to another, so that the statement wil be open and such terms will necessarily have to refer to the general conditions. Here I point out again that the agreements have been contemplated as a part of the fixing of the whole set-up of internationl trade, or so I suppose; and, of course, it may be possible to make some amendment to make this absolutely clear, tnat the approval by the organization will have to refer to some general conditions, that members entering into the agreement may have to accept. all the other oblligations under the generall Charter which we in this Preparatory Committee are trying to draft, and things like that. But in any case it will be possible to construe this paragraph in relation to approval by the organization as relating to any particular participation of any member in any particular agreement. MR ADARKAR (India): Mr Chairman, in regard to the suggestion made by the Netherlands delegate, that imports from non-member countries may be restricted to actual imports in a previous representative period, the Indian delegation would like to suggest that the question of inserting a provisions of this kind may be considered for each agreement separately. I have in mind, Sir, the concrete instance. of wheat and of other commodities, which qre at present in short supply. So long as the present world short- age of wheat continues it is rather hand on importing countries to be 11. E/PC/T/C. IV/PV/4 asked to restrict their purchases from non-member countries to actual imports in a previous representative period. The only obligation, which can reasonably be imposed on importing countries is to see that their purchases from non-member countries conform. to an agreed price range if such price range forms part of the agreement, and the obli- gation not to increase imports over the previous representative period could properly be enforced whon the shortage is over. This is only an instance to illustrate the point tihat a provision of this kind could proporly be considered for each agreement separately. THE CHAIRNAB: I would like to suggest to the Committee that we are in great danger of trying to deal with the whole of our Agenda on item 2 (a). I applaud the eagorness of the Committee to get on with the business, but I think that we ought to try to confine ourselves, as far as we can, to item 2 (a), which as I understad it relates to the question of who is allowed to participate in a commodity agree- ment, and the suggestion on which we were basing our discussion, following the proposals of the Cuban delegate at the beginning of our meeting, was that any commidity agreement may be joined at the start of the commodity agreement - and here I paraphrase the United States draft Charter rather freely - that it can be joined by any member of the organization on equal terms with any other member, and thereafter any member can join the agreement on terms approved by the ITO. I think that it is to this specific proposition that we should address ourselves on this particular item of the Agenda. I think perhaps we might ask the delegate from the Netherlands whether 'he would re-phrase his question which started this discussion, very shortly and directly, in relation to these two specific points. MR DE VRIES (Netherlands): About these two special points, Mr Chairman, one question is this - and may be it cannot be put into any law, but it must come into the discussion, and in my country' s view this is important, too - that any member interested in a speciaI commodity should be entitled to enter it on equal terms, but that he should keep in mind that these are 12. K. E/PC/T/C. IV/PV/4 commodity agreements to work in the economic fieid and not bece:ox political bodies, so that members not interested sould refrain from entering that commodity agreement even if they had a right to enter it; and the second thing about it is that if it gives the specific terms of entering is it necessary to leave approval in the hands of the organ- ization? Could not it be left in the hands of the Commission? The third point is this: Is there any reason to interpret the term " member" here as it has been. done in Article 33 of the draft Charter? THE CHAIRMAN: I do not know whether the United States delegate would like to have another shot at answering those s r. s-_ specific questions? MR WILCOX (USA): The first question related to the exercise of restraint by members; and I take it that it is not suggested that that right should be removed. The next questions was whether the term "member" might be taken to mean "member" in the sense of Article 33, which would extend il to cover a customs tarritory. That was a matter that had not entered into our calculations, I see no difficulty with such an in- terpretation. of the torm. A-s o- thed&istinction nf ermes of d:rernce, such temrsmight eb established yb the Cmmisosion arther than by the Ogrniazatoin, and it woldu bemy ndeusranding ttaht the etmrs would be enralbteoms app icaale to alk 'ew;adherents and noc spocifi;aily different terms for different candidates for adherence. THE CHAIRMAN: Perhaps we could take that last answer first, and say whether that is agreeable to the Committee - whether the terms for new adherents to a commodity agreement are to be decided by the Commodity Council or Commission, or at any rate that they should be the same for all new adherents. Would. we agree to that? I take it we would. I am still not quite sure whether the Netherlands are satisfied on the third question, which is: How do we interport the term "member" in this par- ticular sub-paragraph? MR DE VRIES (Netherlands): I apologize for taking up so much of the time of this Committee. In my opinion the answer of the United States delegate answers my question fully; but would not it be more suitable that this matter should come before the Committee at a later tme, and perhaps a 13. E/PC/T/C. IV/PV/4 small sub-committee made up of the delegations of some countries could. cxamine the position and decide whether this draft Charter covers the subject or whether there should be some alterations, and leave that to the form suggested by the French delegation. THE CHAIRMAN: I think it would be a perfectly businesslike procedure for the Committee as a whole to leave it at that, unless there are ony more observations. MR GUERRA (Cuba): May I ask one question? I am absolutely satisfied with the clarification made by Mr Wilccox, but Iwe.nt to knw . whether the qeustinb of puttign this interpretation into written frmn would be ialt -ith nowvor whether -e should reaer that to a smal. drax-ing committee afterwords when we have decided the final points. THE CHAIRMAN: If I might make a suggestion to the Committee, I think it is clear that a small drafting committee is more likely to intreduce clarity into a draft than a large Committee, and we can certainly contemplate that maybe at the end of the main paragraph 2 we would apoint a. Committee to draft something on the basis of the discussion we have had on those points (a) to (i). But, obviously, the report of that drafting committee would come back before tne main Committee, so that the last chance of speaking on these points would not bec gone. MR R.L.HALL (UK): That is generally agreeable to us; but on the specific point, whether the interpretation of "member" in Chapter VI shall be the same as the interpretation in Article 33, there are some difficulties for the United Kingdom, and we would like to have an opportunity of discussing those when the Drafting Committee gets to work. We do not feel that we could accept at once the view that that should apply equally to Chapter VI. THE CHAIRMAN: I think perhaps it would be useful, before we part with this, if we at least had an indication, broadly, of the anxiety that the United Kingdom has about this. I do not necessarily suggest we should finish the discussion of it now, but I think we would like to hear shortly the point that the United Kingdom has in mind. 14. E/PC/T/C. IV/PV/4. MR HALL (UK): There. are territories urder the jurisdiction of the United Kingdom at present, a very large number of small units, many of which have their own customs arrangements, and they might, in the case of a specific commodity, cach produce some small portion of the commodity in question. That would result in a very cumbersome set-up, if each of those was to have separate representation, irrespective of its relation to the total. MR McCARTHY (Australia): I think we are trying to put quite a big problem into this one paragraph. It seems to me that No.1 was intended to relate to adequate M.FN. principles as far as nowcomers were concerned, and then it said, having done that at the beginning, later on the organ- ization will decide what will be the conditions of entry. I think, as we go through it later on, we will automatically cover some of the points that will be raised: there will be such questions as some selectivity in deciding the people who will be in the new commodity agreements, and I think the question will automatically come up under this heading whether people who are not members at all shall come under a commodity agreement. I presume that "member" means a member of the ITO: or it night be decided that the agreement would not be applied if a certain country decided that the ITO were not members of it; and for that reason, for a particular commodity agreement, you might have a non-menber. That I think will arise before this is finished. But we are trying, as the Chairman I think suggested, to compress the wole lot into this rather narrow single item. (At this point the Chairman (Mr Holmore) vacated the Chair, which was taken by the Vice-Chairman (Mr Melander) THE VICE CHAIRMAN: Well, gentlemen. I certainly agree vvith the suggestion of the Australian delegate on tlis point. I think that the basis is first to decide - and I think that seems to me the general opinion - that at the outset all the members of the International Trade Organization shall have the right to join. There may be certain questions of detail as to what territories should be considered as members, but that I suggest 15. E,/PC/T/C. IV/PV/4. is a question of detail, and we might leave that aside for the time- being. MR McCARTHY (Australia): In view of the iterpretation that has been placed upon it I would like to make a reservation for a while that the argeement might not be initially open to everybody. I think that there is a danger in people being members of a now commodity agreement, whose interest in it is so limited that they might tend to hamper it in its work. I think that that is erhaps a point I was going to raise lower down here; but for the moment Ido not think that it should be taken for granted that every menber of the organization could if he wished be in an individual commodity agreement. I think this is largely covered perhaps in some of these other clauses where yo refer to people who have a substantial interest and import and that sort of thing. If you had people who were not substantially interested in the consumption of it, it might be that they should not be members of it. I do not think Australia would wish to be a member of an inter- natonal agreement on coffee: it gros p'o-ractically none, tCds etnvo cnsume rv rymuch, n ad for it tvoo .e on coffeegain asterhaps aazil.Bl or thne Uited States wdoul not be reabne. lan Th t is pthe oipt I mone, and if it is include d ien No.1I witm ould like it to stand for the time g. bei n Asfhor te rest of it, I thintt i k arg s lely a mratte for a drafting ictom.mtee VE EeT/CHAMANIRW: dou any member like toake many other comments oupn this prticularpr Dplem as to rti t ½.paciptaion iheity co0=ammod agreement? LD ( BMMLE(So h frica) : mMr Cmouan, cclodWilcoilwhehcox sk `oewther, nr -wotlhe fct thaae t that snemakmAcle 1p najal esi otiopn1fal ebers n tor niof Article 4 tey b cl 2e5 (2) which says agteehat membe re noet to enter into agreafemenths except ter te formulation annumd adoption by bers e "oa-rpgre=a economice adjustrmnd tt blieverutdo a deeqate`nd s on. Ne,oi a major producing county does not join, thewn thepla holew rwaold apparently hfall t rough,becausoupe it ld note in thterms of Article 45 be made effectnd wiulv e, aodnotdef tt a haryt eagve arl are ptof the 16. E/PC/T/C. IV/PV/4 object or the intentions of this arrangement - if any major country can stand out and at the same time have a sufficient number of markets to sell to, something in the nature of a black market system, which would undermine any agreement. THE CHAIRMAN: Does the United States delegate wish to comment upon that? MR WILCOX (USA): That is not envisaged in the plan as outlined, that there would. be any compulsion on any country to enter any agreement, either as a producer interest or as a consumer interest. It is assumed that participation would be entirely voluntary. MR McCARTHY (Australia): I would agree with that view stated by Mr Wilcom. I think the fact might have to be faced al so that if one or two major countries in a porticular commodity agreement decided to stand out an agreement could not be reached, but we would hope that there would be sufficient people, both importors and exporters in an individual commodity, to make it workable, and even if. black marketing did take place it would be on such a small scale as not to impair the effectiveness of the agreement. 17. E/PC/T/C. IV/PV/4 THE VICE-CHAIRMAN: Well, in any case, this answers the question which the delegate for South Africa asked. Does any delegate wish to ask any other question about that? PROFESSOR E. de VRIES (Netherlands): Mr Chairman, I only wish to stress one point: the question whether article 33 could be applied to chapter 6 is not a question of detail, but a very important question. Let me put it very bluntly in this way: if there were a coffee agreement and the Netherlands and her overseas territories were taken as one unit, we could establish the strongest imperial preference you can imagine; because the Netherlands territories are about self-supporting: they could build up their coffee cultivation within the terms of an agree- ment and establish imperial preference in that way. This is not a question of detail; this is an important question. THE VICE-CHAIRMAN: It may be an important question, but in a way it is a side track from the main principle whether the Organisa- tion ought to be open for all the members of the trade from the start. I think the particular problem which you have raised is rather complicated and I suggest it should be considered by a sub- committee at a later stage. I think perhaps we ought to proceed with the general discussion on the different items; then perhaps we will see if other problems of the same category arise, so that they could be includde in the work of a subcommittee. Does that meet with your approval? Does any other member want to cmment on that? (After a pause:-) Then I suggest we start the dis- ussion under heading 2 (b), representation of producing and consuming countries. Are there any proposals as to what should be the basis of that. Mr BRCADLEY (UK): Mr Chairman does not the American text cover that? I think that would be a very good basis to work on with the drafting committee when it comes to put it together. THE VICE-CHAIRMAN: Are there any other comments on that point? The United Kingdom delegate has suggested that the United States 16. E/PC/T/C.IV/PV/4 proposal ought to be sufficient basis for discussion of that subject. SENOR JOSE ANTONIO GUERRA (Cuba): We support it. Mr McCARTHY (Australia): I would just like to suggest that we might make it clear that the representation of importing and consuming countries is in addition to the representation of exporting countries. It seems to be quite clear what it means, but would say the words should be "such agreements shall include adequate representation", or "shall in addition to exporters' representation provide for"-. I think it is just a matter for the secretariat to note for drafting later. THE VICE-CHAIRMAN: Yes, we will take note of that in the drafting. Are there any other remarks on this subject -- 2 (b)? PROFESSOR DE VRIES (Netherlands) : In this article the term "substantially interested" is used. It ought to be a task for the drafting committee to put on and to make clear the signifi- cance of "principally" , "substantially" and "largely interested". -ily", tant ally" adel - Int rested Such expressions can be used alternatively. Has it been done on purpose or by chance? It may be we need not occupy a long time discussing that here, but it ought to be considered before we come to final draft. Another point is that the words "importation or consumption" are used. Well, it is quite clear that importation and consumption are quite distinct things. If they are put here in a generaI way, I can agree to it, but we ought to make it clear whether such agreements have relation to exports and imports, or to production and consumption. Most agreements that exist now do not mention home production as home consumption. They mostly relate to export and import; but Ican imagine that there may be some agreements in which production consumption is very important. These terms are not easily defined. In regard to consumption, let me take this instance: the United States are rubber consumers from which they manufacture tyres. If they are exporting suh tyres, who is the consumer: 19. PAE L-3 E/PC/T/C . IV/PV/4 is i the uItimate consumer of the tyres, or is it the consumer of the rubber? Such things can be important, but I can see that we need not discuss that question in such a large conference as we are here. THE VICE-CHAIRMAN: Well, if I may say so, I think the points you raise, were covered to a certain extent, at least, by the delegate for Australia, when he suggested that it is not only a question of considering the producing and consuming countries but also of considering export and import; is not that correct? Mr. McCAHTHY ( Austrliaa: "ell, , . ihintky.ou really ege-got the three cteagories: oyu have the epxorters adn mpiorters, adn then peopl ewho may be ver symall ismporters and exportersmasy have a very large conmsmpuiton.Y ou might cnsodier ti davisable to incldue such a country becaus e ofth e ocntrbuition theymi ght ake to -ny regelati n that might me lail down. You mightm-ave a case of a country which was not an imporrant exporter or importer but was nevertheless a very important consumer. It would be very largely a matter of considering each case, I think, on its merits, and I suggest that some of the problems that undeubtedly arise in one's mind in examining general provisions will largely resolve themselves when you get down to the consid- eration of individual commoditiy agreements. There you will find that the people who are really interested will be dealt with perhaps on their merits. America is quoted. Well, of course, America is a big consumer of many things. She can be a very important consumer of a commodity without being a big importer ort..t' or expoolortgher. akeW mit be tn as an exampmple. Her iort of wool is srle relativ- o her totba coonsbuumptdin 'td sehe woulab ery intaat wtol a -eomento grer.7aufseer oL hr eraorrild i-nabybg trrWhenhl l oissu dner condsrai-feon ponist sppreci.u re thmpe iortance of a country likme AericaI. quote Amca anderi wool only as ana exmple. Hemr iportance in redgar to wool would be such that wit ould bige rht ito nclude .her u Ymio ght have 20. E/PC/T/C.IV/PV/4 another country which for some reason has no interest in either of the three categories and the question would arise, whether that country ought to be in or not . The difficulties that could be visualised if such a country were in it might not arise at all if that country were not participation. The expressions "substantially", "largely", "primarily", and so on, are examples of a lot of the difficulties that one finds in reading general provisions. You cannolig _et anhing.- verd;eif i te on that point, but you wouldi fnd those aspects bemcogine vriy mportant ewneo ugtt to the conssderaiop- fy -ur id idvlal agree-ner, THEVIOEC-HACRMANI: Wwell,Ge ntlmeen, I tinkh on the basis of the Ameircan proposal and in teh lghti fr what has beenex presedsed hrI-ownitww.c.ld 1bp nos leil or the drafting comrr.tee to make suggestionsg,:ostimns. R; ,FrR C.)'S nte pr tation): :erej(itrr~5r efor e ofd-scus o,a thibsg parmrapI h eins -ayitaseemat ume5sG s to *- that the exphance ohicolinion wJch khasp Just htaen lwace as shon clearly denouLt'hed i-esifi 5nterestsr of counties represented here, anmr it msee. to 7 tJat thie uain ea oftr wthe tedxsw . ar cussinr tends rathelarger hto ez:telrepresenita.ion I inter- cvernmentaldi coammeom.yts nrao.nlthn to restrain repDesen- tat n, Tterefore I belwive Vteh thcAustrali- elegate that in degcwidain hethper a articular country shall be represented we have to consider specifmmidic ecootis and proceed by successive selectiNon. evertheless. I should not like to see this discussion end whehoutrme it entgionin that from the point of oview f my country there are certaimn comodities of whi arech we neither large scale exportersm or iportoers, ut wihich n our national economy have vgery rmeat iportance gasd rears the lives of gremat nubers of our population. Therefore when the sub- committee to which we shall later delegate the dutpy of regparin, this aafmt exa.nes paragraph 46 Ikd htyhwill 1 'the have to take into account the representation of couwntries which, hile not 21. E/PC/T/C. IV/PV/4 importing or exporting a great deal, may be large-scale consumers of national production. Senor GUERRA: With regard to the question raised by the delegate of Australia, I wish to call attention to the fact that I am representing here what is primarily an exporting country. I support the suggestion of the British delegate that not only imports will have to be considered; because even though it may be considered that these agreements tend to regulate production and consumption only in so far as they affect international trade, we take the view - and in this we concur with the Australian and French delegates - that a country may not be a great importer but yet may have a great consumption; and a dis- order in prices and supply in the international market may affect the domestic prices and have other injurious effects. The is in our view a sufficient reason for giving proper and adequate representation to countries, even if they are not great importers, who have a real subtantial interest in the consump- tion of the Commodity which is referred to in the agreement. THE VICE-CHAIRMAN: welI , Gentlemen, I think we have discussed that particular problem sufficientIy now and it will be possible for the subcommittee to try to obtain a reasonable agreement on that particular point. I suggest, therefore, that we continue by discussing veting arrangements.Un. -in u :_. SCuEN):OR Ga-Z- ( tr on, on an opportune occahsi on, t Cu'ban delegation will e a specific amenintro to ducdiment artcle 46. I now waknt tbo mae a rimef stapteent gexlaimnin tghe eanin of our a:nln t df thi. reforsio. F rI' Itoseral years we have been a party to the internationalg suar agreement, and t hatareement may be taken as an mexaple of adequate representation i oImporgtin na poe-rnQi ocnQuris.-e p e have pero-oed witin hrgath,g-eementr-: on very good terms. Throughotheut nine years thtat hat agmreeent has been in operation we have not had any real difference or 22. PAE L-6 E/PC/T/C.IV/PV/4 frictIon. I refer to that because, while that shows that we find it fair and right for the consuming countries to be adequately represented in any agreement, we do not think it would be proper for the Charter to state as a general and inflexible principle that there should be equal representation. As the delegate of Australia said regarding the point previously dis- cussed, the question will have to be decided in each particular agreement and according to the interests that the different countries have. If we accept this principle as fair that the countries should be represented within any agreement according to the interest they have in the trade of a particular commodity. I think the same principle should apply with regard to the general representation as between the consuming, importing and exporting countries. There may be a case in which a particular commodity is really vital or very important for the whole economy of several countries, and yet from the point of view of consump- tion, the character of that commodity m mtv ay be such as nmako :-1:e . r e~l;yiempry - tuat or substantfiaml Prn hiiepoo-nt.fv-iw, f t- consu:mer. c,rv, -ce versa, themare . b- case rn -hich ta cmiognssu--zde on this questwiion w.lg emi.t ore than the zouuing or expioirt esEid or inst,ance.twhe -rld triade J a odco cmtyiy b-wideldiy ;,bri-,ed id-n-.ferenitcountri-e, and mtyu not be very mi5ortant frmo-th.e point of vwie of the ecomnoies of those countries; and yet the conmptsuion of that cmodmoitmy aye b concentrated in some coutries and my have an important beiagrnn o the production anindd ustrial activities of certain basic industriesiIn one of those countries. In such a case imt ay be posbsile to accept the view that the consumgin interest should wgeimh ore than the expoirgtn interest. We have fcndi13 very usefulw vth r-gard to the possibilities of reachign^ areerment on all these cmon.icated matters ofi 1ternational trade to ifnd that the Charter has consistently avioded establishing 23. E/PC/T/C.IV/PV/4 standards as regards participation or obllgations. I feel that If we accept - and it seems that in the previous discussion it was widely accepted - the priciple that the interests of each country within any particular agreement should be properly weighted, then the same principle should apply to the represen- tation of consuming and exporting countries. If we establish the principle that the agreement shall provide for adequate represen- tation of exportirng and importing and consuming countries, we feel that will safeguard the interests of consuming countries and in every specific agreement they will have every possibility of setting a proper balance. We really do not think it would be wise to include a general condition that the representation must be in every case equal.d HET IVCE-CHARM,NA: Thankyuou. ASre there any ohter cmme,nts or this paritcular pinot? H BROADLEY (U.K)' Well. MrCChairman, as far tte Un.ted Ki gdom. is concerned, naturally we shall be very happy to study any amendment or recommendationwhi ch h.e Cuban delegai on uf- w'rdt: '. I muayshswt ,oever, that ign reard to the balance between import- indg an expogrtin countries, we do attacrh gveay imret ..*portance tct'he principle of equalitisTthy. is particular dparagrah Loes not in ltself referp to consumtiion;al iwit s mdeing th iports and emxports. Iports and expoorts must, f course, be dequal; an therefpore the reresentamtioning of irport countries angd exportin countries in relhatioon to te vlume of trade mathematically must also be equali.io The postmn gof consuin hcountries as been referred to in our previous dischussion. Te position ogf consumin wciountries hch are substantiallyie selfi-sufcient s not dealt with at all in this paragrahph, and tat is quite a separate question; 't in so farasg imtortir countrwiese asd a ,ol-aniexporting couna thries as wole are concerneghbnd, alth wek would lie to examine any suggestiona put forwrd, we do feel that thne questio of iequality n voting in regard to tmhe very r-por.antlmatters of 2.L E/PC/T/C . IV/PV/4 regulation of prices, trade stocks &c., is a very important principle to which we do attach very great importance, and I should Just like to make that clear at this stage of our discussion, without in any way prejudicirng what we may think about the particular amendment. THE VICE-CHAIRMAN: Are there any other comments on this point? SENOR GUERRA U (Cuba): I just want toak-cre clear-Iuat I have said. I understand perfectly that imporats nd exports will necessarily balanice n everay cse. Our principle is thatig weht should be -ven according;to the importancef o_that consumption,nm -oatrtCon or pexortationf or the economyf c any particular coun.tr, 1 iAARHYTK-ustraliJ-a Mi.rhairm:.: as a representatives of an exporting country, I think I should have to say that we believe in the principle of equal representation. ln practice, we shall, of course, encounter little difficulties: but I do not thirkd. it can be claiemd thta an exporting body shoudl be in a poistoin to outvote an mioprintgb doy. There iwll be little points of difficulty; ofr eampxl,e at tmies htere willb e some difficulty in decidig wnhether a country is ane xporter or an importer. In the case of wheat, ti is quite possbile for Russai to imoprt wheat th roguhV ladivsost c k adn export it through the Black Sea; but that wIll have to be dealtw ith on its merit.s I do not know;wh ether it is necessray to mention it in rgaerd ' voting, but I thi-klI sho-:d "ave to support th. view that,. to puti ti n a purely practical way, exporterss hould not be able to outvote importers on vital matters, particularly on prices, Not only do I think it is a reasonable viwe for miporters to take,b ut I believe it is necessary for the sound continuance of these agreements, and it is important teat they shuldo continue. It is important for the successful carrying on of these agreements that importers should be saistfide. M oreove,r wsie shall desire to get greater co-operation from importers than we have had in the past, such as in ensuring thatt he decisions of hte contorllign Jdy are carried out. It shoulk be possible to reduce the tran- 25. E/PC/T/C . IV /PV/4 sactions of an exporter outside the council to the degree that it is necessary to reduce them by the help of the importers. Whether it is necessary to mention it actually in voting or whether to affirm the principle that there should be equal repres- entation, which is practically the same thing, I am not clear at the moment. I just want to say, as the representative of a clountry which will be a. participant in certain in agreements, I hope, anyhow as an exporter, that that is the that we have come to after consideration. M. WOR1SER (France) (interpertation): Mr Chairman, with regard to the beginning of paragraph 2, I have expressed our Opinion that it is important that the interests of consuming countries should be represented. With regard to paragraph 3, the French delegation believe it would be givvn the useful that countriees interested in such problems should be given the might of vote eaqully. I think we have to examine such possibilities as msy exist of finding a system of voting for countries which are largely consumers of primary commodities without playing a very important roles in international commercial relations. PROFESSOR DE VRIES (Netherlands): Mr Chairman, I suppose we can express this point at a later stage; it is a very important matter. The Netherlands, being an importing country and having ed exporting territories overseas, are interest in this question on both sides. You may say that the outcome of the discussion is that consumers should have their interests well protected; but producers also should have their interests safeguard, and I agree with the representative of Cuba that you cannot say that a representation as between two States of 50-50 is always better than 52-48 or even 60-40. You cannot say that in general. It may be different for different commodities. With regard to sugar it is 45-55 and that has worked very well without any complaint from the side of the consumers, or, on the other hand, any complaint from the side of the exporters. 26 E/PC/T/C. IV/PV/4. The question of voting arrangements as a whole covers more than "equal voice", mentioned in Article 46, point 3. In our existing cmmodity agreements there are a lot of voting arrangements. There are some agreements which require unanimous decision on all points. In others, like a wheat agreement among five big countries, a two- thirds majority is required; and there are a lot of other matters concerned when we talk about voting arrangements. Now, is it intended that we discuss this in general terms or is it your idea that we should discuss those things at another stage? THE VICE-CHIARMAN: Well, gentlemen, I think it is rather difficult for me to express any definite opinion on that. If it does riase questions of principle, then perhaps it would be advantageous to hear a statement from those delegations mainy interested in that subject. Would the delegate o f the Netherlands care to m ake any particular statement on this point? PROFESSOR de VRIES (Netherlands): I should rather like to wait until we have the discussion on the amendment of Cuba MR GUERRA (Cuba): We are of the opinion that at this stage the discussion should be referred only to paragraph 3 of Article 46, which would mean the general balance as between the interests of importing and exporting countries, because the question of voting arrangements in genral i s connected, from our point of view, with other questions of organisational relationships between the Organisation the I.T.O., the Commodity Commissions and the Commodity Councils that will be set up for each particular agreement. Therefore we think that in order to get the matter c elar as much as possible we shoulud confine or discussion to this general balancne of interests and not to the general voting arrangements. 27 THE CHAIRMAN: Does it assist the Committee any way to take up this suggestion from the delegate the of Cube now? MR BRCADLEY (U.K.): I think if it raises an issue of principle and if the Netherlands a delegate has suggestions which ought to be considered by Drafting Committee, it would be useful for us to hear a brief statement of them at this stage. PROF. de VRIES (Netherlands): Mr iChairman, as I said a flow minutes ago, before you took the Chair, the Netherlands Dlegation stands for adequate representation of consumers and producers alike They stand for the interests of both groups but they would not like to be tied by the word in the Article, ``equal voice". There may be other terms much more suitable. The principle is that both sid es are adequately represented and ab le to vote adequately, but we do not feel happy about the mathematical idea of 50:50. We think that 52:43 may be quite as good as 50:50; and, as I said before, we should like to discuss it when we have before us the amendment which the Cuban delegation has been so kind as to prepare. MR GURRA (Cuba): I am sorry, but I did not what the order of introduction of amendments would be, and the. translation .had to be made. We will have them ready for tomorrow THE CHAIRMAN: Would it be the wish of the Committee that we postpone this point and, return to it later - in full Committee or in Sub-Committee possibly? MR. BRCADLEY (U.K.): WHy not let the two delegates give their suggestions to the SubDrafting Committee, their will then appear on paper possibly even alternatives, and we could then discuss them, more usefully when mit all comes back to us as a complete document E/PC/T/C.IV/PV/4. E/PC/T/C.IV/PV/4 THE CHAIRMAN: All right ; let us deal with it in that way. Are there any other remarks on point (c) at this stage? It not, we will pass on to point (d), which I think refers to Article 46(4) in the United States Draft Charter. MR McCARTHY(Australia) Mr Chairman, whilst I agree with that, I rather wonder whether we shouled not go a little further and whether we should not suggest that expansion of consumption need not necessarily arise out of the idea of avoiding pro- duction restriction. It might be be that it would be advantag- eous to endeavour to expand consumptiont wi th d a o .ith e "ie -f on bu..~timulating urtherxrng -rodcs.vi.ouf- rond raththat req i.riek- ethi n thet we aaoteaazire scoicerntd rithwtheinecessitti c_restricting-oSy 'h ol at atatei¢^ tb_ at we do contemplaced sonmulatiu thetn miproduction whece it ear -eo o.g.t auout economcch-ly l e ezir m ght :ie.ve the pu-por -nf eopx.dinganco s:mption oantries~~here ~onsump c~nccan be ssimtlate .htichadv tag to tath co utnry. I w onedr hetweh wr esholud otn try to Strkei hatt not as e wel.l I mightt ebthat m ypo nitw uldo e 4met b -n ampli:ic tion of pa.agra h 4 o an extra paragraph. THE CHAIRMAN: An event simpler amendment occurred to me while you were speaking, which was simply to leave out the words "In order to minimise the need for production restriction". MR McCARTHY (Australia): Yes; I was not looking at it from a drafting point of view at all when I mentioned that; but if we started at the word "such" that would cover my point, I agree. MR GUERRA (Cuba): The Cuban delegation is entirely in agreement with the spirit of this paragraph, because we feel that the permanent solution, if there is to one, for these primary commodities will have to be found in the expansion of production and of consumption and not in restrictions. 29 LI E/PC/T/C.IV/PV/4 have in mind one thing related to the discussion we had yesterday in the Sub-Committee set up for the presentation of this agenda, and that is the relations of the F....O. and the I.T.C. and these Commodity Councils. Perhaps it might be helpful to suggest that, instead of giving to the agreements themselves the obligation or authorisation for expanding world consumption, it would be more proper to say that the agreements shall provide, where practicable, for measures designed to allow for the expansion of world consumption. I think the functions of F.A.C. and these Commodity Councils will be reconciled if the F.A.C. has the primary function of expansion of consumption, which was a function accorded to it at the Hot Springs Cofnrerence. That would be a good ground to begin with, I think; and therefore I would say that t he agreement should provide for measures that will allow for the expansion of world consumption, rather than that the agreements themselves should have obligations in them for the execution or the implementation of any policy designed to expand world consumption. PROF. de VRIES (Netherlands): Mr Chairman, I am much in agreement with the delegate of Australia, who said today that, when we are thinking of giving to consumers more influence in the whole scheme, we should bear in mind that consumers should also have the responsibility of expanding consumption in a more efficient way than was the case previously. We can in this matter learn from the lessons of the past. In many agreements there are provisions for expansion of consumption. on the producers' side that ought to be done by research and propaganda; and in most cases a lot of money and a lot of effort is spent on these two points, because they are most important. But consumers have a responsibility, too and I agree with the delegate of Cuba that in dealing with the question of expansion of 30 M.5 E/PC/T/C.IV/PV/4 consumption a large part of it lies in the broad field of economic activity, and it is not the place to discuss it here; but some of the barriers to expanding consumption are tariff barriers or quota or protective systems by consumers who may not be the most effective; and when this Article is put in here I take it it is meant to s tress the point that consumer countries take the responsibility of expanding consumption by trade measures, by reducing tariff barriers or redu?ing fiscal burdens when taking up their rights of representation and voting. There is, however, one small point which I should stress here, and that is or the subject of competing products. When I think of a Commodity Committee or a World Food Board making regulations for a lot of products together I have in mind a body wvhich has the task of expanding the consumption of coffee, tea and cocoa at the same time, and which would have to induce the English to drink coffee and the French to drink tea: That is why I would stress again at this point that the Commodity Councils should have a fair opportunity to make propaganda for themselves and not be tied together in one bundle so that they cannot work at all. THE CHAIRMAN: Do I gather that the Committee is ready to leave this problems, including the ticklish problem of national tastes, to the Drafting Committee? Then we might go on to point (e), which is dealt with in Article 46(5) of the American Draft Charter. MR GUERRA (Cuba): On this point we entirely agree with the idea and principle set out in the American proposed Charter as it is. We would only call attention to the fact that the present draft may be construed in a form that will disregard or put some difficulty in the way of certain countries which have suffered from the dislocation produced by the war; M.6 E/PC/T/C.IV/PV/4 and I am referring now particularly to sugar-producing countries in the Far East which have, as a consequence of the war, dropped very considerably in their figures of production and export cf certain of these commodities. They may be in a very difficult position if we do not make any reservation for taking into consideration the historical participation of different countries in the export trade, because those countries will start now, after the war, from a different position from that which they enjoyed before. Therefore we think it might be a constructive thing to make in this paragraph some reference to the historical position of supplying countries, so that that may be taken into account. For this purpose the Cuban delegation will introduce a suitable amendment. I would like to add here that we are not in this matter thinking of our own interests. As a matter of fact, if this reservation was not made, Cuba, which has increased her export of sugar to a much greater degree than before the war, will profit from the situation in which these other countries now find themselves, particularly those in the Far East. PROF. de VRIES (Netherlands): We are very grateful to the Cuban delegation for the opinion they have expressed here. If I may I would like at this point (again apologizing for being so difficult about terms) to draw attention to the last few words of paragraph 5, "supplied most effectively." I am not a student of English and it is difficult for me to know the distinction between "efficiently" and "affectively"; but surely here are two terms, one of which is relating to the application of science and technics and the other to cost accounting. The opinion of the Netherlands delegate is that in considering this phrase we should not only see to matters of cost accounting and cost price but see whether from a scientific and technical point of view the 32 M.7 E/P/T/C.IV/PV/4 system of production comes up to standard. MR WILCOX (USA): The point raised by the Cuban delegate is covered, I think, in the phrase "with due regard to the transitional need for preventing serious economic and social dislocation"; at least, that was the intention of the insertion of those words. The phrase "supplied most effectively" I would interpret as meaning "at the lowest unit cost". We would attach considerable importance to this principle as a long-run principle; that is, we do not believe that commodity agreements should be used as a means of permanently freezing production in high cost locations. We recognise that re-location of ro auction may involve serious problems of adjustment and that there is need for meeting this problem by easing the burden of transition over a time; but we do feel that there would be a serious social cost and a serious social loss involved in terms of standards of living and the well-being of the people generally if we did not recognise as a long-run objective the idea that things should be produced where they can be produced most cheaply, so that more people can get more goods to consume for less effort. PROF. de VRIES (Netherlands): Mr Chairman, I think Mr Wilcox stresses a very important point. When I apply this to my country I could say, "Well, the Java sugar industry should very well be ready to take over a lot of expensive beet sugar in a lot of countries", but we do not like to do that, having regard to the historical interests and the basic needs for these products in many European countries. On the other side, when we apply only the idea of low cost to agriculture in the European countries, I suppose we would have to leave England and Holland and other countries free for hunting, as our forefathers had them two thousand years ago, and import 33 M.8 E/PC/T/C.IV/PV/4 all foodstuffs from overseas. I do not believe that the social dislocation in Europe is so serious that we have only to consider the matter of low cost, but we need also to take into account social interests and unemploymert questions on, this. Both sides of the problem have to be taken into consideration. THE CHAIRMAN: I wondered if the United States wanted to reply to that challenge on behalf of Western Europe'. MR McCARTHY (Australia): I think I must support the view put forward by the United States. It seems to me that some distinction has been made in the direction of providing that increased consumption be met by the low cost producers and that it is not desired to thrust back the present high cost production. to make way for the low cost producers. We might expect countries such as the delegate for the Netherlands referred to to cut back their production a little, but not very much. I am not committing myself at this stage, but as I read this particular paragraph I thought it referred to the countries which should provide any extra production if it is called for. I personally believe that a fundamental element in these Commodity agreements ought to be that countries which are low cost producers should get the advantages of that; and I would point out that those countries. might have to forgo in respect of other commodities some of their production in order that they might buy from the countries that they expect to buy the extra production that they provide; and, speaking for my own country, I would say that if there is any extra production. of certain primary commodities and our costs are lower than those of Europe, we think we ought to supply them, and we would hope by doing that to buy more off Europe, which is largely a producer of manufactured goods. 34 M.9 E/PC/T/C.IV/PV/4 MR GUERRA (Cuba): The Cuban delegation entirely agrees with the statement of Mr Wilcox on this point and I would only explain that we had interpreted the words '"with due regard to the transitional need for preventing serious economic and social dislocation" as referring to the dislocation that will be caused by the re-allocation; but if this sentence is interpreted in the sense that he explained before we do not have any objection to that point of view. MR HALL (U.K.):- Mr Chairman, the United Kingdom also wishes to support the attitude expressed by Mr Wilcox, and we do attach very great importance to the principle set out in Airticle 46, paragraph 5, that there should be increasing opportunities for satisfying world requirements from the sources from which they can be supplied most effectively; and we feel that it would frustrate the general objectives of these proposals if a special exception were made in the case of primary products which would enable the existing pattern of production to be frozen irrespective of efficiency and by that I think we also mean the costs of the various countries. There is a considerable difficulty in the point which has been mentioned by several speakers about the position of high cost producers who are producing only for their own consumption and in our interpretation of this passage we do give primary through to the question of exports and imports. We do feel that, although it is a good general principle, there will undoubtedly be special circumstances in which countries may require from their own point of view to maintain some part of their requirements in production within their own territories, but, as far as the participation in the export trade is concerned, we certainly feel very strongly that there should be some provision of the kind which is set out here. MR W ILCOX (USA): It seems to me, Mr. Chairman, that Mr Hall 35. M.10 E/PC/T/C.IV/PV/4 has made a very important point here. This particular provision applies only to what would be done under a commodity agreement and would not in any way interfere with domestic agricultural ,programmes outside of a commodity agreement. What it says, in effect, is that under a commodity agreement nations may undertake to establish arrangements with respect to export trade in the commodity concerned which temporarily and for a time will give, let us say, larger quotas to high cost sources of supply and smaller quotas to low cost sources of supply, but that they should not keep on doing that indefinitely. 36. E/PC/T/C.IV/PV/4 MR. ?ORMSER (France) (Interpretation): The statements which have been made by the delegate of the United Kingdom and the delegate of the United States have received the full attention of the French delegation, and the French delega- tion would like to associate itseIf with those statements and to say that its own interpretation of the Article under/discussion is precisely the same as the one which has just been expressed by those two delegates. MR. McCARTHY (Australia): Mr. Chairman, I have some doubts about the interpretation which has just been mentioned by the last three speakers. My understanding was really this, that if a country was importing and had perhaps a protected industry and was producing heavily under that protection, and if that country did consume more or did open up further avenues of consumption, that it could not continue with protection, but under this clause could be asked to open up its market further to a low-cost country which was in a position to export further quantities. I think the question does come up later, but while we are supporting the view/? that importing countries should have full representation, equal representa- tion to exporting countries, we also believe that importing countries should adopt a full share of the obligations that the agreement involves, and if, for example, export quotas were fixed under which exporters agreed to keep their shipments within certain specified quantities, not only as amongst themselves, but in total, it would be expected, I think, that importing countries would agree to take certain steps regarding the holding back or holding at agreed levels of their production, even though it was entirely for their own requirements. To our mind/it would be quite wrong for countries Perhaps to engage in the limitation of production over a certain period, whilst the 37. E/PC/T/C.IV/PV/4 total imports in the world were being narrowed by high-cost importing countries, and if that particular paragraph is to be considered as applying only to export- ers I should like to reserve my position until I have gone further down, and see what we have covered elsewhere. MR. WILCOX (United States): It think the Australian delegate has misinterpreted an earlier statement of mine. I should have said that it is not intended that this paragraph applies to domestic programmes in the absence of a commodity agreement, but applies only in cases where you have taken the affirmative stop and concluded a commodity agreement. MR. McCARTHY (Australia): That meets the point. THE CHAIRMAN: Does that meet your point, too? MR. BROADLEY (United Kingdom): Yes. I think some of your points are being dealt with by other Committees of this Conference, are there not, Mr. McCarthy? MR. McCARTHY (Australia): Only in relation to subsidies and things of that character. MR. BROADLEY (United Kingdom): But I mean your general point about limitations on the degree of protection which domestic producers should give to their own products. MR. McCARTHY (Australia): The point would arise, of course, where there is an allocation of the market between exporters, and my point is that where there is an alloca- tion of a market amongst exporters, any additional alloca- tions should be based upon a low-cost basis, but that that should be applicable to importers as well as to exporters where there is an agreement involving export quotas. You see, I think we will really come to it later. I am satisfied with the point that Mr. ?ilcox made. It covers me for the time being, and I do not want to start on 38. E/PC/T/C.IV/PV/4 another subject prematurely. MR. BROADLEY (United Kingdom): I am content to leave it at that. MR. de VRIES (Netherlands): I am glad to hear that it is not the idea to bring back Europe to the state of a thousand years ago and force European people to develop their agriculture in a much more extensive way than there do now, and that there has been taken into account the need for preventing serious economic and social dislocation. I think it is a very important thing for these European people to know this, but if that is so I take it that measures to overcome such dislocation should cover a transitional period. For instance, supposing the consumption of milk and fruit and vegetables goes up more than 100% - I do not know whether it is possible - then maybe there is no necessity to plough so much ground for wheat or sugar in some European countries, so that would be a transition period, but the need for preventing serious economic and social dislocation cannot be transitional, because it is a fundamental thing in the whole employment problem and in the social policy of all the nations that there is need for preventing serious social and economic dis- organization as a permanent thing, so if we take out this word I think we shall be/safe and can work together for the welfare of mankind. THE CHAIRMAN: I wonder if the United States would like to assist us by saying exactly what they meant by the use of the word "transitional" in front of me here - or perhaps that is too profound a question at this stage. MR.WILCOX (United States): I do not think you can define it in terms of a specific number of years. I should say it does not mean a period as short as twelve months, but it certainly does not mean a period as long as a century. 39. E/PC/T/C.IV/PV/4 MR. de VRIES (Netherlands): So the United States delegate means that after some scores of years there is no longer any necessity to prevent serious economic and social dislocation? MR. WILCOX (United States): I think a distinction might be drawn between violent sudden change and gradual adjust- ment to changing economic situations over time. I think that violent sudden change is very undesirable; it hurts large numbers of little people unnecessarily. I think that gradual adjustment to fundamental economic changes over time is not only desirable, but necessary in the interests of all the producers and consumers involved. MR. de VRIES (Netherlands): Mr. Chairman, I fully agree to that, but that point is covered in the Charter in very well-chosen words in Article 45, point 2(c), where it is even forbidden to enter into an agreement without having a formulation and adoption of such a programme to economic adjustment. I agree about that, but that is not exactly what is said in Article 46, paragraph 5. e must have such a problem of adjustment and it is provided for in the Charter in a direct way. MR. WILCOX (United Sta tes): Those two sections, of course, are supposed to be complementary and definitely related each to the other. THE CHAIRMAN: I do not know if the Chair is allowed to try and effect a reconciliation of these points of view, but I strongly suspect that if the sentence read "with due regard to the need, during a period of change, for preventing serious economic and social dislocation", it would not mean anything different from the meaning attributed to it by the United States, and it might satisfy the Netherlands. MR. WILCOX (United States): Correct. E/PC/T/C.IV/PV/4 THE CHAIRMAN: Any other points on that item? I think we have time to go on to point, (f), which is Non-discrimination, We might look at Article 46-6 in that connection. MR. DEUTSCH (Canada): Mr. Chairman, I am a little puzzled by the meaning of this paragraph. Where there is an agree- ment involving prices of exports and imports among a number of countries, in order to make such agreement effective must we not necessarily or almost in every case necessarily be discriminating against non-members of the agreement? If there is an agreement on price, if that price agreement is to be effective amongst the members of the commodity agreement somebody must undertake not to buy at another price, and that necessarily involves discrimination against people who are not members of the commodity agreement. MR. BROADLEY (United Kingdom): That would depend, would it not, Mr. Chairman, on the nature of the provisions of the agree- ment? For instance, if there was an agreement that fixed, shall we say, maximum and minimum prices, those would then be applicable to all parties, but it would admit of trade between the maximum and minimum which would be on an ordinary commercial basis presumably, and would involve, no doubt, variations as between particular deals with particular buyers, which would not infringe in any way the provisions of the agreement. I think the point raised by the Canadian delegate will come up when we consider the particular provisions of agreements. MR. DEUTSCH (Canada): Yes, but for the purpose of enforcing the minimum price, when that condition is reached, in order to make the thing mean anything there would necessarily have to be an undertaking that the members in the commodity agreement would not buy at a lower price from anyone else. 41. E/PC/T/C.IV/PV/4 MR. BROADLEY (United Kingdom): I think one would accept that. MR. DEUTSCH (Canada): In other words, in order to make the undertaking effective it will require discrimination of that kind. MR. McCARTHY (Australia): I was going to raise that point in a slightly different way - that this particular clause might prevent certain clauses being put into an individual agreement which it was desired to put in, and which would be quite legitimate and perhaps necessary to an effective agreement. For example, it might be decided to have a special price for a certain area, and there might be an element of discrimination in that to which everybody party to the agreement was agreeable, but which a clause like this might prevent being written into the agreement. MR. DEUTSCH (Canada): There is already provision for the whole agreement to be approved by the Commodity Commission, so why refer these particular points again? Wherever there is such discrimination involved, why refer it again to the Organization specifically? That is what puzzles me. MR. de VRIES (Netherlands): No discrimination has always been an economic policy and trade policy of the Netherlands. I would only like to put this question now: Does this mean that for any commodity that comes under a commodity agree- ment no preferences and no quotas or allocations are possible without the consent of the Organization? That has a bearing on the trade policy as a whole. Is that the meaning of the Charter? MR. SCHWENGER (United States): Mr. Chairman, I believe this question of discrimination does not prevent the members of an agreement from enforcing the decisions that they take in regard to commodity price, as suggested by the Canadian delegate, if I understood him correctly. For example, if 42. E/PC/T/C.IV/PV/4 the members of an agreement were to decide on a minimum price and there was an agreement that no importing country would purchase from a non-participant member country at a different price than that agreed upon, that would not be discrimination against that country in any sense. It would be merely enforcing upon them the same regime that was extended to the members of the agreement. MR. DEUTSCH (Canada): If the clause does not mean that I am wondering what it does mean. It says "Under such agreements the treatment with respect to the imports or exports of the commodity accorded by any participating country to any Member - any member being any member of the I.T.O., whether they are a member of the commodity agreement or not. These are principles which are to govern commodity arrangements. If a specific agreement in a commodity arrangement over-rides this principle, then what does the principle mean? MR. SCHWENGER (United States): If I may continue, the essential purpose of this paragraph is to emphasise that in the conduct of these agreements there shall continue to be, vis a vis the members of the I.T.0., a strict observance of most-favoured-nation treatment. That may be a simplifica- tion of it, but that is the basic point. That is, in the distribution programme that may be agreed upon, should the agreement be so conducted that distribution programmes are agreed upon, members of the organization who do not happen to be participating in the agreement shall be giver a ?air share, be it on the import or the export side. MR. WILCOX (United States): We should be glad to have assistance in making such a re-statement. MR. GUERRA (Cuba): I should like that to be clarified, because if the interpretation is in general an extension of entirely 43. E/PC/T/C.IV/PV/4 equal treatment, the Cuban delegation will have reserves to make on that. THE CHAIRMAN: I would like to suggest that the Canadian and United States delegations get together on this before the next meeting and see whether they can come back with an adequate explanation for all of us, after which we might return to the point. MR. McCARTHY (Australia): Do I understand that Canada agrees with the principle that m.f.n. or the principles of m.f.n. shall be extended to all members of I.T.O., even though they are not participating members of the agreement? MR. DEUTSCH ( Canada): No. MR. McCARTHY (Australia): well, that is what I think was said, was it not, and you seemed to me to agree with it, only you said the drafting was not adequate. If Canada does think that I want to put a view, but if Canada takes the view that I thought she took at the beginning. I am quite prepared that she should just go and see the United States alone. THE CHAIRMAN: Obviously this is the opportunity to make confusion worse confounded. Perhaps we might have the Australian point of view on this now, and in the end it will save time. MR. McCARTHY (Australia): All I wish to say, Mr. Chairman, is that I can conceive real difficulties where we have a commodity agreement, where members of the I.T.O. are not members of the commodity agreement and where we are obliged/to treat those members of the I.T.O. who are not members of the commodity agreement on a m.f.n. basis. I think there are certain cases where duties come into it where it would be permissible, but where there are - such things as quotas and prices I do not think you could 44. E/PC/T/C.IV/PV/4 really adopt the principle of non-discrimination as between those who are party to the agreement and those w7ho are not. MR. DEUTSCH (Canada): My point is exactly the same as Mr. McCarthy's. I did agree to the American interpretation, that this might mean that in the treatment of non- members some principle of equity shall be observed. That much I agree with, but I do not agree with the meaning of this clause as it appears to me now, and my difficulty is exactly the same as Mr. McCarthy' s. MR. WILCOX (United States): I think there is a solution of the difficulty in the phrase "unless otherwise agreed by the Organization". MR. DEUTSCH (Canada): My point is, why should these particular matters have to be referred to the Organization in every case, when the whole content of the agreement has to be approved in any case? THE CHAIRMAN: I suggest we have a triangular party on this, and that Australia, Canada and the United States try to reconcile this point for us, or at least make it clear to the rest of the Committee and the Chairman what exactly is the point at issue. MR. de VRIES (Netherlands): Mr. Chairman, may I repeat my questions - whether this also relates to bi-lateral treaties between nations on quota or special preferences? Are these allowed or not allowed? Are they forbidden by this Article, or not? MR. WILCOX (United States): As I understand it, this whole Article refers only to multilateral commodity agreements. THE CHAIRMAN: I am not quite sure whether that was really the question that the Netherlands delegate wished to put. I 45. E/PC/T/C.IV/4 understood it to be, if there were a preferential arrangement otherwise allowed under this Charter between two members of a commodity agreement in respect of that commodity, would that preferential arrangement have to be eliminated, or could it continue? MR. de VRIES (Netherlands): Unless, of course, agreed by the Organization or by the council or Commission. I can see that there are historical positions which cannot be abolished at once, but if you have an agreement, and under the agreement give the right to members to make special bi-lateral treaties, will that not be a reason to upset the agreement? 46. 0.1. E/PC/T/C.IV/PV/4 THE CHAIRMAN: Tha is a separate question from the one I put. MR WILCOX (USA): I am afraid that I do not fully apprehend the point. Perhaps, Mr Chairman, the Netherlands would join this suggested sub- committee. MR McCARTHY (Australia): I thought the point was that you might have a bilateral agreement with some country where, for example, you got some concession on duties; and then, in entering into this agreement, you might find yourself in the position of not being able to continue to grant those duties. I really think the answer is that all these special points will come out when the individual agreements are being discussed, and if a country has got any particular position relative to another country it will have to try to get that concession carried forward in the agreement. I think that if you try to cover them all by a general principle you will find difficulties, because it would mean, in some cases, that you might have eight people going into the agreement, seven of then might have duty-free on a particular commod- ity, that is entry duty-free; the eighth might have duties; but he might not be able to discard those duties straight away. That will have to be part of the original bargain with them. MR GUERRA (Cuba): I am trying to put tlhe question more clearly. The thing is whether the provision of this paragraph refers only to arrangements exclusively made as regards the agreement and within the scope of the agreement or whether this provision applies to the general commercial relation of any country member to an agreement as with any other country. I think that the discussion has shown by itself the need for some clarification on this point. THE CHAIRMAN: I am sure the Committee agree with that. MR GUERRA (Cuba): The provision refers only to the arrangements made within the scope of the agreement - at least that is the interpretation placed on it; it is only referring to things within the agreement. Then, if that is so, it will have to be clarified, and I insist again that if the inter- pretation is that it refers to all general commercial relations with any member country party to an agreement as to any other countries, then ?.7 E/PC/T/C.IV/PV/4 the Cuban delegation will have to make reservations. MR WILCOX (USA): It was intended to apply to the first case mentioned and not to the second. THE CHAIRMAN: I wonder whether, with that explanation, Canada is satis- fied. Is that so? No, I am afraid it is not. MR DEUTSCH (Canada): No, Sir. THE CHAIRMAN: This is a point that I still do not understand, and I would ask the United States, the Netherlands, Canada and Australia to attempt to elucidate it for us, after separate discussion, at the next meeting of this Committee. Now, I do not know how the Committee feels about continuing to-day. It is now 5.35 and there is at least one entertainment that I know of beginning at six o'clock. MR WILCOX (USA): MR Chairman, I may be unduly optimistic, but I would assume that the next two points could be disposed of rather quickly. THE CHAIRMAN: Would the Committee like to try that? It is a challenge to our ability to conduct our business quuickly. Let us go on, then. Point (g) "Adequate supplies to meet world needs. " The united States would like us to agree with the point as stated broadly in the terms of their Charter. MR McCARTHY (Australia): I would agree with that. (Agreed) THE CHAIRMAN: Point (h) is probably also fairly simple. It is in para- graph 10 of Alticle 46. I think we can say that the faith of the United States delegate has been thoroughly justified. That is also accepted. (Agreed) MR DE VRIES (Netherlands): Mr Chairman, I suppose I ought not to speck, but, agreeing with this Article, there is only one thing that is not said in it and that is this: At what moment there shall be full publicity. Especially about the commodity agreements, I suppose that full publicity at a time that is not well chosen might be a dangerous thing. We have had experience about that on the markets; there was a lot of speculation about the chances of an agreement being arrived at; and even as our conference here is mostly private, I propose also that the proceedings and 48. E/PC/T/C.IV/PV/4 negotiations leading up to the agreement should not be publicized at an early date in the Press. MR WILCOX (USA): I would agree to that. THE CHAIRMAN: Perhaps the Drafting Committee could have a look at the actual wording and see whether that point is adequately covered. I do really hesitate to go on to the next sub-paragraph, not that I think there will be any difficulty about the first part of it, but disputing about how to settle disputes is always an item which calls - I say "always": or has frequently been known to call forth a good many speeches. Should we perhaps, therefore, leave that over as the first item for our next meeting? I am afraid that the right of committees, which is undoubted, to decide when they shall meet again is being sorely tried by the tyranny of our Executive Secretary, who obviously has a most difficult task. I think he said to me that he would allow me to suggest that we might tentatively agree upon Monday next at eleven o'clock, continuing in the afternoon. I suggest that that would be the right decision for us to take, leaving it to delegates to watch the Journal for any changes that may be unavoidable in order to fit in with the work of other Committees. We will therefore adjourn now until provisionally Monday at 11 o'clock. MR BROADLEY (UK): What about the Drafting Committee, Mr Chairman? Is there anything about that; is it the same committee that were appointed last time, or is it in any sense different? THE CHAIRMAN: I rather had it in mind that it would be profitable possibly to continue a bit with the discussion and to select a drafting committee not necessarily on the same basis as those who draw up the Agenda, but rather picking out those delegations who had been most active in the do discussion. I hope that the prospect of being made to/some work might act as a deterrent to verbosity, but I am sure it would be best to leave that till the next time of meeting. (The Meeting rose at 5.40 p.m.) 49.

GATT Library

sf227xc2586

Verbatim Report of the Fourth Meeting of Committee V : Held at Church House, Westminster S.W.1 on Thursday, 31 October 1946, at 3.p.m

United Nations Economic and Social Council, October 31, 1946

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

31/10/1946

official documents

E/PC/T/C.V/PV/4 and E/PC/T/C.V/PV/2-5

https://exhibits.stanford.edu/gatt/catalog/sf227xc2586

sf227xc2586_90230010.xml

GATT_157

%- C/T/C/V/ ~~~~~~~~ I UNITED NATIONS ICONN1IC ALD SOOUNCIL t U'L. PREPARATMMI COLUITTEE of the IT=ONATICi.L CONFE'ENCE ON TRADE 4MP.OYMYL; CENT Vinbatpr Retort o f the FOMREH iG-TINC COJ. 7TTEE V held at Church House,miestr~nster S7 - Thu,sday.,31st. October, 1 ..- .p.m3.;c.. . N :,Mr.LYN -Sh thW SSorthandoNotes Of o' ' a Street, es -1-ster, X.l. -,,' 'S "Mr. LYNN R.EIRST- (U.S.A) ,Y.. R. M 17T_ I ? - - ) PAE A-2 E/PG/T/C .V. /PV/4 THE CHAIRMAN: The Secretary of the Committee wishes to make a statement before we begin our general business. THE SECRETARY: Mr.Chairman, just two points I have been asked to raise in reference to documents. Firstly, I would call the Committee's attention to a document which will appear, document No. 9, comprising a number of proposals involving amendment of the American draft text submitted by the Cuban delegation; and in calling the Committee's attention to these proposals might I add that if any other delegation have specfic suggestions, it would be helpful if they could be submitted in writing to the secretariat of this Committee as soon as possible. Secondly, I have been asked to ascertain the wishes of members of this Committee with reference to summary records. As you know, a summary record is prepared of the discussion at the end of each meeting and is circulated as quickly as possible, usually by the following day. It has been suggested that the summary records perhaps are superfluous, in view of the fact that the verbatim record is also made available fairly quickly. The difference is, of course, that, whereas the verbatim records are in limited supply, the summary records are made available to delegations in much greater number. It would be helpful if we could know whether in the view of this Committee the summry re- cord as at present produced is considered useful and whether it is the desire that it should be continued along the present lines, or whether you would be satisfied with an even more condensed summary containing merely a record of decisions taken subsequently to the motions moved, and so on. Mr BURY (Australia): Mr Chairman, I should like to suggest that they be continued in their present form. Anything shorter would be insufficient to convey to other Members of the Delegation and to Departments at home what transpired. On the other hand, verbatim records are very limited in number and difficult to get, iI. .m r ,, i ficult In nu be and d.f.......... and most dI' tfe people concerned will not wish to peruse anything , . . . . . . . . .2. AE -Af w - e '* -*~o P s justo full. Therefore, I should like tc argieet tht they- - continuIn their prqsent form, . THE CNAIThAN: Unloss there is object on, I s>a isue hbtthis CommIttee wihes to continue the sunrnry £n 5-s -'esent :'rm. Xr ERIK COL3AN (NorwY): 1r Cha. m n wlth regard to tue f rst point brought up by the Secretary as to SULmiMIsoD ln writing of -mendzents a proposals, i vcnture- o ask .fr ndulgence, as It is only during, the discussion that I understand the draft Charter s men-ing fully and only ther az I prepared to state my v-, v ev, Up to no- that has worked vory satisfactorily, and I a & litlee it afraid of the very rigid procedure forcing us to stick to such amendments as are subnitted before hand in writing THE S7CRTARY: .rChairman, zay I remove any m.iunderstanding? I Mav not have rade myself very clear. I had no intention whatever of deiar.ing fiom tz- procedure that we have ceen follow ng, Al' I meant 7as zhat ia elegation has a certa-inconcrete mit,estlon hich thcintend in any case to 8u-bt it does give other delegations as -ell as the secretariat an opportunity ofally yari those suggest ons before they actu£y -V i se in the meeting; but otherwise it Is fully understood that most sug;est:ons must come in t.e course of our day-to-day dis- cussions. THE CAI-RAN:.Does the delegate of Canada want to say anything? Er. PImlCE (dCnada): I was going to support war-:y the views of the Norwegian delegate, THE cw-11AáN: If there areno further ccmmQnts, vr shill proceed togthe discission of the f:rst i tm on the aoenda, wh:ch is a consideration cf the report of the Subcom.ittee which was set up aall uplast :eeotng, t, s ,l eref:o c7 1u -o-n-te Chairman of that Sufo-omm tee. '; Dao. E/PC* . P ]3~~~~~~~/PC/T/C ,V/1?V/4. a,. DAO.m(Chi=) :(Mr.irr-n mf ,ub-Coimittmm) ', Chairx:n~the Sub-Coozittee which was appointedmby youmptlour last meeting vet proiapty in accordance with its instructions and was successful in reaching unanimous agreement on the ' text of the various .rticles wh:ch it was asked to consider. nThe Sub-Cocitteels* eco~nedations are set oum-in Document No. 8 of Com- ittee V which has bemembertriblted and which enterss wial have before them. In attemptinm to alve theaquestion of the number And status of Deputy- Direcmmirs General, the Sub-Coidtteeo0 has suggested certain difications of Article 67, 68, 69, the general effect of which is to leave the fullest freedom to the Director General himself to act in this matter accoerding to the needs of th situation as they arise. In delecing Pararaphm2 -f Artidle 69 which iade provision for Deputy- Directors Generam to actoas emmofficio =embers Of mmzzissions, the Sub-Coiaittee was influenced by the argument that im is necessary to know ore definitely what mmis charactegoingthe Co;issions is £;oin to be before decisions can be taken rewarding the role wkicraleputy-Diremenbersenetsa or other emberss of the Sec- retariat shoulamplay therein. For exxapge; it was felt that a Eood deal depends dn whether the Co~missioners are to remain as bodies omposed of experts (as'at present provided) or whether, at least inmmihe cas; of certain Conissionf they ar to be representative bodies. In theue cimmcumstances, thhee Sib-Co~ittee agreed the principle ilfcit in Paragmiph 2 ot article 69 r3i&t be further considered at a later date. I would draw the Committee's attention, also, to the proposal concerning the reference to food and agriculmmere which it is reco=ended be ~~~~~~~~~~~~~~U .' membe o= ed fr6oParagrph 2 of armember,1. pOn he suggestion of the U.S. eer, it as aed t ssibility ohould be given to the poAibi tY of including so- sB c -re-ince e-sewhere ilen the draft Charter - fr exampi, n the Section. -alngwith' te s:ructure andfmmctionscommission.posed Coroodity- CS' ,. ~ Ll~beaj4bsarve that the great m~4ority ofpute proposals which were It norward duriig oir teird.Azd fourti meetings and which met wsth any general measure ' , .. - , ..' . _t ViU sefit to accept E/PC/T/C.V/PV/4: y, * ~~~~~~~~~~h. 6 MR. SOM;CM.R (Unrman , in connection with th report I 'wuld just 1ile to ask that the writtenn report be taken in connection -wth the qualifications that the Chairman of the Sub-Co mmtee has made in his oral statement, because smso of them do not appear here, especial ylyhose regarding the necessity for corBnsering further the decisions taken in the light of .tat the other Committees of the Preparatory Committee may have to say about the nature of the Conimmsion.-T e coints.. we made by M. r.o in' i-is ral presentation. T,E C:AH2IRM N:1Ifhere 4-is oobjctection that procedure -w -iwl consider !M D.ots'remarks as constitutinQ g -apt of the R pert of t'h Sub-Com-imCCte You have heard the Roreporto the Sub-Co~-mmtee. The next step is to take up the amndm.entswh:icw~ ere proposed by the Sub-Cmmit e e and to dipoose of them seriatmn i .this Plenary Cmmittee. The first amendment which has eein proposed relates'to Article 67. It is proposed that this article be mendetd to read as follwr: - nl. The Secretariat shall consist of a Director- General and such staff as may e-riqeuired". " 2. TheD_irecto -General shall have authority to appoint such e0puty Directors-General as he deems neces ary. Such pnpointments shall be made in accordancewi te -gulations approved b the Conference" . should ge clad to hear any comments or discussion on this proposal. RM.URENCERFN wKe' Zealand): Mr Chain, o 'One poiat s rising from the Article as itwno- standwe - have the prescription that the appointments shall bm ade in accordenwc -ith regulations approved by the Conference. That ihetlegu tilations as to the procedure of appoinnmeLt,take itkc . I a juwt 7onder.ngc the her it is not reasonable to give eithter he Cenfarence or E /PC/T/C.V/PV/4 There is one more point: we stressedthis matter at the last meeting. In view of the great importance of the post of Deputy Director General, would it not be desirable that instead of the Director Genera . nmianai.ng Deputy Directors General -or appilnting them, it should be entrusted to the smie bodya2s appoints the Director Genea&l? This is just to show the importance of the post of Deputy Director General. !. ERIK COLBAN (Norway: Mir hiaimian, I beg to differ, for tils reason: if the Deputy Directors Geneal .aPre appointed 'by the same body as appoints the Director enenral, It illl underline the importance of thilr office,azd& itw.ill create :very great gap between the Deputy Directors Geneacl and the other high officials of the Organisation. It will put the ohber officalss of the Orgailsailon very much belw . the Deputy Director., I thin - it is much better to appinbt only he, Dieactor General by the Conference and the DeputyDLirectors yv the iIrector General according to rgulations sapproved by the Conference. r. MORN (Cuba): MirChairman,, I ti'nk the prevailing sentm-ent of the Subcmm-ittee when this matter was discussed was to iIve the iIrectorGrnrealr the means of cofi-mmiIng the policy of the Conference, and this we could not possb-ly obti-n if the assistant or Deputy Directors Genealas-hould be appointed by anybody except himself, becaueE then he could not possibly control their policies. I undersa.dm quite well that there are two opposite views. I Just wnit to a,II the attention of the dele- gate for Indac. to tèe fact that we considered this on the Su- committee. We approached the other end of the question that we deliberately wanted to give the Director General the last word in selecting his assistants. As a matter of fact, I think we even talked about the convenience of his being able at any time to jump into any Committee on which one of the Deputy Directors General might be attendring, so that he might at all times be in a 7.- PAE C-2 E/PC/T/C.V/PV/4 position to impress his own policy and his own ideas on any given SubcommIttee. ,rBUwY ( ustrawis) Ir Chawr.rct I ouldj not V.'h in any ,ay to 11=it 6iscusslon, buiilt dsd occur to me perhaps my Impres'ion Is a wron- one - that the pol-ts raised by the New Zealand and ich an delegates are points l-chJ. were discussed in the fu11 committee, ind the sensC of zhe discussion In the full Oommittee has been conveyed, to the Subcommittee. It does seem to me that unless we conf-ne our attentionflargely to whether the report oL tieiSalcommittee doestmeet the ortgInJ. wishes of this full Cormittee, we Just w-ll. not iake progress. Lr Gi LaAURE7CE (New Zealaed)o .r Chalrmn, if we accept th> pcint made by Austmislak it premupposes that if a ='sta~e were rade in the approach in thm eariy discussion, it becomes irposslble to correct it at soke la er stage. However, to tabe up. the point raised 3y t-e delegate f r Cuba, it was not the question. of the number of a polnam ents that -ere to be made., I . quite aware of the feat that some check on the number of appointments that the Director Ceneral cai makeiis available through conslderatfon o the Budget, bu whether or not.. that check is- very effective is dependentiupon ,-hetheryor not appropriat ns for the purpose of p y nr the salirims are made prior to the appolntient or subsequent to it. I do sucial that it i a matGer of crud-a]. Importance, and I should say that either the Executive Board or the Conference Is very dlrectly concerned as to the number of persons allowed to hold the status of Deputy. £r PIEeCE (Canada): Mr Chairman, it setms to me to be/wrong at this *stage t put a. celling as it is to put-a floor on the number of l;puties that are to be appointed, I do not think we need be any-more fearfub th n the United Nations. was atout. the nuWber that wouli be appointed. "e are not losJng control in aey way oisixpenditures, e hav' a provlison in the draft-here that appnintments cgulaeioade in accordarce with re;plat Ins by PAE C-3 E/PC/T/C.V/PV/4 the Conference, If at that time we know enough about the work to say there shall not be more than six or five or four, let it be said then; but surely you need not say it now; and, as the delegate from Norway has pointed out, we always have what certainly is in our case- and I imagine in the case of all other countries -a most effective control through the Budget. I know that our Treasury officers would examine the appropria- tions very carefully and make sure that they were not lump appropriations that could cover extravagances in the engaging of staff. I think the paragraph as worded represents the sense of the Committee and is as far as we can realistically go now and still leave ample control in the, hands of the Conference. As to the point raised by the Indian delegate, the point has some force, but it appears to me to be outweighed by the practical consideration that if we do not leave the appointment of the Deputies to the Director General himself, It makes it rather easy for him to disassociate himself from the actions of the Deputies, We want him to be responsible for them, and I think we will judge his efficiency by the men he appoints, If the men he appoints are not satisfactory, he himself cannot be satis- factory, That is one of the duties of his office. On the other hand, if we make the appointments subject to approval, it makes it very difficult for him to take on men quickly, as he may have to do . I think we have to leave the responsibility on his shoudlers trusting that we have chosen the right man who can discharge that responsibility and if we have not, we shall have to discharge that Director-General himself. Dr..A.I. QURESHI (India): We have no strong feelings on this point, I just suggested it for the consideration of the Committee. As a matter of fact , it was not. an objection: it was only an observa- tion. it was made by me and i just ,mention it to the house 8.(a) an t ega e r' me - £ ~~~ - - ..~~~ 11r- -Ne E/PC/T/C.V/PV/4 Zealand whether, in view of the explanations which have been made, he cares to withdraw his opposition. Mr. G. LAURENCE (New Zealand): Mr Chairman, I hesitate to delay the meeting, but I do not know that I have made myself clear, because the reply made by the delegate for Canada does not meet the point that I had in mind. His reply suggested that the relations approved by the Conference would extend to the regulations as to number. Dr.PIERCE (Canada):Could. Mr LAURENCE (New Zeeland): Well, I cannot read that into the clause. I am not questioning the point as to whether or not the Director General should apppoint the persons that he wants as Deputies; I think that is quite right. My point is this, that it is conceivable that a Director General may get the idea that he can set up half a dozen persons as Deputy Directors General, and he may-proceed to do that. Then the Executive Board and the Conference would be met with a fait accompli: he has done it; what are we to do about it? My point is that I think the administration in this thing is crucial. I am not questioning that the Director General should appoint the persons that he wants to appoint, but I do think he should be under some respon- sibility to get the approval either of the Executive Board or the Conference as to the number of officers that he wants with the status of Deputy Director General. That is my point; but if the meeting sees nothing in the point, I of course accept the majority decisions Mr NAUDE (South Africa): Mr Chairman, I do not want to delay the thing at all.It was passing through my mind that my Prime MInister only yesterday again spoke about the know-how of co- operation there is in the British Commonwealth; and apparently you have got a scrap on here between the British Commonwealth. But it seems to me that we ought to find a solution for our friend 9. C-5 C. /PV ~~~~~~~~~E/PC/T/(' VPlr,/4 from Ne. Zea~a d eas longeas he realises thattthc Conferonce, once set up - cnd weaksy not meet for another 12 reins -- will. have the duty to lay down in the regulations whaterer, they desire thefDirector Genercl to do; and iv he is concerned with a ceiling on the number of Depute DIrdetors general, the Confer=nce will stIll have the power, once St meets, to lay that down. Do that that point is oovered, if ha.is so concerned. on that point, THE CHAIRBAN: Is twe delegate from New Zealand nov satisfied with the explanation made by the delegate from the Union of South Afri a? br LAUR1CE (NewgZealand): Now that the meetin. has not disputed tplioint thatbere regulation ap;h-es to numrsrs as well at p.ocedure, that meets the point, HE CHAIBKAN: Ion,hehe is no kfurther discussi07- t.en I tae it thatam thm Committee agrees to th=-endnent of Article 67 which has been proposedjb: the tubcommittee, and we pass ontSo Article 68, With respect to Article 68 it is proposd. that in paragraph 1 the fourth line, the words "he shall be eligible for re- apponitmrat" be deleted, and that in pac.graph 2 the first sentence be"amended to read as follows: iThe Director General or a Deputy designated by him shall participate without the right to vote in all meetings ofethe Conference of the Executiv Board and of commigsionstand"committees of the OrEanisaviont. Are there any comments on this proposed amendment? MrISCHliNGER (USA): tr Chairman, T be&ieve there was probably an error of typography in our rush in preparing this, in this particular phrase. Specifically "e planned to have capital 'C" Cownissionsand small 'e"ommittees; and associated with that I w uld 1ike to suggest thatnit- would not be inconsistert with what we agreed a cd I think it would be quite onsistent with that agreement on the capitals and the lower case letters if it were to ",-" read after "Exeutve Brig ,of the Commissions, and of ectiv Bor. l0 PAE C-6 E/PC/T/C.V/PV/4 committees of the Organisation". I believe that would not differ from what we agreed and would bring out more clearly the difference between Commissions, which are constitutional bodies, and committees which are ad hoc. THE SECRETARY: Mr Chairman, may I intervene to say that the responsibility for the capital "C" in the word "committees" is exclusively that of the Documents Section and not of the Secretariat of this committee, It was the definite understanding of the subcommittee that it should be with a small "c". THE CHAIRMAN: The delegate from the United States has suggested a slight revision of the wording of the proposed amendment. Are his suggestions supported by other members of the committee? If there is no objection, I take it that the amendment of the amendment which has been suggested by the delegate for the United States is agreeable, and we then pass to consideration as to whether the proposed amendment as amended is acceptable to this committee.(After a pause:-) I hear no objection, and therefore I assure that this amendment as amended is approved. Te pass now to Article 69. Mr.NAUDE ( SOUTH AFRICA): Mr.Chairman, I have no strong feelings about the words "a deputy" there, but, to avoid confusion possibly with a Deputy Director General might it not be preferable to say: "The Director General or a deputy designated by him" ? There may-beg-ood reason - for retaiilg- the word ddeputy". r.ERIK COL0ANB N(orway:) Yes; I was responsible for that chang.e I have to explain. I prefer the word "deputy" in order to make it clear that the man wouldhave authority to act on behalf of tile Director General and not only represent him, always looking behind imh to find out whether the Director General agreed on every point. I want a deputy instead of Deputy Director General in order to allows other officials of the staff to take part in the work. That Might makei tpnosi-ble to restrict the number 11. PAE C-7 E/PC/T/C .V/PV/4 of persons salaried as Deputy Directors General. THE CHAIRMAN: Does the statement made by the delegate for Norway satisfy the delegate from South Africa? Mr NAUDE (South Africa): Mr.Chairman, the Norwegian delegate speaks from a great fund of experience, and I obviously withdraw what was not an amendment at al . I me.ale!y ask d. for ane xplan- ati.n, THEHCIRMA-:N: I take it, then, thaw -m ;ayataki tht.at the propo e.mardmC ent of Article 6i Is approved. We pass now to Article 60, It is first proposethavht page.raph 1 aamen&nded bi Incorporated in Article 67. It is thep :urpod 6: that paragraph 2 be deleted bu iw-thout pjeidc.ce to subsequent recoislderiooln at suchit-me asht'eharrocrel, mo-positlon and functions of the proposed Commiislons havbe ner more clearly teueriaIned. Are there comments on thesamuIendmtnzs? .2; E/ PG/T/C.V/PV/4 MR. SCH.EGER (United States): Mr. Chairman, I have already made this point in general, but it might be noted here that this reserva- tion extends by inference to what we have already accepted for, Article 68, paragraph 2, since the change accepted at the top of this page was to replace the deletion which we here note as being without prejudice to subsequent reconsideration. THE CHAIRMAN: without further comment the amendments proposed of Article 69 will be recorded as agreed to. The next is Article 70.It is proposed with reference to para. 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." It is also proposed that in para. 1, second sentence, 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." It is of course clear that there as a typographical error, and that the "i" in the first amendment proposed should be in the lower case letter. Without further comment the proposed amendments of Article 70 are agreed to. Article 71: It is proposed that in para 2, the first sentence, the words "with particular reference to the importance of food and agriculture in relation to the subjects dealt with- in Chapter 6" be deleted. There is, however, a note that with reference to this amendment, it is agreed that the United States relegation should examine the possibility of incorporating else- here in the Draft Charter an appropriate reference to the special importance of food and agriculture in relation to commodity arrangements. 13. OM D2 E/PC/T/C.V/PV/4 Are there any comments on these proposals? MR. MORAN (Cuba): I wonder if we can have the permission of the Chair- to have Dr. Alamilla, of the Cuban Delegation, comment on that provision on our behalf? THE CHAIRMAN: Certainly. DR. ALAMILLA (Cuba): With your permission, Mr. Chairman, I would like just to add this, that we are, of course, in accordance with the suggestion that these words be deleted, but that me would like to have the note underneath drafted in a somewhat different way, because it seems that we have agreed that the United States delegation should examine the possibility of putting an appropriate reference, and therefore we are taking somewhat of a responsibility in considering that an appropriate reference should be made in some other place in the Charter. The Cuban delegation would like to be able, when these points are raised, also to discuss whether or not it is appropriate to do it and whether or not it should be incorporated. Thank you. THE CHAIRMAN: Would it be agreeable to the delegate of Cuba if that note were changed to read as follows:- "With reference to this amendment it ras agreed that the possibility of incorporating else here in the draft Charter an appropriate reference to the special importance of food and agrilculture in relation to commodity arrangements should be left open for considera- tion" ? DR. ALAMILLA (Cuba): Yes. THE CHAIRMAN: In the absence of further comment I take it that the amendment proposed to Article 71, with the note as revised, is agreed to. Article 72: It is proposed that in the fourth line the words "These persons may be appointed without regard to their nationality" be deleted. Are there any comments on that? Then without comment that amendment is agreed to.. rticcle 77, the title: It is proposed tha .the title of thsa 4. th 6.,-ti . l E/PC/T/C .V/PV/4 Article be amended to read "Payment of Contributions". Are there comments on that? If not, that part of the proposal I take it is agreed to. It is also, proposed with reference to Article 77 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 Organiza- tion 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" . That is the text of article 19 of the United Nations Charter. Are there comments on that? R.W.C .NAUDE (South Africa): Mr. Chairman, I apologise for inter- vening again, and again I will say I do not press what I want to say. It does seem to me that from the point of view of the structure of the constitution it seems to be perhaps not very appropriate to say in Article 55 that the Conference will apportion the expenses, and, then to say about 20 Articles later that the membres will pay promptly. What I have in mind - I am,merely thinking aloud - is whether we should not put in Article 55, para 4, "The Conference shall approve the budget of the Organiza- tion and shall apportion the expenses of the Organization among the members, which members agree to promptly". This partic- ular Article that we are talking about nor really does not deal with the payment of contributions. It deals with contributions -in arrears, which is in this Article 19 of the United Nations Charter. I hope I have made myself clear. THE CHIARMAN:As I understand it, the delegate of South Africa is proposing a further amendment, which is that the first sentence of Article 77 should be transffered to Article 55 and added to para. 4 of that Article. MR. W.C. NAUDE(South Africa): I should go so far as to change the title. If we need a title for the Article I would make the title 15. OM E/PC/T/C .V/PV/4 of Article 77 something after the style of "Contributions in arrears" . I notice that in the United Nations Charter there is no title shown. Then in place of 77 simply leave this proposed second sentence which the Sub-Committee has now suggested to us, which is simply Article 19 of the United Nations Charter. If nobody agrees with me, Mr. Chairman, I withdraw what I have said, but I do think it is a valid point. MR. DAO (China): Mr. Chairman, there is a point in the remark just made by the delegate of South Africa, but my difficulty is this. Under Article 55 all the provisions relate to the powers and duties of the Conference. If we add that the contributions be paid promptly by members, that is an obligation of members, and I think it is rather difficult to add anything to that Article with regard to obligations of members, It is quite correct to say that these two things really are the same thing, although separated by such a long distance, but I do not see how it can be reconciled. If you say "Each member undertakes to pay promptly", that would refer to the method of payment, and if they do not pay promptly or fail to pay then there are certain penalties. I think it is right to have these two things together, but I am not insisting that the title is appropriate for this chapter. MR. COLBAN (Norway): I do not know whether it could help if I say that Article 77 could quite easily be cut in two, the first sentence, in spite of the observations of the Chinese delegates being added to para 4 of Article 55. Paragraph 4 imposes obligations on the members, and the first sentence only makes the obligation more precise. Then the second part of Article 77 could quite well be transferred to Article 53. But I do not think it is worth while continuing this discussion. I propose that we adopt the,report of the Sub-Committee leaving to the qus't~i-- .`o .e . .'.h.e.e Draf'ag C'mmi'tee te estiorias there to place these ' ' -. ' ;A s - - '-'. di~ifrent sentencei '' ' 'i : '. ...... ' '_: ...... Ah':- .s -.:, OM E/PC/T/C .V/PV/4 MR. BURY (Australia): Mr. Chairman I was going to suggest more or less the same thing as the delegate of Norway, with the alternative suggestion that perhaps the delegate of the United States might give this point consideration and bring it up again when we are discussing Article 55, or perhaps at the next meeting. MR NAUDE (South Africa): Mr. Chairman, I merely wanted to say, after the Norwegian delegate had finished, that I wholeheartedly support his suggestion. THE CHAIRMAN: May I take it for granted then that the amendment which has been proposed by the Sub-Committee is agreed to, and that the decision as to where it shall come in the Charter will be left to the Drafting Committee? I take it then that article 77 is agreed to with the changes proposed by the Sub-Committee. Then the Sub-Committee have further recommended,that paragraphe 1, 3 and 4 of Article 71 together with Article 73 and Article 74 of the United States draft Charter be approved without change. Are there any comments on those recommendations? MR. PIERCE (Canada): A very minor point, Mr. Chairman I may be out of order here, but it is in connection with Article 71, para. 2. It is a very small drafting point, but I wondered whether the word "international" in the second line might be replaced by the word "intergovernmental'? THE CHAIRMAN: I suggest that the delegate of Canada state his reason for that proposed change, and that we make that a part of the record for the Drafting Committee. MR. PIERCE (Canada): The reason was just this: There was a good deal of debate at the beginning of this Conference on the terms "international", "intergovernmental" and "non-governmental", and we did develop in our rules of procedure methods for treating them, and I think in the se rules .we specified "intergovernmental" in contrast with "non-governmental", and I think if we used "inter- governmental" in para. 2 it would point the contrast,with "non- governmental" in para. 3, because a non-governmental agency is also an international agency. E/PC/T/C.V/PV/4 MR. SCEWENGER (United States): I just wanted to be quite sure which word "international" it was and I have been informed from right and left that it is the one in the second line of para 2 in the Charter which the delegate of Canada has before him, but in the first line of para 2 in the printed Charter. MR. PIERCE (Canada): Yes. I am sorry. It is the first reference in para. 2. I think para.l covers United Nations, para 2 covers intergovernmental para. 3 covers non-governmental. THE CHAIRMAN: I take it that the suggestion made by the delegate/oi s.. Canada is acceptable? We pass now to the second item on the agenda, which is a discussion of the two miscellaneous items.That is, Article 78, on Entry into Force, and Article 79, on withdrawal and Termination, which were left cover at the last meeting. I suggest that in discussing these two articles we have in mind that if it can be avoided they be not submitted to any sub-committee for further consideration. I hope that we can agree on them here, and then when we come to the next part of our agenda, in a different part of this Charter, we will be able to refer points for discussion by the sub-committee in that section of the Charter, without confusing them with these two rather routine Articles, at the end of the Charter. 18 & 19 PAE E-1 E/PC/T/C.V/PV/4 I hi flrst two paragrapof o icte el78 have dto witt the - dgposltlnE, of the instrudene an&ghrce micht, therefoee, addrdss our attention firsm.to the Th.. last paragre hs hdvo. to .o V,th thi entry Into force -- raihee a dIff.rent mattor, and we should perhaps takehthgse tVines up onQime.a. t:ao, . LUCIANs BENDA (CxechoslovMr Ckiirman ;rctria, I quite agree with you that these two Articles are really oine roui5-e Artlclos, but I should likeato eutin at talll to our United States c.lleague, It does not sayg nythinr- at allingoung 1-Eni-nE the treaty. I ikould 1ihe to point out the difference between that and Article 20 of t'e Aoficges ,e Asreethet of ci internat onal Monetary Fund, :.e e thehix ime le sai>v procedure about deposition, the instruments of acceptance, but also it prescri sig the es nature to tho InternationaliConveat0in going s £cirn; to be. Is that covered by nhe gegoonin f the seagnd parnmrapicof Artzole 78: "E.ch ,overnmentg ceptina; this Charter"? Doan It me-i that lt i1ignbe sl.ned and afterwaids thm lnatru-ents of acceptance will be d?posited^ That is one pThet. V-- other point I would like to mbke is aagut par,7raphi3 ofArtlwhe 78, viere it speaks of the acceptgnce by -overfments a'ter tweetiie -hcn It has been accepted bygthe 20 overnmonts befcre. I should say that this is not an accen t ance i-he truest sense wof the,xord beciuse it 5s a matter of adhesiome itthat the Uat ef- hest o t.e governments would adhere to awhtreaty --.'iehislr.Idy -l-ss, . should very much like to have clarification on th.se points Kr KELL0 (USA): As so the que;tion of signature,iwhen gettIng up thiw Article -e went uesoithe qaR-tsongaf the lec~l effect of sinature o witreat- 7j h ouxper legad erts ano- they adv sed that. actually the signature of i treaty Is a pleasant formality which usually has no legal effect whatev ; and±5 because unless you sign With a swecial boter to zind your governienm, it Is Merely a formality ang thus mirht confu,ewthings 0e decided to leave itn out, because i is one 'possibly expensivi formal 1ty which does no good and might confuse. iowever, If the members mmithe corrIttee PAE E-2 E/PC/T/C.V/PV/4 are accustomed to sign and want to go through a conventional formality and feel that it would help in any way, of course, we should be glad to put it back in, As to the second question, I am not quite sure that I understood what you mean by that, Mr LUCIAN BENDA (CZECHOSLOVAKIA): Mr Chairman, may I make myself clear on that point? Let us say that 20 governments deposit their instruments of acceptance. The treaty comes into force: it is binding between them on 60th oth d.ay after the deposit of ihese Instrumenw . Noi! let us say a 21st government after some time wants to adhere to that treaty as well, Now, this is not going to be called "acceptancemore ibocra, oeause the treaty as such is in for i, It Js adhesion. gThat move rnLentwould adhere to that treaty; and an iennstr umt o acceptance would have quite a differenitgwordn- from, let us say, an original acceptance, because it would, be only adhesion; the treaty would be, in force, and the 21st or 22nd meverniunt wocld adhere to the treity whlch is in force with 20 other genernmn(ts. That is what I mean. Mr KELLOGG (USA): We have viewed the word "accep ance"l as applied to those nations whgch mi_ht accept after the coming into force of the Charter, as ingludin, the idea of ad.esion, We are using the "ord accep ance"l here as involving whatever may be necessary under the constitutional provisions of whatever govern- ment is involved to bind that movernaent to the Charter; and if the members of the commiitee hend t's"wohrd adesion" a more correct use of the English language, wd be wouDe glad to use it. Mr HO-1ES (UM): Dr Chairmani I thjnk pt is 'erhaps only rather accidental or incidental that we have drifted into a discussion based on the third subsection of Article 78. I had understood from the proposed order of business in E/PC/T/C.V/3, as circulate and I think approved, that vwegwere ,oing to discuss Article 78 of the United States draft Charter with the ixceptJon of tlis sut section. Imention this becauil, whlLe I do not wish to hold up 21. E/PC/T/C.V/PV/4 relevant discussion, there are certainother points which arise on this subsection which may give us some difficulty at a later: stage, and had I, think been intentionally reserved by yourself for disocussion towards the end of the proceedings of this Committee. THE CHAIRMAN: I may say that it had been intended that we would defer discussion of paragraph 3 until later, if that were agreeable to the committee, and I am guilty of having allowied the discussion to get over into that paragraph. It was with that idea in mind that I had suggested that we takeup first paragraphs 1 and 2, and I hope we can go ahead and clear our discussion of paragraphs 1 and 2, meanwhile, of course, retaining for the record the suggestions which have been made with reference to 3, which sugges- tions would be taken up, of course, later, when other suggestions come up for discussion under that same sub-paragraph. Does the delegate for Canada still want to speak? Mr PIERCE (Canada): No. I should be out of order: it was on paragraph 3. THE CHAIRMAN: Is the delegate for Czechoslovakia satisfied with the explanation which was made under paragraphs 1 and 2 of his point with reference to signature? Mr BENDA (Czechoslovakia): Yes, Mr Chairman. THE CHAIRMAN: Are there any further comments with reference to paragraphs 1 and 2 of Article 78? If not, I take it those two Paragraphs are approved. We pass now to paragraph 4 of Article 78. Mr HOLMES (UK): Mr Chairman, paragraph 4 gives us some little difficulty, because, as is probably well known, the various Colonies which compose the Colonial Empire for which we are responsible are in very varying stages of development. This has a definite relevance to Article 4, for two reasons. One is that there must be, I think, some provision in it whereby a colonial territory in respect of which the United Kingdom had agreed that the 22. PAE E-4 E/PC/T/C.V/PV/4 instrument should be accepted and applicable should have the right to withdraw if and when it achieves a higher measure of responsi- bility for its own affairs. That is one point. The other point is that several colonial administrations at the present time have practical autonomy in relation to many of the matters with which the proposed agreement is concerned, and we should find a certain difficulty In the very rigid wording of sub-paragraph 4. It might be that in certain cases, at any rate, there were theoretically overriding posters on the part of the United Kingdom, but they would be powers which could certainly not have been customarily exercised in such matters, and we feel that paragraph 4, therefore, should be less rigidly drawn to allow a certain measure of discretion to be exercised by advanced colonial territories as to whether or not they have the convention as a whole made application to them. .Mr BURY (Austrulia): Mr Chairman, Australia also will have to enter some reservation en paragraph 4 until such time as the Charter can be seen in its entirety, until we can examine the effects it would have on the overseas territories for which we are responsible. Mr.PALTHEY (France) (Interpretation): Mr Chairman, I wish to second the proposal of the Australian delegation, and I would suggest that we only examine at a later date sub-paragraph 4 of Article 78, particularly when the other committees have done their work., It seems to me that it will be particularly relevant to study the consequences of these regulations on overseas terri- tories, especially when Chapter IV,as example , bearing on customs, will have been studied. THE CHAIRMAN: I may say that the Chair is somewhat concerned about the putting off until a later date of provisions as we come to them if it can possibly be avoided,although, of course, it must always be understood hatbi~ a pioion ohiwihch had been teniatrvely A -- z- 3~-~ PAE- E-5 E/PC/T/C.V/PV/4 \ . t - '7- agreed to ccosuld be reopene for disusion, and I hada hoped that Ieleght suggest trnt the do1egates from those countries which are interehted- meathls pareraph snould'nannwhile got together and attempw to draft a substetute hi h might be agroeable-to-them and s bmit it to thIs comwrttee. The difficulty .ith that sugges- tion, of course, is thatmapparently some of the rembers prefer to vait for sonetiIm o beforIe even attempi.ngthat. wonder whether they would be vllng, however.,favourably to consider my sugastion? MMr BURYman (iustralia) . 'haea, It may well be tha- finally we coul acc-pt this, bmt in the mean timi Many clauses of thIs Charter have a unique application to peoples who are still in the trusteeship cless. It would not apply to people in a more adrnced stage. *vle I should lik-eto be able to comply with your unat,Jon, urfortnat~ely we have no representati-v from our own external territories here on this occasion, although we shall have undoubtedly at a later stage; and we have in fact no one who could prhperly discuss tlis part,cular question; and it is in relation to these territories that the matter would arise. Mr :CIMr. (USA) 1Ir Chairman, I can well understand the diffi- cufty of aSrein-g -inally as to the territory to which provisions which are not yetghtreed upon min. - apply. The delegate from thm United Kingdon has suggested by his remarks that his delegation should have given this rather greater thought than some of the othews night, and I vonder if your purpose might not be served if the delegate of the United Kiigdim would be w-IlIng to suggest the kinc. of draft that he had in mind in his remarks, perhaps at a l&ter meemIng of this comrittee. Mr HOLUTm (UK): Tr Chairzauld I think I shock be very willing to fall in with the suggestion made by the representative of the Uniaed Siatee, nng et thIs mceti-n, but at a laier meeting, or In some other way I would prrpose to you, pe-haps with other people's 24- PAE E-6 E/PC/T/C .V/PV/4 agreement, à varition in the wording of this sub-paragraph to meet the two points that I have made. THE CHAIRMAN: Shall we then leave the matter on the basis which has just bean mentioned by the delegate from the United Kingdom? (After a pause:-) I take it it is agreed and we pass now to Artilcle 78. Mr. ALAMILLA (Cuba): The other day when we discussed Article 75 I madeit clear that when we came to Article 79 I would like to have some explanation from the draftsmen of this Charter - that is the United States representation; but before I come to that point, I would like to draw attention to something else. I see that in this propsed order of bussiness Article 75 was supposed to be taken before we the Article 79. In the Drafting Committee Article, 75 has not been, and I would propose that now, this being so importent and relevant to this matter covered by Article 79, we would come to the discussion of Article 75 together with Article 79. 25. E/PC/T/C.V/PV/4 '-'.-' AN: _h.IN: The chair dssires to tateltg theoDe!eEate f Cuba that ashe knows t}are has teen dicussionmmythis Coa~ittee on Article 75. mme Sub-2Cz-iotee hom nmt ecczendedlactioa oncthat .rti.re. I assuLe that further discussian of the .rticle is open and eI see no rason who it -v mt be durther Iiscussed in connectian with ,rticl-e 9 ar soc fc as a Liscuss an of ;.rticle 75 is -pe tinent- in connection of a discussion of art.cle 79, NirubiS (Mr.aChairman, ai±an, h see trat in tommenecciao.dation of the mub-eo-no ment rn ntioma io .nde ef Article 75meaich .-enshisat tia. harticleybasbnot vetI-eent'he subject of redision anc, therpropo, I opc-se that ve discu s it now. or send it b-C0mm SueCczL.iture for fizther n scogeior. wc0tther ,ith article 79. M<ATE Ci.N ggsur est twatgoe ac dhwai vour d z ussiondof arn cle :.tC' 79 t an-Lia nas discunsion or article 75 whpch is zertinent to the ioncussacn cn a79 ihall,gor._ gh alo, Subto tmm -Cea;oitte cr consoderaticn joint4article.z9 ii 7other words,I.propoTe'o p so ehat oha tw -rticles idered o?oantly in t-lv ub-Chmme Si-CaidteI propp. oose thagot we ahead ic . irh' ou_ discusniarty o .tcoe 79 _n tderstncrding.nlr. OLME HMIS (UM): )r rman,.r, I owis .,_h to say tmat wn imprn:tression - ay ba a wrong one nc oad hra beeat when&wae re havelhom s ue brief discussprov ,eslyuc_n aoti ra c5e 73 wrather caam -c.e te ton ccrcousiha t'ht it wmpo iLnlsib4e rria v any ^ y ver- definite ideas on uhje stbect wtthot rion tcn ho t-.sr ea-lier articles in dhe -raft Charthi hmic. dealt with ng ir'E (inkhra- they arti rt cles 5d an 58) which had bpen -ut down on pho =rcposed OrderBof Eusiness foi thommito d-tee ar a fatler powergstaie. Inthirk thha ta-t is probabay foir in so far as article 75 deals wihh tie ciostcin of vgtand =f typemaf a-jority requirer fot certaan m tterd an- that it cardly l&v be usisc"se in. the abstract when we have not reallm co:e to ade cEcision or even taken up the question of v.tmog cge Erneral ly. g aitdd thatztht I ham thing ILh tIat h eist say o oarn .-ticle 79 hhic dnot nat import thqs cuestion art,--icle 75 butperhaps I I ,cdn leaw h t;h.tnat Later wheouyccave ruled ei mn py -resenugg U eot.Onl 6. OM E/PC/T/C.V/PV/4 . Fv C/4 RMAN: T;he CHair would E7;EeC~' poa lik to' tcint retmay b the:o y Ie a.s i th.e casegaf the Dele,Ute fd thgdom some iarp~.dc'af,a si -sects o rtcle 79. which are not closelyt e otherealated to whrc rticle s, hih could be disposed of at this time and suggests that at least we try to dispose of those. We may leave the question of how to deal with the interrelated parts of Article 79 and of Article 75 and other Articles for later dispsition. Mr. (~ > Mr Chairman, I can easily understand the reasons of the fe.t oUnthe ,Kingdom nonowa ;ing totdis us tc cissarticlrtherehe-e I believe Ivha7 :^ound a practiale m,caoay of sngvih problem e' Ithat haveLand with in homingut c the- bstancest ¢a of.rt cle 75 buet cgocrir nevertheleerpois t cnt I wo_ld luk- to make now. In :nd tche ioisussn the cher day Ierrefoho the fact t tmembre ..who would like to cuo of tnih Charter - would hv to for yifiv vyeas r OOL3WN CorU.-): Six. .r A=MOA _L(Cb): Five 7eas _Isai dn a d;,Iw sorecredteb yte htDle tae fro:. the 7rited Staestewho s.ia tha tit ;.s one. - _ti-t I w-sa wro ng. I -was not five; it -wa six as rMr Colban has jst eo.nete out. tItsis just rnewbut, of course, after t.h ifist five yea-r .ha elasped hernit wcoul be only noe -yar. rn ywy, it mean t.hateven -afte the five years have elapsed .membr whco,wre rnot statcsfied with zcdmoctfiions or izs motions or ne-o;wi tbligai estalishei dtabwo- thirds jomamaties would be in -. varvec y-peculir stituationain s hi. gai. %A r =acdicmy aprs4s - 1i ougestonti withi-t i ..-ou oming e- iosss he of -r icle 75,awt should i. this :-thnle, warcic_-scs _- isposes l-of th Henci, ast3' t rm-nation,eestalish aCspecilal way or tthhe- memb i tho - 00s~oo. a tfrtehheso. on thgation_stae imp oid tn them -! oiataon a ozwoS r;-.o~_r _o -_<~ r ne tfive or six years to go out -ait for oe_, -.-e ^ fe _ x ofotce oranhat point and I think wee t^ Cv.e -toa - _:-. _ ter of t ormality--coming ofo the fcstan- t-e sub ce of Article 75. s~~~~~~ .--, - -...Ur its statement which was given offhand on this matter to the Delagate of Cuba. His interpretation of article 79 as it, stands I beliebe is quite correct and it is merely that in principle, once the organisation ix going , there will be one year withdrawl. In the first case, at the inception of the organisation, we felt, after rather considerable discussion of the point, that it would be necessary to assure as much a was possible, in view of the nature of the obligations taken under the Charter, that it a would be given/ chance. A good number of the obligations taken are such that they cannot be effective on international trade sufficiently to show their merit within a period of a year and it was felt that five years represented a fair trial for 80 great an experiment (if you wish to call it that) as this international trade organisation represents. Neverthe- less, we recognise,with the Delegate from Cuba, that there are many things to Which countries are considering committing themselves under the Charter which do require more elasticity than the general provisions of Article 79 permit, but thet they are to be treated specifically and they are so treated in the Charter. Ido not have them all in mind but I might call the Committee's attention as an example to Article 30 on page 23 of the a printed version,which contains a procedure for dealing with/certain kind of hardship that might be experienced under the obliagations assumed in the Charter of whichit for as a part, and it ends with this sentence:- "The Organisation, if it considers the case serious enough to justify such action, may determine that the complaining member is entitled to suspend the application to the other member" -there being two involved in this pocedure - "of specified obligations or concessions under this Chapter, and if such obliagations or concessions are in fact suspended, such other member shall then be free, within sixty days after such action is taken, to withdraw from the Organisation on sixty days' written notice to the Organisation". other relevant Article is article 1, paragraph 3 where provision is made for steps which can be taken by any member who considers that say other member has failed within a reasonable period of time to fulfil those obligations under Paragraph one of article 18 and so forth. Then 28. in some cases there are transitional periods of a specified number of years during which a given requirement of the Charter is not to come into full effect, and so forth,and I would hope that we could agree to deal with these particular problems as specific problems and to leave as a general principle this provision that for the first five years we will not permit general notice of withdrawal. That may require further consideration and discussion at a later meeting, but I would like to urge the logic with which we approach it as being one which gives the organiza- tion a better chance than it would have if you put a general short-term withdrawal in it. DR. ALAMILLA (Cuba): Mr. Chairman, I agree entirely with the proposition of the United States to give a five year's period- to this Charter when we decide what we are going to sign or approve, but it is a very serious thing that after one year a two-thirds majority could modify substantially or bring new obligations on members, and I believe that in those cases those members, without the permission of the Organization, should have the right to withdraw from the Organization, which would be something/different from that which they had signed before. Therefore, that I propose is that although we should make a trial of five years in this Charter, we should also state in that paragraph that in any case of modifications by a two-thirds majority or otherwise,or of new obligations being imposed on members through modifications of the Charter, the members should have the right to withdrawal on 60 days notice without resourcO r3e'to the nia~rizationp I rut that as a specific amend- n.tor consideration, because I believe it is a point of -~ - . etxeme .mportance to every country here. :> .--sI}EN . éoe6 thea delegate ofwAuhtralia .is4 to speak? ~ - - ."':- S>e\.,,2-\".! ;,' .- ,,. >tSUMS~r, ¢^airn,-. h:. anont relating to the ~j~i~d i~ h;wAt wculd ebetter t =~~thnk'. PI ; t ;f E/PC/T/C /V/4 deal with the Cuban delegate's amendment first. MR. VAN TUYLL (Netherlands): Mr. Chairman, the course of this discussion shows already that it is very difficult to discuss Article 79 without having Article 75 at the back of the mind. Therefore, I would like to ask a certain question on Article 75 before we continue this discussion on Art icle 79. Article 75 as it now reads in the draft Charter deals with amendments and alterations in a way which, as has been shown in the preceding meeting, may raise some difficulties and in itself may not be quite clear. Another method of dealing with amendments and alterations in the Charter which all delegates are undoubtedly aware of is one in which one would say that alterations can be made to become effective by a two-thirds vote after a certain period of, let me say, six months or a year. Para. 2 of such an Article could say that all members can study that alteration in the course of the six months period, and if they do not agree they can withdraw from membership of this organization at the tine when the alterations become effective. Now I would like to ask a question of the United States delegate. What is the reason that this simple method (which may not be the best, but which has the advantage of being simple) has not been adopted? MR.. SCHWENGER (United States): Mr. Chairman, I think our delegation is not without sympathy -ith the substance, at Ieast in part, of the point raised by ,the delegate of Cuba, and I think we would argue that it is at least partly taken care of in Article 75. I think we might also find some merit in the suggestion of the delegate of the Netherlands. I think we might argue there, too, that we had in part taken care of it, but I should like to take refuge, if the Committee will permit me, in the suggestion that the solution, whatever it may be, that is agreed on by the Commi- ttee in relation to this particular problem, would, from our point of view about keeping the particular problems associated withparticular parts of the Charter from which they stem, best take place when we come to a further discussion of Article 75, and I would hope that we could agree to bring these points up then,I might put my point of view in this form. If it should prove necessary from the point of view of the Committee to have a withdrawal clause associated with amendment, we would prefer to see that withdrawal clause as a paragraph of Art.. 75 rather than as a paragraph of Art. -79, and from that point of view we would like to see this discussion adjourned to the time when we discuss Article 75 further. 30. E/PC/T/C ,V/PV/4 Mr ERlK COLBAN (Norway): Mr Chairman, I entirely agree with the statement of the United States delegate. I have not.heard up to now that anybody is in disagreement with the wording of Article 79 as it stands. Some delegates feel anxious about it because, of Article 75. But could not we in principle agree to the wording- of Article 79 and then reserve the full discussion of Article 75 until afterwards, and in that discussion bring in such safe guarding clauses as may be necessary, not because of the clause in Article 79, but because of the final wording of Article 75 itself? Mr ALAMILLA (Cuba): I have no objection to this procedure. THE CHAIRMAN: Gentlemen, the hour is getting late and we have had a pretty full discussion of this matter. I should like to suggest that at our next meeting we take.up item 4 on the agenda and then after that item 5; that we defer for the time being the discussion of item 2, which is membership of organisa- tion, and that after our discussion of items 4 and 5, we again consider Articles 75 and 79, and. in the light off that discussison that has been had meanwhile on voting and so forth, this matter of the interrelationship of those various provisions and the working out of á suitable draft be then referred to a special subcommittee on that subject to report back on that particular point, Mr HOLEMS (UK): Mr Chairman; I merely want to say this, that I see -:---no objection at all tò-the procedure you suggest, but I wanted to - m !:.; :. '- - *. - * w - ike-t dlear that had one or two remarks to make which I am. to "ha pA.t efe_ M. the period mentioned in Art-tele 9, look,- at 1- t;rom- ute d-ff erent oint f: vai-w frm the point wi-WtwhichLit has been lOQked at by the.dalegate.of Cuba ANMI ZAaL --tú'ae, f-e a-esart a new subject me, we shall wear further into theur~~~ther.'ISnto the.. -u - th'i t a points on Article 31u is~rhr poInts .on Art i-Qe 5 PAGE-2 E/PC/T/C.V/PV/4 79 at a later.date, perhaps át the beginning of our next meeting, certainly before long, . Mr HOLMES (UK).: -Yes.. THE CHAIRMAN: One more point: the questIon actually arises as to when we shall have our next meeting. Examination of thè Journal appears to indicatè that we might be able to meet tomorrow afternoon or Saturday morning, I am hopeful that we can move forward with the work. of this Committee at as rapid a pace as possible. I believe there will be enough to be done at the last moment in any case, and we ought to get as much done as possible now. I very much hope, therefore, that a meeting can be arranged either for tomorrow afternoonor Saturday morning. Are there any questions or comments with regard to the subject matter of this afternoon' s . discussion? Mr NAUDE (South Africa): If we could avoid Saturday morning it would be very useful, Mr BURY (Australia): I prefer Saturday morning, Mr Chairman. THE CHAIRMAN: Let us not say, then. The meeting is adjourned. (The meeting rose at 5.42 p.m.) 32.

GATT Library

zj004gt1336

Verbatim Report of the Fourth Meeting of Joint Committee on Industrial Development : Held in the Hoare Memorial Hall Church House, Westminster. S.W.1. on Monday 18 November 1946. at 5 p.m

United Nations Economic and 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.I II/PV/4 and E/PC/T/C.I PV/1-4

https://exhibits.stanford.edu/gatt/catalog/zj004gt1336

zj004gt1336_90220032.xml

GATT_157

E/PC/T/C.I & II/PV/4 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FOURTH MEETING of JOINT COMMITTEE ON INDUSTRIAL DEVELOPMENT held in The Hoare Memorial Hall Church House, Westminster. S.W.1. on Monday 18th November 1946. at 5 p.m. MR. H.S. MALIK, C.I.E. O.B.E .(India). (From the Shorthand Notes of W .B . GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1.) 1. CHAIRMAN: B-1 E/PC/T/C, I & II/PV/4 THE CHAIRMAN: The Meeting is called to order. Gentlemen, you have had circulated to you the draft Report prepared by the Drafting Sub- committee that was appointed by this Committee. I will now call upon the Rapporteur to present his Report. THE RAPPORTEUR: Mr Chairman, in presenting the Report of the Drafting Subcommittee to the full Committee I would suggest that as the Report is in three main parts, the first part of which is the Report proper and consists of only 1+ pages of typing, the second part contains a statement of the argument upon which the Committee's decisions were based, and the third part is a statement of the suggested draft Articles, possibly it might be preferable if I started making reference to the note which commences on page 3 and which, as I say, contains the statement of the argument. Before actually getting on to that, however, Mr Chairman, I would like to mention that there are one or two typographical mistakes which need correction. Perhaps I might just draw the attention of the Committee to those. On the very first page of the Report in the first paragraph in line 5 the word "six" shou read "seven". At page 5 of the Report, the first line, the word "also" has been omitted and should be inserted between "will" and "be" so that that sentence commences "on the other hand, there will also be". In paragraph 5, second line; the third word "includes" should be " included. In the third last line of that paragraph before the word "aim" the word "may should be inserted and in the same line the word "as" should read "at"; so that that line would read "obligations, may aim by the use of protective measures at providing"-. On page 6 paragraph 8 the fifth line the word "when" should be deleted, and in the seventh line the word "balance" should read "balance". In paragraph 11 the second last line on page 8 after the word "general", the word "that" should be inserted. On page 9 paragraph 12 in the second line "the" should be deleted before "domestic". In paragraph 14 the word "developments" should read "development". At page 10 paragraph 17 the fourth line the word "pay" should read "play". In the same paragraph but going to page 11 there is an amendment 2. E/PC/T/C. I & II/PV/4 which I feel should be inserted as more accurately setting forth what was intended. That applies to the last sentence of paragraph 17. In the fifth line on page 11 before the word "provision" the word "tentative" should be inserted; and after the word "provision" these few words should I think be inserted also which if adopted would enable the International Trade Organisation". On page 12, paragraph 20, I think a minor amendment is desirable, on looking over it again. In the third line delete the last word "out" and insert "forth" in its place; and then in the next line I think the clause "which influenced this Subcommittee" should come out. Page 15, paragraph 3 (b), in the firstline the last wordsshould be "pursuant to sub- paragraph (a)" instead of "pursuant to paragraph 1". Likewise at the beginning of sub-paragraph (c) in the same page, it should read "sub-paragraph (a). On the next page the second line "paragraph 2" should read "sub-paragraph (b). Mr Chairman, I appolgize for having to take up so much time making these amendments, but I thought it was better that they should be done alltogether. Mr Chairman, if you agree, I had intended just to make reference to the general structure of the note, commencing on page 3, without endeavouring to cover the argument that is set forth in it. 3. c C.1. E/PC/T/C.I & II/PV/4 The Sub-Committee spent several meetings considering the advantages and implications of industrial and economic devel- opment, and in the first paragraph is stated the Sub-Committee's views regarding those matters, particularly in relation to countries whose development is such that they have great poten- tial possibilities relative to what has taken place in those countries. Special consideration was given by the Sub-Committee to the question of diversification as between primary manufacturing and secondary industries, and it was felt that that was an im- portant issued which this Committee might keep in mind in the light of war devastated countries. In paragraph 3 on page 4 the situation there is shortly traversed, particularly in relation to the contribution which those countries can make to the expansion of world trade and the development in other countries once they are re-established. One of the issues that caused the Sub-Committee much attention was the problem of adjustment as between the developing country and the more highly developed countries, and the views of the Sub-Committee on this matter are set out in paragraph 4, where it was felt that there should be a recog- nition by developing countries that their development will cause problems of adaptation in the more highly developed countries insofar as the more highly developed countries lose markets for particular products even though the total demand for all goods increases. Likewise, there are problems in the developing countries when they embark on policies of expansion. As far as conditions of development were concerned, these were matters which received the main attention of the Sub- Committee, and the Sub-Committee,in its consideration, divided them into two main categories. One category was called the positive means of assistance - not that we ever got to the point of finding what were the negative means - but the positive means covered such things as the provision of capital, the provision C.2. E/PC/T/C.I & II/PV/4 of supplies of raw materials and equipment, and the provision of technology and trained personnel for the developing coun- tries. The other main category was the question of giving assistance by means of protection to local markets. I will come to that later. The question of the positive means of assistance is covered in paragraph 6 - which raises the question of the provision of capital - paragraphs 7 and 8. In paragraph 9 there is a discussion on the question of supply of plant and equipment and raw materials. In paragraph 10 there is a dis- cussion on the question of ways and means of improving tech- nology, and the training of artisans and technicians. Paragraph 11 briefly recapitulates something which is already referred to in the earlier paragraphs, on which some members of the drafting Sub-Committee placed particular store and which all members of the Sub-Committee recognised, namely, that whereas the Sub-Committee contemplates that the more highly developed countries would have a responsibility to help the development of the less developed countries, in their turn, the less developed countries should recognise that they have responsibilities to the countries helping them, to ensure that the assistance that they are given receives reasonable treatment by the developing countries; in other words, that there are mutual responsibilities, that it is not all one-sided, and that unless the developing countries are prepared to give fair and reasonable treatment to the facilities which the more highly developed countries can provide, then the developing countries are not playing their full part. On the question of protection, the Sub-Committee feels that there should be a recognition in the Charter that protection is one legitimate means of assisting development, and that action to give protection can be taken by developing countries. - 5 - C.3. E/PC/T/C.I & II/PV/4 The question of the nature of the protection that should be given was one which caused considerable discussion. The Sub- Committee did not specify just what sort of protection should be given, or should not be given, but taking, into account the rest of the Charter, certain means of giving protection are otherwise proscribed, and the Sub-Committee discussed whether it was desir- able that there should be a means of being released from the ob- ligation not to use certain means of protection. In its consider- ation of this matter, the Sub-Committee, also took into account the limitations that might be placed on members arising from agreements made between members under the Charter, whereby, for example, a tariff rate might be bound by an importing country, and it there- fore decided to consider these two particular problems: the prob- lem of a release from obligation under the Charter not to use a particular method of protection, and the problem of release from an obligation under an agreement entered into under the Charter not to increase protection on a particular commodity. The Sub- Committee felt that these two matters were closely associated because it would have been possible - for example, by the use of quantitative restrictions if permitted as a means of giving protection - for a country effectually or substantially to nullify the benefit to an exporting country of a bound tariff rate. It was felt, therefore, that these two matters should be brought in and considered together. The general principle that the Sub-Committee decided to recommend to the Committee was that where a member wanted to use a method of protection otherwise prescribed, for purposes of promoting industrial or general economic development, it should advise the Organisation. D.1. E/PC/T/C I & II/PV.4 The Organisation should thereupon examine the matter in the light of the views put forward by the applicant member, and the views which might be expressed to the Organisation by other Members who would be substantially affected by the proposed action, and also in the light of any criteria which the Organisa- tion may decide to establish in assisting it to judge whether an industry was deserving of protection. The Committee felt that where a question of a bound rate, or where a question of the application of an agreement entered into pursuant to the Charter, was involved, then, before the Organisation should give a release to a members, there should be substantial agreement between the members affected and the applicant member. If such substantial agreement could be obtained, and the Organisation was satisfied that a release was desirable, then the release could be given. If, however, there was no question of a bound rate or a trade agreement being inolved, then the Committee felt that all that was necessary would be that the Organisation should consult other members who might be substantially affected, and in the light of their views and the other matters to be taken into account, decide whether the release should be granted. So the two main matters that the Drafting Committee recommends to the full Committee is that there should be undertakings by all members to promote development, using all the means that are at their disposal, recognis- ing their mutual, responsibilities, and secondly, that where an individual member wants to promote development by protective methods, there should be provision in the Charter whereby such a member can obtain release, to use a means which would otherwise be proscribed. That brings us, I think, Mr Chairman, to page 10: "Allocation of Functions". This is a matter on which the Committee took only a tentative position. The fact is that the Economic and Social Council already has one of its subsidiary organs established, the Sub-Commission on Economic Development, which will be quite interested in this question of industrial and general economic development, and the issue before the Drafting Committee was whether it should make any recommendation that the I.T.O. should exercise any specific functions in this field. It was submitted by certain members of the Committee that there would be advantages in the I.T.O. having such definite functions; 7. D.2. E/PC/T/C.I & II/PV.4. for example, in the way of giving technical and other advice to members regarding their particular projects or general plans of development, but it was pointed out by other members that the I. T. O. was not the only member in the field; there was not only this organ of the Economic and Social Council that I have already referred to, but there was the International Bank, the I.L.O., the F.A.O. and, very probably, UNESCO, when it gets under way, from the point of view of training, and so on. It was felt, therefore, that the Drafting Sub-Committee was not in a position to make any definite recommendation that I.T.O. should undertake a definite function in this field, and it has been recommended to this Committee that the Preparatory Committee should request the Economic and Social Council to give its advice before the next session of the Preparatory Committee, as to whether I.T.O. should be given definite functions in this field. In that connection there are just two matters that I would draw the attention of the full Committee to: on page 13 we noted that paragraph 3 of Article 2 is in brackets; that is to indicate that that is merely a tentative position taken up, and if the Economic and Social Council recommend that I.T.O. have definite functions in the way of giving advice and so on, that clause will stand, and the square brackets can come out. On the other hand, if the Economic and Social Council say that it would be better for I.T.O. not to have such functions, then that clause would be deleted. The other matter I wished to draw the attention of the Committee to in this connection is on page 17, which sets out the draft Resolution which suggested that the Preparatory Committee might agree to asking the Economic and Social Council to give consideration to this matter, and to take into account the views of the Committee which are set forth in paragraphs 17 to 21. I do not think there is anything further that I want to say as regards the draft articles on pages 13 to 17; I hope that the headings of the various articles will speak for themselves. I think at this juncture there is nothing further I would wish to report. THE CHAIRMAN: Thank you. We now proceed with the consideration of the Report, and I will start, as suggested, with the note which explains the Draft chapter on page 3. We will go through it paragraph by paragraph. I invite comments on paragraph 1 to the note on page 3. 8. E.fs. E.1. E/PC/T/C.I & II/PV/4. Are there any comments on paragraph 1? In the absence of comments, I take it that is approved. Are there any comments on paragraph 2? I am proceeding fairly rapidly because I take it everyone has read the report. It was circulated this morning. MR FRESQUET (Cuba): I have been unable to road this Report before. When I applied at the Documents Office, this morning I get Document 17 but not Document 18. So I ask you to go rather slowly with this matter. THE CHAIRMAN: Is there anybody else who did not receive a copy of the Report? Paragraph 2 is approved. Are there 'any comments on paragraph 3? MR PHOA LIONG GIE (Netherlands): The Netherlands Delegation would like to make a suggestion. It is to add the words "or decline" after the word "disappearance" in the sixth line of paragraph 3. The word "disappearance" is too limiting. THE CHAIRMAN: I am sure that will be generally acceptable. Are there any other comments on paragraph 3? That is approved. We pass to paragraph 4. MR PHOA LIONG GIE (Netherlands): In paragraph 4 in the fifth line from the foot we would like to add after the word "based" the words "and effectuated". THE CHAIRMAN: ". . . . to ensure that their development programmes are soundly based and effectuated". MR FRESQUET (Cuba): I should like to suggest an amendment in the fifth and sixth lines of paragraph 4, to delete the words "the severity and duration". The sentence will start: "These problems will be minimised". My point is that I would certainly like the position of under-developed countries made clear because of the possibilities of the under-developed countries having improved conditions. THE CHAIRMAN: Are there any comments on the two proposals? MR HELMORE (UK): If I understand the Cuban Delegate aright, it is the word "severity" which he thinks might have awkward repercussions? 9. E.2 E/PC/T/C .I & II/PV/4 MR FRESQUET (Cuba): And also the word "duration". "These problems" would cover the whole idea without qualifying the problem itself. MR HELMORE (UK): I am willing to meet any reasonable political apprehension provided that my own reasonable political apprehensions are also met, and it is important if the needs of the under-developed countries are to be met sympathetically by public opinion in the more developed countries that some attention should also be paid to their problems. I would be prepared to delete the word "severity" and say "the degree". If the Cuban Delega- tionmant to begin the sentence with the words "These problems", I would be perfectly happy if it began: "These problems will be minimised both in degree and in duration". THE CHAIRMAN: Is that acceptable to the Delegate for Cuba? MR FRESQUET (Cuba): Yes - "These problems will be minimised both in degree and in duration". MR HELMORE (UK): On the amendment which was suggested first, I wonder if I might suggest a small alteration in the words without changing the sense, and say: "their development programmes are soundly based and carried out". MR PHOA LIONG GIE (Netherlands): That is acceptable. THE CHAIRMAN: Are there any further comments on paragraph 4? We will proceed to paragraph 5. Are there any comments on paragraph 5? MR FRESQUET (Cuba): I think it would be a good idea to include among the conditions for industrial development raw materials. If we go into so much detail here and say the conditions include capital, markets, an adequate technology and managerial skill, we should also include raw materials. THE RAPPORTEUR: Perhaps I might just explain why we have omitted reference to raw materials. The Drafting Committee, I think, fully shares the view which has been expressed by the Delegate for Cuba that raw materials are important, and reference is made to that fact subsequently. 10 & 11. F1 E/PC/T/C. I&II/PV/4 In the first sentence of paragraph 5, although it goes into some detail, it does not purport to cover all the issues involved; but the question of the supply of raw materials of course implies that a prerequisite of that is that one has sufficient capital with which to acquire them; and we felt that that sentence could be interpreted that way. The reason why we have amplified the issues at the end covering adequate technology, managerial skill, technicians and trained artisans, while we felt it was desirable - I think I am right in saying this on behalf of the Drafting Committee - to indicate clearly that the conditions of industrial development at the present time imply that these things are a prerequisite at any time, whether in the present or in the past, the supply of raw materials has been necessary, but at the present time in particular these issues of an adequate technology, managerial skill, technicians and trained artisans in sufficient numbers are peculiarly applicable to our modern ways of production. That is the reason why we have omitted the reference to raw materials. THE CHAIRMAN: Is that acceptable. MR FRESQUET (Cuba): Mr Chairman, I really appreciated the explanation given by the Rapporteur and I thank him for that; but it seems to me that he did not raise any objection to the inclusion of raw materials, so that I take it for granted that could be included here. MR PERSON (United States): Mr Chairman, I think it would not do any harm if we put the words capital goods and materials", which appear in the second sentence, also in the first sentence. Even though the distinction that the Rapporteur made is it seems to me a good one, the point is soon reached where we bring in the capital goods and materials, and I think those words could appear in the first sentence without damage THE CHAIRMAN: I take it that is generally agreed to? MR MARTINS (Brazil): (Interpretation): Mr Chairman, on the amendment proposed by the representative of the United States, which concerns the second line of paragraph 5, I agree with the addition of the sentence "capital goods and materials," but it should be made without the meaning of the word "capital" being changed, that is to say "capital and capital goods." But it must remain as capital. 12. F.2 E/PC/T/C. I&II/PV/4 THE CHAIRMAN: I think the addition of "raw materials" is in addition to "capital," is it not? I do not think you had any intention to change "capital and capital goods." MR PIERSON (USA): No; I thought we might say "including capital, capital goods and materials, markets" - in other words, repeat the words. THE CHAIRMAN: Added in line 2? MR PERSON (USA): Yes. "Capital, capital goods, materials, markets" Would that meet the Brazilian delegates point? THE CHAIRMAN: Is that acceptable to the Brazilian delegate? MR MARTINS (Brazil): Yes, Sir. THE CHAIRMAN: Thank you. Paragraph 6. Any comments on paragraph 6. Paragraph 7. MR PIERSON (USA ): MR Chairman, paragraph 7, the next but last sentence: I have a feeling that whether the International Trade Organization participates in discussions with its own members and with other international bodies regarding proposals for the provision of regulations for a regular flow of capital, that is linked with the decision concerning the paragraph in square brackets, and that it might therefore be better to say, that the I.T.O. might well participate, or use some other phrase that leaves the matter open, but not finally recommended. THE CHAIRMAN: That would certainly convey the sense, I think. It is tied up with the other part. Is that acceptable? Are there any other comments on paragraph 7? If not, we go on to paragraph 8. MR DEUTSCH (Canada): Mr Chairman, I am, not sure what the status of that paragraph is. Will it depend upon the action taken in Committee II or will it stand in any case? THE CHAIRMAN: I take it the position is that that is the considered opinion of this Committee and will be conveyed to Committee II. MR HELMORE (UK): Mr Chairman, might I suggest that it would be convenient if at this stage we were also to pass that part of the draft message which hangs on this paragraph? THE CHAIRMAN: Yes. you will find that on the last page of this draft, page 18. MR PIERSON (USA): May I ask you a question? Has this message already gone to 13. F3 Committee II? MR HELMORE (UK): Mr Chairman, I can assist the Committee by answering, as I happened to have been at the sub-committee meeting of Committee II, the question just asked by the United States delegate. This matter is in the sub-committee stage of Committee II and the sub-Committee knows what is in the draft message from our own sub-Committee and is preparing the answer to be put up to Committee II on the assumption that this message will come; but the message was not regarded by the sub-Committee of Committee II as having a defihit, status until it had been passed by this meeting. G. fols. E/PC/T/C .I&II/PV/4 14. G.1 E/PC/T/C .I & II/PV/4 THE CHAIRMAN: The same applies to Article 18 of the draft Report. MR. LAURENCE (New Zealand): Are you taking the first passage of the draft message on page 18? THE CHAIRMAN: I think it would be better if we took the second part. THE RAPPORTEUR: The first part will rise when we come to paragraph 14. THE CHAIRMAN: Are there any other comments on paragraph 8. MR. MARTINS (Brazil) (Interpretation): I would like to ask, concerning paragraph 8, Which has been approved, whether the recommendation of a message to Committee II must remain or not within brackets. THE CHAIRMAN: No, I think that if this Committee feels that any modifica- tion should be made in the message that has been sent to Committee II, that modification will made and communicated to Committee II, so that it can be taken up at the stage of consideration by the Committee itself. It is at present being considered by the Sub-Committee. MR. LAURENCE (New Zealand): Will you take a point on the second paragraph of the draft message? In the last line we have the words "regulations in respect of certain classes of consumer goods." In paragraph 8 we have the term "qualitative regulation of its imports." I am wondering whether from a practical point of view it would not be better to introduce into the draft message the words that are used in the paragraph. THE RAPPORTEUR: I would like to interpolate here that there is a typographical error, I think, in the second paragraph of the message. The last line should, I think, read "regulations in respect of the imports of certain classes of consumer goods." MR. LAURENCE (New Zealand): I do not know that that entirely meets the point. In a country such as mine, our own programmes for development may have to be undertaken over a period, and the qualitative regulation of imports may extend even to the field of capital goods. I think that the paragraph would be more satisfactory if the words of paragraph 8 were used in the draft meassage. MR. HELMORE (UK): I hope the Committee will not accept the New Zealand Delegate's suggestion, particularly because I have not the faintest idea what qualitative regulation means. I only suspect it is a way of 15. G. 2 E/PC/T/C. I & II/PV/4. describing quantitative regulation so as to conceal its true meaning. I have heard various people in this Committee and in the Sub-Committee talk about qualitative regulation, and they have always proceeded to explain that what they wanted to do was to impose quantitative regulation. I do not object to the words in the Report itself, because there we go on to explain what we mean, but in the message it seems to me important that we should use precise words. I am not sure that the words of the message do entirely meet all the circumstances, and I would be prepared to consider or to suggest other wording, for it and the message, but I think it would be a mistake to use the word "qualitative" in the message. MR. LOKANATHAN (India): I was going to say that I agree that the last sentence needs modification, because I entirely agree with the New Zealand. Delegate when he pointed out that the sort of regulation that is con- templated is not nerely applicable to the imports of consumer goods, but to all kinds of goods, the object being not to diminish the imports of the total value of goods, but to use the resources for the best purpose by getting those goods which are most likely to be useful. Therefore, I think that if the term "qualitative" is not appropriate, it is necessary to make it even more general, and to say that it will be inadequate to ed finance the need/imports of both capital and consumer goods unless it imposes regulations in respect of such imports. MR. MARTINS (Brazil) (Interpretation): I was thinking that the problem of qualitative restrictions had been sufficiently explained for there to be no more doubt about the meaning that qualitative restrictions might have in relation to quantitative restrictions, and it seems to me that the drafting of this message is quite clear to those who wish to consider if as a matter apart from quantitative restrictions, because the word. 16. G.3 "qualitative" in this message is defined by the regulation of imports of certain categories of consumer goods, and the reason is well explained in the Report which says that its object is to avoid a future lack of equilibrium in the balance of payments. Those countries which have to develop their industries need imports, and they may not have the necessary foreign currency to buy these production goods. Whatever may be their quantitative restrictions which they may have chosen for some other end, they need also some purely qualitative restrictions in the choice of the goods which they wish to import, so that consumer goods should not be imported, and there should be enough currency left for capital goods. It does not seem to me necessary to change this message, which seems to me quite clear. The word qualitative is there, and it might need some explanation, as the Delegate of the United Kingdom said; 17. E fols. E/PC/T/C.I & II/PV/4. HI E/PC/T/C .I & II/PV/4 but it refers to restriction of consumer goods in favour of capital goods, and that has to do with the industrial development, and that is why we must also have some express recommendation in this report which might satisfy the aims of the industrial development of countries which do not have an abundance of foreign currencies; because they have always in the past been and may yet in the future be in the position of not having an excess of foreign curreney as their balances are not always available. MR HELMORE (U.K.): Mr Chairman, I think the Brazilian delegate and the United Kingdom delegation are at one in this. The word "qualitative" is used in the report quite appropriately, because it is defined. when we came to the Message, the New Zealand delegate suggested the inclusion of the word "qualitative" and I resisted it because it would be difficult to define it there. If I might now take up the suggestion of the Indian delegate, I think he was troubled by the implication that the only choice was between capital goods on the one hand and consumer goods on the other, which, of course, is not so, because a country, even if it was spending very heavily on capital goods for its industrial development programme would probably need some consumer goods, and I believe we can solve all the trouble if we make the last two lines of the Message read, "to finance the needed imports of capital goods unless it imposes regulations in respect of the imports of other goods" - that is, unless it cuts down on all the other goods then the needed goods. MR LOKANATHAN (India): Mr Chairman, Mr Helmore has covered completely all the points I raised, but there is just one that he has not done, justice to, and that is that it may be that certain types of capital goods may have to be restricted in view of the fact that there is a better local supply of such capital goods and the need for certain other capital goods is more urgent; and therefore I do not want this Message to imply that we ought not to put any, restrictions at all upon the importation of any type of capital goods. All we want to ensure is this: the total amount will be spent, but how it is going to be spent must be determined by the needs of the country. MR PIERSON (USA): I wonder if that point would be met by inserting the word "particular" before "capital goods" in the next to last line? MR LAURENCE (New Zealand): That is after Mr Helmore's suggested amendment has been made? MR PIERSON (USA): Yes; so that it would road; "monetary resources will be H2 E/PC/C. I & II/PV/4 inadequate to finance the needed imports of particular capital goods unless it imposes regulations in respect of the import of other goods." MR LAURENCE (New Zealand): I do not know. We have the position where the term regulation" is taken as being synonymous with the term "restriction", but that is not necessarily so. It may be that you say, "Yes, we will import all the capital goods which importers, whether they be governments or private corpora- tions, want to import"; but there may be a programme, a time-table; and the word not "regulation" may/mean restriction at all; so if we accepted the proposal made by the delegate for India and caused it to read "to finance the needed imports of goods unless it imposes regulations in respect of imports" - or if you like you can say "capital and consumer goods" - regulation does not necessarily mean restriction. MR HELMORE (U.K.): Mr Chairman, if regulation does not mean restriction there is no need to send a message to Committee II about it at all. THE CHAIRMAN: It must mean temporary restrictions, surely? MR LAURENCE (New Zealand): Restriction on the way in which Mr Helmore has chosen to interpret it! MR MARTINS (Brazil)(Interpretation): Mr Chairman, the alterations suggested by the representative of New Zealand would nullify this whole Message, as the last sentence means that there will be a necessity for certain regulations. THE CHAIRMAN : Shall I read it out as it should read after the latest amendments have been made? It will be like this: "to finance the needed imports of particular capital goods unless it imposes regulations in respect of the import of other goods". THE RAPPORTEUR: Mr Chairman, if I may venture to make a suggestion which I think is in conformity with what the Committee has in mind and which may clarify the point the New Zealand delegate has raised, it is this: if instead of the words "in respect of" in the last line we insert the word "restricting", I think it will spell out precisely what we have in mind. It would then read: "...unless it imposes regulations restricting the imports of other goods". THE CHAIRMAN: How does that appeal to New Zealand? MR LAURENCE (New Zealand): Do I take it that the last four lines from "anticipates" now read, "anticipates that its accruing international monetary resources will be inadequate to finance the needed imports of particular capital goods-unless it imposes regulations restricting the imports of other goods"? 19 H3 E/PC/T/C.I & II/PV/4 THE CHAIRMAN: That is correct. MR LAURENCE (New Zealand): Thank you. MR LOKANATHAN (India): I do not wish to spend any time on this, but I have a little difficulty here, because it seems to me that if you use the words "to finance the needed imports of particular capital goods" the idea is not well thought out, because what is implied here is that we have not the resources to finance the imports of all kinds of goods and therefore we are asked to restrict the importation of some goods. That is all we intend to say, and any idea that we want to finance the needed imports of particular capital goods is not in my mind at least or in the mind of several members of the Sub-Committee which went into this matter. We had broadly the idea that if/the total resources were not adequate for getting all the capital goods and consumer goods required, it night be necessary to put restrictions on the importation of some goods. Whether those "some good" included the capital goods or only consumer goods is not for us to say. That was the point. If that idea is brought about it will be all right 20 E/PC/T/C.I.& II/PV/4 THE CHAIRMAN: We pass on to the next point. MR. HELMORE (UK): I think we were in the middle of paragraph 8 when we came to that. Have you finished the discussion on that, or could I raise a point? THE CHAIRMAN: Yes, please do. MR. HELMORE (UK): It relates to the phrase "especiallyy if it is replying on its domestic savings to supply the capital required". I am not sure that that does not beg a question and rather point to that particular way of conducting industrial development rather than another, which I do not think we should do. I would prefer to leave the phrase out altogether and simply to say "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." That is a perfectly plain statement of fact which does not give a lead in any way. THE CHAIRMAN: Any comment on that? I take it that is accepted. We now proceed to Paragraph 9. Any comments on Paragraph 9 ? MR. DESCLEE (Belgium) (Interpretation): Mr. Chairman, I have not quite been able to follow the words of the Drafting Committee and I think the word "unreasonable", which can be found in the eighth line of the paragraph, is not precise enough to be interpreted clearly by the I.T.O. I should be glad if the Chair could give me a few explanations concerning this particular word, or suggest criteria which one might followg in determining whether an obstacle can be called reasonable or not. I believe that a nation which might place certain obstacles might certainly have a reason for doing so. THE RAPPORTEUR: First of all, Mr. Chairman, I draw attention to the remainder of the paragraph, which says that the obligation not to place unreasonable obstacles is undertaken subject to other provisions of the Charter, and the theory, I suppose one might say, or the thought underlying what has been written here is that 21. 2 E/PC/T/C.I & LL/PV/4 the other proviesions of the Charter broadly speaking cover the reasonable obstacles that mahat y be pereemittd, and, speaking broadly, anythiengmn bod that should not bee don. The intention s that there should be a recogcaxiznon at thmemberis aam dosition to supply capital goods and materials should not take action to eventpr sucha icptal goods and materials being dmaae vailable to any particular country requiringe dvenlmenopt in a wanyy, overt othterwise. hhe decision rosae from viow x[prsosfd by many delegates at earlier eemtings of this full Committe that it as essential that developed countries should be able to obtain the capital goods and material theywa nt. I do not think that the Draftign Comimtteewe nt into a consideration fo thew ays mmd means hereby countries e could place unreasonabee tbstacles in the wah, but I think that there are a number of ways which could be thought of. For example, an unreaesonable government might well suggest to supplies of electrical equipment that they did not like a particular country and suggest that any orders for electrical equipment for that country should be recived with the reply that there were so many orders on hand the it was not possible to receive the order. That is only one example of placing an unreasonable obstacle in the way of capital equipment being supplied, and provision is made in the draft Articles that if any country believes as it is suffering as a result of unreasonable obstacles being placed in th way of getting the equipment it wants it can complain to the I.T.O., who can investigate to see whether action is or is not unreasonable. MR. DESCLEE (Belgium) (Ineterprtation): This explanation is most interesting, Mr. Chairman, but the I.T.O. will really have only one power - that of seeing whether or not the measures can be called reasonable. It seems to me that this wording could not be satisfactory to internationeral jurists and certainly will not be satisfactory to countries who are trying here to obtain a certain measure of guarantee. 22. 13 E/PC/T/C .I & II/PV/4 THE CHAIRma"eaUn"oneeaabl ise"obviously an unsatisfactowry rd,w capable of dffrnitt einerprttatieons, but ouhweluld Bliane egatedel helpeus uggesby sting tordabewoc7? R.DEi.Es(iInteEE (Belgu) cIeipon) tati We. n Fllreohinnnnncg paraphrase this by saying obstacles which would not give to the nation or region or country which is using them or making them an advantage which might be compared to the advantange brought to the opposite party from the suppression o these mfeasures, those obstacles. I suggest the obstacles are out of proportion to the interests of the members directly concerned. MR. HAKIM (Lebanon): Would not the word "undue" be better than "unreasonable" ? THE CHAIRMAN: It still leaves us in a state of vagueness, I think. MR: HAKIM (Lebanon) I think this word must necessarily remain vague. THE CHAIRMAN: Does the delegate of Belgium wish to press his objection to this word? E/PC/T/C.I & II/PV/4 Mr LOKANATHAN (India): The I.T.O. will not be called upon to decide and therefore a certain amount of vagueness is permissible. This is only an enunciation of a principle which has got to be explored by the developing countries. I do not think the I.T.O. is going to be called upon to consider whether any protective measure is wise, because under the provisions of the draft which we are going to examine later you will find that this is not directly called into question at all, as may be explained later. Here the only object of this paragraph was to expound the double obligation on the part of the countries which use protective tariffs to be reasonable and on the part of countries which are supplying capital not to impose any unreasonable impediments. So that the vagueness is all right as between both the parties and I think we should accept that. THE CHAIRMAN: Are there any further comments on paragraph 9? If not, we will go on to paragraph 10, Are there any comments on paragraph 10? (After a pause:-) Paragraph 11. Are there any comments on paragraph 11. Mr. FRESQUET (Cuba): Mr Chairman, referring again to the same phrase "capital funds, equipment,. advanced technology", and so forth, I think if we accepted it before, we should include "raw material" here. THE CHAIRMAN: It is the same phrase. Mr. FRESQUET (Cuba): Yes, THE CHAIRMAN: I take it that is accepted? (After a pause:-) That is accepted. Mr.HELMORE (UK): In the form of saying "capital funds, capital goods and raw materials"? THE CHAIRMAN: Yes. THE RAPPORTEUR Mr. Chairman, previously in paragraph 5 we have the phrase capital" goods and materials. THE CHAIRMWN :Yes,"capital and materials" .Are there there any more comments paragraph 11? Then we go on to paragraph 12. Are there any comments on paragraph 12? (After a pause:-) Para Are there any comments on paragraph 13? (After a pause:-) Para- graph 14 J-1 J-2 E/PC/T/C. I & II/PV/4 Mr LAURENCE (New Zealand) Mr Chairman, are you taking the first paragraph of the draft message along, with the consideration of paragraph 14? THE CHAIRMAN: Yes, I think it will be convenient if we do that, Mr LAURENCE (New Zealand): There is a point e arising from the first paragraph of the draft message in line 5, where we have the words "that in relation to the undertaking to reduce tariff and to eliminate import tariff preferences". I think the udertaking is rather to negotiate with a view to.Now I , am wonderinig if it would not express the real position better if instead of the words "to reduce tariffs and to climinate", those words were changed to concerning the reduction of tariffs and the elimination of import tariff preferences". Mr FRESQUET: Mr Chairman, I wonder if we can take into consideration what the have been doing in committee II. Instead of only the word "eliminate" for the import tariff preference, we may use the words "reduce or eliminate", because the elimination I undeirstand is not gong to be so automatic as we thought in the beginning, and on this here there is the idea that it going to be only an eliminiaton. Mr HELMORE (UK ): Mr Chairman, I think we are in a difficulty here beause two Committees are moving on parallel lines and seem unlikely to meet. Perhaps we could solve the difficulty by a still more radical amendment than that suggeste by the delegate from New Zealand, which I shoulde have thought was sufficient to cover the point which the delegate from Cuba has in mind. If it does not, we should just leave out the words "from so that" down to "preferences"; so that it would read "requests Committee II to make a provision in Article 8 of the Chapter dealiing with commercial policy so that the Organisation and other Member should when considering the contribution " &c. Mr LAURENCE (New Zealand); That will be acceptable to New Zealand, Mr Chairman. ; THE CHRMANAI: Is that acceptable? The proposal now eliminate the "words tar "so that", befeginning with "in relation to" up to "prefer- ences" the next line, line 5 of this. (After a pause:-) That .25 E/PC/T/C. I & II/PV/4 J-3 is agreed to. Are there any further comments on paragraph 14? Mr. DESCLEE (Belgium): (Interpretation): Mr Chairman, the draft of Committee II seems to present certain objections which might be more of words than of substance. It is said here that the Organisation when it is considering the contribution which might be made by a Member in tariff reduction should take into consideration the tariff rate of that Member. I think this would be going outside the terms of reference of Committee II to use a formula of so general import. As far as I can see, here we are talking only of Member countries who face the historical necessity of developing an economic system which has not yet been the subject of important economic development. 26 K K.1. E/PC/T/C.I & II/PV/4 It seems to me that it would be good in a case like that to add after the word "member" some expression or other which would specify that here we are thinking of a member who is undertaking concermic and industrial development for eovpme,.xnt for ent thiicprotectinn io deelssrty whotprss nthch pe ce fovery generalis iits merorts.gNriimsupsu ger I gasusttht "eett heord w.Ccce inhtccount o a h .oh ei ofhe tc tarieff of t hatmeembr? FRSEPEQT (Cuba): I tohiink the owWinr;og his lin eccvres certain counties which have had very low tariffs, and that should be considered at the time of the negotiations. The qualifying in use of the word "high" here should remain/the text, for it will give countries with traditionally low tariffs an opportuntity of geting a fair position in the way of nege- tiations. THE RAPPORTEUR: I think that the delegate of Cuba has stated substantially what was in the minds of the Drafting Sub- Committee in putting in these words. It is true, as the delegate for Belgium said, that as it stands it has a general application and that particular part goes beyond that to members promoting development, but the Drafting Sub-Committee felt it was a principle sufficiently important to have general application, and therefore the message was worded in this way. It is possible that, as a matter of strict logic this message we should restrict the modi- fication only to members promoting industrial and general economic development, but I think that the Drafting Sub- Committee felt that after considering the matter it would be better to draw the attention of Committee II to the matter in general terms. M. DESCLEE (Belgium) (Interpretation): If that is the case, it might perhaps be better to replace the word "and'" by the words "in correction with" before the words "the need", so that it would read: "take into account the height of the tariff of that - 27 - K. 2. E/PC/T/C. I & II/PV/4 member in connection with the need, if any". Mr. LOKNATHAN (India): That would be acceptable to us. Mr. FRESQUET (Cuba): Before proceeding, may I have a translation in English of the last speech made by the Belgian delegate? (The speech in question was then interpretod from the table, as given at the foot of p.27. and. top of this page.) MR. LOKANATHAN (India.): The Drafting Sub-Committee had, two separate considerations in mind the case of member countries which would like to use protective measures for their industrial and development programmes (that was a very important con- sideration) and the second consideration was that certain countries could obviously not give excessive concessions because of low tariffs, and that must be taken into account. There was no point in joining these two entirely separate factors, are I think it is very necessary that we should retain these two in the form in which the message has been framed. M. DESCLEE (Belgium) (Interpretation): I think it will be sufficient to leave in the message to be sent to Committee II certain explanations which may be needed, should the Committee ask to have the meaning of that sentence explained. That being so, I am prepared to leave this message as it is. M. IGONET (France) (Interpretation): I believe that the difficulties we are facing on the interpretation of this sentence come from the fact that we might not directly be able to understand the manner in which one will take into account the more or less high rates of the country which wishes to protect its developing industries. It is understood that a country already having a great deal of protection and high tariffs for good reasons asks to have its tariffs raised in order further to protect a new industry. On the contrary, a country whose tariffs are low, legitimately, has a better right to require to use higher tariffs to protect an industry. I think this is the way we want to understand the words "take into K.3. E/PC/T/C.I & II/PV/4 account", and that ought to reassure our Belgian colleague, as Belgium has only low & tariffs as far as I know. THE CHAIRMAN IRAl wIl: Shel *we lcave it then? If there is any difficulty bouteamthis, I indicate ie ttut serl wndicate igy wielncwW w go on to phrap15. LAURRECE (New ZNcland)au:Zoipnt .ases iic1a ra.gaph15 in the third line on paeg 10 - a"s a result of agreemnts volunatrily egontiatedb y embeMr ssac ontmpealedtb y the Charter". Teh position, as I uneds tnda it, is that the Charter will not cowm into force untikaf ert tehe sperlminaryi negotiations ar ecarride out,and teher is just a question whetehr there ould notmee a moee ruitable wordingaif thathis to be the case, because the Charter will not be in existence at the time when the negotiatoins are carried out. L follows. - 29 - E/PC/T/C.I & II/PV.4. There is intended, I think, to be some agreement -- a general trade agreement between the parties that enter into the negotiations. It is just a point of detail but it arises from the fact that the Charter is a post-negotiation document. MR HELMORE (United Kingdom): I think the point of the New Zealand Delegate is a sound, constitutional point, in that the Charter cannot settle what happens before the Charter comes into effect. We could leave out the words "by the Charter". MR LAURENCE (New Zealand): Members of what? -- countries entering into the general trade? MR HELMORE (United Kingdom): Or "by prospective members, as contemplated in connection with the Charter". THE CHAIRMAN: Are there any further comments on paragraph 15? MR FRESQUET (Cuba): I have not been able to go further in this draft, and I do not know if the point is found later, but it seems to me that it is in this paragraph that the Sub-Committee states in its draft that there was a general agreement about the use of subsidies, and they did not feel happy about tariffs, and they did not say anything about other forms of protections that may be used to promote industrial development in undeveloped countries. I did not see any reference here to what? THE CHAIRMAN: Paragraph 16. MR FRESQUET (Cuba) That is what I said before. MR LOKANATHAN (India): May I explain. The position is this, that all forms of protection are permitted, whether they take the form of tariffs or subsidies or quantitative controls; but in the use of those forms of protection every member will have to be guided by the other articles of the Charter. The other articles of the Charter provide for the use of subsidies and tariffs in a particular manner. As regards quantitative controls, they are permitted only in certain sets of circumstances. If quantitative control is to be imployed also as protective measure, there is no provision here; but if a country wants to employ it, then it will have to go to the Trade Organisation to get a release. The procedure for getting that release is also laid down. He will have to satisfy several tests and conditions, and if those tests are met, and the Organisation feels that the par- ticular member is entitled, in veiw of the circumstances presented to the Organisation, to use quantitative control, then it can get a release from the 30. L.1. L.2. E/PC/T/C.I & II/PV.4. obligations or from other undertakings given by that member under the terms of the Charter. MR. FRESQUET (Cuba): I reserve the Cuban Delegation' s view on this matter until we come to discuss the procedure. MR IGONET (France)(interpretation): Mr Chairman, I should now like to present a few remarks of a general character, which ought perhaps to be made a little further on. It seems to me that they are connected with the statement made just now by the Indian Delegate. The remarks which I wish to express here have already been expressed by the French Delegation during the debate in Committee 2. They concern the very great importance which should be given to the views of the parties in any dispute, concerning the measures to be taken in order to ensure industrial economic development, through other Committees and for other reasons. All of us in all the different committees are turning towards a solution of the problem of international relations whose aspect is no longer one of a definite strict law or discipline; but rather an organisation more flexible in its way of operation, to whom everyone can present its own case, and which would; in all justice and for general good, take the best possible decisions. It seems to me that the faith which many countries might have in the actions concerning disputes is a fundamental element in the arrangement of international relations in the economic field. Therefore, I should now like to say (and oven other committees might have the opportunity of doing it too) that the arrangements for the conduct of disputes should be given the greatest possible attention. In order to ensure great objectivity and to give to all countries a feeling of complete security, an agency of appeals might somewhere be established, either near the Economic and Social Council or the Organization, in order to give final judgment when a country believes that the jurisprudence. governing disputes is not satisfactory. THE CHAlRMAN: Thank you very much, Are there any further comments on paragraph 15? Then we now pass on to paragraph 16. MR HAKIM (Lebanon): I would like to make a short statement regarding the last sentence in this paragraph which refers the method of regional preferential arrangements to Committee 2. I rate that the Sub-Committee has not recognised regional preferential tariff arrangements as a means of promoting industrial development in smalI countries. It has not included this means for the promotion of industrial development in its report and in the draft clauses of the chapter on industrial development. 31. E/PC/T/C. I & II/PV/4. The Lebanese Delegation considers this question is one of great importance to certain small countries in certain regions, if not to other countries. It considers that this means of promotion of industrial development is of the same character as tariff protec- tion. Where regional preferential tariff arrangements are made, small countries co-operate in providing tariff protection for each other's industrial products in each others markets. In spite of the fact that the Lebanese proposal on these regional preferential arrangements has not been discuss ed in this full Committee, I have no intention of raising the question now. I only wish to make a special reservation with regard to the non-recognition of those preferential arrangements which the Lebanese Delegation considers are a very important means for the promotion of industrial development in small countries. We believe that these arrang events should be encouraged as a form of international co-operation on a regional basis, for the solution of the problem of markets which small countries face, the widening of which is necessary for the industrial development of small countries. MR LOKANATHAN (India): Mr Chairman, on behalf of the Indian. Delegation, I should like to offer a comment upon this paragraph. I have no amendments to propose or alterations to suggest. All I wish to do is to place before you our difficulty with regard to the suggested procedure. We feel that the procedure may turn out to be too elaborate, too complicated and probably too dilatory. We also fear that under-developed countries may not be able to get release except under difficult terms. We also have a suspicion that, unless special weight is given to their difficulties, the scales may be weighted against them. In particular with respect to trade controls, we have a feeling that our difficulties have not been fully appreciated. We are the 32. M.2.E/PC/T/C .I.& II/PV/4. first to recognise that they are capable of great abuse. As in the case of balance of payments difficulties adminis- trative trade controls are allowed, subject to reasonable safeguards, so we feel that in this, subject to safeguards, they may be allowed. However, we appreciate the sort of compromise that has been arrived at as the result of long discussion on in the subject, and we do not wish to press further /the matter on this occasion. We shall consider this matter very carefully, and we may have some more suggestions to make when next we meet. THE CHAIRMAN:. The reservations made by the Delegate for Lebanon and for India are noted. I take it that no amendments have been suggested; so we shall not, therefore, have any amendments to discuss. MR FRESQUET (Cuba ): I would like, Mr . Chairman, to say a few words on this paragraph. I agree that subsides are the better form of protection for the countries which can afford them. Then come tariffs, as another form, not so good as a protective measure; and countries should not use quotas unless it is absolutely necessary for them to do so as a means of protection. I think the way the matter has been dealt with in this paragraph leaves very little opportunity for the use of quotas at all, at least for the under-developed countries. Apart from the regulations which we shall come to discuss later on, it is expressed here that the opinion of the sub-Committee in relation to quotas is that they should be employed only when they, would place a lighter burden on the country giving the protection. In connection with this phrase my own judgment is that it is a very candid way in which to look at it because it is very difficult to assess the degree of importance of any protective measure, especially the quota measure because it would take a long discussion on human necessities to decide and find out what kind of a burden we are imposing when we 33. M.3. E/PC/T/C.I & II/PV/4. establish some kind of quotas. In relation to the second condition that quotas would be less restrictive of International trade, it seems to me that that is also candid, because quotas, of course, will always be more restrictive than any other forms of subsidy in International trade, unless the tariff was so high and the subsidies so high also that it came to the same thing in the end. So I have a proposal to make in connection with this paragraph and It is that we delete those two conditions and say - this is at the end of line 6 "These means should be employed only where it was absolutely neces- sary" or something of that kind. I only throw these particular words out to give an idea. THE CHAIRMAN: The proposal now made by the delegate for Cuba is that at the end of line 6 of paragraph 16 it should read as follows: "Those means should be employed only whore it was absolutely neces- sary"; in other words to eliminate "It would place a lighter burden on the country giving the protection and therefore it would be less restrictive of International trade than would be the case with other forms of protection." I invite comments on this proposal. (N.fols) . 34. E/PC/T/C. I&II/PV/4 MR HELMORE (UK): I do not suppose that at this hour the Committee needs, or wants, a fairly long speech from the United Kingdom on the subject of quotas for protective use. The proposal as set out in the Committee's report and the draft articles represents to our mind a very considerable approach towards supping with the devil. I am sorry if the Cuban delegate thinks the spoon is too long, but I am afraid we could not agree to shorten it. THE CHAIRMAN: If the Cuban delegate wishes to press his point we can include it among the reservatinonns ad let it stand with those reservations. We proceed to paragraph 17. THE RAPPORTEUR :TR:Chn,Mranaairm-, if I might just make reference to the psitionn tken by the Delegate for the Lebanon, athe wy the redraAt of the ticle is worded, "wherebye a Mmberge caene te rlas farom n obligation," there is no limitatwhion as to at obligations he can be released from and, if necessary, he could be released fronm th obliation not to enter into regional preferential arrangements. If the Organization, on examining the case, agreewd that it as desirtable thathe should be iven permission to enter ingioto rprenal efernarratial gements, because of that over- riding possibility of rele ase, the ommisub-mtte felt that it was not necessary for them keto t fuather anyr a especctiocially in the light of tahe factaa thtma the ttser wabeing, considereed, w unoderstod, min Comittee II. KIM(MWU Lnon): Mr Chairman, I thana kph papeotoueRferc is interpretation paragraph 3 of Article 4 of the proposed Chapter on Industrial Develop- ment, and would like to know whether the whole Committe supports this interpretation, because, at first sight, it seemed. to me that the protective measures referred to in thagis paragraph concerned only those which were taken by a member individually and not in agreement or arrangement with riemnt th other members. If this release referred to here also covers the possibility of members pentering into referentiale arrangemnts, I would not b prepared nodw to withraw reservation, but I think that would be a contribution towards the solution of this problem. THA:IRoWvemove on toMp vcn 17. sa yy that aay shaiconnection sewseih te five paragraphs 17, 18, 19, 20 and 21 there is a resolution. as well, but we 35. N2 E/PC/T/C. I&II/PV/4 will take paragraph 17 first. Are there any comments on paragraph 17. MR DESCLEE (Belgium): (Interpretation): Mr Chairman, I wonder if it would be possible to separate Article 17 from the others; I am reading it here for the first time because I was not present at the meeting of the Drafting Committee, and I will read the last sentence but one, where it says that the "Organization" (must) "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." In a word, Article 17 refers already to the draft of the text to be submitted to the Economic ard Social Council. That being so, I wonder if I could tell you now ---- THE CHAIRMAN: It is going to be submitted. MR DESCLEE (Belgium) (Interpretation): Mr Chairman, the question I asked was this. I was wondering whether we might even now speak of this draft, and I wonder if I might tell you what is my opinion of thewhole of this problem, since Belgium has not been allowed to do so in the Drafting Committee. Both Article 17 and the following Articles have caused me a certain amount of surprise and I think they might also cause surprise to those who know how the Economic and Social Council functions. I suppose that this suggested draft which might be submitted to the Economic and Social Council should first be the subject of debate by the Heads of Delegations, and that, on the other hand, Committee IV should have its say on this matter, Whatever the case may be; but I am not quite clear that the procedure which is suggested is satisfactory. There must be equal collaboration between international agencies, and, on the other hand, there is no doubt that there must also be very close connection between the I.T.O. and other international organizations. From this point of view there can be no shadow of doubt that the problem of international tariffs and other measures of protection which might be taken in favour of under- developed countries, implies both the functions and activities of the I. T. O., the Economic and Social Council, the Bank, and the other specialized agencies, most particularly the Economic and Social Council, as the 36. 83 E/PC/T/C. I&II/PV/4 Rapporteur has so justly said, in Article 19. There is a special sub- committee discussing economic problems, and it does not seem very logical to me to give to the I.T.O. the responsibility of solving problems of economic development starting from a viewpoint which is not its own view point. In this paragraph, for instance; technical help is mentioned. I might have understood this if one supposed that it would be the duty of the I.T.O. to deal with the problem, because in my opinion the provisions, in so far as they are related to economic development, are concerned with this; but I do not understand very well why we use as an example the functions of the I.T. O., technical help, and later on talk about functions which at least in my opinion pertain much more to the functions of the Economic Development sub-Committee, and which, in any case, will necessitate, sooner or later, the intervention of the Economic and Social Council itself. Also Articles 17 to 18 are a surprise to me, and I am wandering whether this problem should not be developed a little so that we might understand it with greater precision. It is a question of the collaboration between the different Organizations; it is a very subtle one; and I do not think that the proper solution would be one of having every international agency having its terms of reference extended to all matters from all points of view. I believe, on the contrary, that we should try to examine the problem of economic development from the point of view of international competition and international trade. I have expressed here my surprise, and I am wondering, whether all these reasons are as important as they seem at a first reading. 0,fols. 37. 0.1 E/PC/T/C.I & II/PV/4 THE CHAIRMAN: I wouId like to remind the Delegate of Belgium that, as the Rapporteur pointed out in his opening remarks, the specific provision made is in the draft Charter in paragraph 3 of article 2. That lays down the specific functions of the ITO with regard to economic industrial development. The intention, as I understand it is that this particular paragraph shall retain in brackets until the second session of the Preparatory. Committee has received a message from the Economic and Social Council as to what it feels is the right way of dealing with this question after considering the paragraphs numbered 17, 18, 19 and 20 in this Report. The intention was to put to the Economic and Social Council the feeling of this Committee with regard to the advantages in favour of the ITO taking on the functions laid down in paragraph 3 of this Article, and also recognising that there are other bodies that could presumably be charged with the same functions. That is the position with regard to this Matter. I do not know whether the Rapporteur wishes to add anything to what I have said. THE RAPPORTEUR: I am afraid I have been preoccupied with another point that was left outstanding. THE CHAIRMAN: Does the Delegate of Belgium wish to proceed with this matter? MR. DESCLEE (Belgium-Luxembourg) (Interpretation): I would like to say to the Rapporteur that the main point of way argument was that Article 17 and the following three go very far in this sense. The aid to new countries does seem to come under the terms of reference of the Sub-Commission for Economic Development, which is one of the Sub-Commissions of the economic and Social Council. I believe that we have gone outside the programme of our work such as it was outlined at the beginning, of the work of the joint Committee. I think the examples given here, such as the one of technical aid, mentioned under paragraph 18, are examples. which would not really justify any intervention of the ITO in this matter. There is, in fact, a Sub-Commission for Economic Development which has been organised, and which is appropriate for the regulation of these problems, and I understand the ITO should really treat all questions of international competition and 38. 0.2 E/PC/T/C.I & II/PV/4. perhaps treat questions of economic development from that point of view. I do not see how it could effectively treat problems of technical aid, and everything that is mentioned under paragraph 18. THE RAPPORTEUR: Speaking as Rapporteur for the Sub-Committee, I think I can only say that there was full recognition given by all members of the Sub-Committee to the potential role which the Sub-Commission on Economic Development might play. Some members of the Sub-Committee felt that I think for two main reasons -- that the ITO could perform some of the functions which may have been contemplated for the Sub-Commission. One reason was that the Sub-Commission is an organ of the Economic and Social Council, and as such is presumably a body that will undertake mainly advisory and coordinating functions; and it was felt that the technical advice and general advice on plans and programmes might involve functions of a rather more administrative character; and the broad policy which is gradually being evolved is that administrative or executive functions are carried out by specilised agencies, such as the Bank and the Fund, and in another sphere, by the F.A.O, The F.A.O's functions include advice of a technical character regarding agricultural production, and it was felt that possibly the carrying out of that function would involve administrative action being taken by F.A.O. Likewise, on industrial production, manufacturing production, it night be desirable to have a similar administrative agency of the Council. That was the first main point, I think, put forward by the supporters of this idea. The second was of a rather more general character; it was felt that if the ITO was to be thoroughly successful over a long period in the carrying out of its functions, it was desirable that it should have the best possible opportunity of getting the confidence and goodwill of its Members. If its functions were primarily concerned with policing the restrictive provisions of the Charter, it was thought that the opportunity of getting that confidence and goodwill might be possibly not as great as they would be if it had functions whereby it could give more positive assistance, and it would be of mutual benefit in enabling the 39 0.3 E/PC/T/C.I & II/PV/4. the officers of ITO to learn at first hand the real problems that individual countries have to face and at the same time assist individual countries in developing a respect and regard for the ITO. Those were, I think, the main points of,the protagonists of this idea that the ITO should be given these functions. It was felt that it was sufficiently important that some action should be taken along these lines if it were possible. However, other members of the Sub-Committee pointed out, just as the Delegate of Belgium has done, that this sort of functions might possibly be undertaken by the Sub-Commission on Economic Development, and until the matter has been clarified, it was thought that the whole issue should be left undecided. It was felt, however, that it was desirable to get the views of the Economic and Social Council, because it presumably did not when take into account the possibility of ITO becoming established/it decided to establish the Sub-Commission on Economic Development, and as the actual organisation and operation of that Sub-Commission has not yet been decided, it was felt that it was not inappropriate to bring the matter to the notice of the Council for their examination and advice prior to the april meeting of the Preparatory Committee. MR. DESCLEE (Belgium-Luxembourg) (Interpretation): As far as the first of the arguments is concerned, it seems to me that certain members having decided that there is a lack of agencies of the Social and Economic Council, this might be expressed in some message which would be quite different from the one here suggested. We might ask them to examine how the organisations already existing or accredited might take charge of this very important problem of economic development from the point of view of administration. As far as the second argument is concerned, I am not convinced. The same arguments would apply to the Bank. P fols. 40. . .~~~~4G P1 E/PC/T/C.I & II/PV/4 The best system for achieve the aims which have motivated the members of this assembly, particularly those who come from less developed regions, night be for the Bank to give up all its powers to the ITO. You would then certainly have the confidence and goodwill of members. My position perhaps is too logical a one, but I fear that the ITO might fail at its task, which, after all, is the one of achieving some positive and concrete result in the field of international competition. THE: CHAlRMAN: The discussion has nearly covered paragraphs 17, 18, 19 and 20, so that we can take then all together now. Are there any further comments? MR DEUTSCH (Canada): Mr Chairman, I have one suggestion to make on Article 18. I have no objection to the main substance of that Article but I am a little troubled about the middle of the first sentence: "This task, because of its essentially administrative character, would be appropriate to a specialised agency"; which then goes on to say it is necessary to do this in order that the Organisation may have goodwill. Now, it seems to me that the goodwill of the Organisation will depend upon the exercise of all its functions, not simply the exercise of this function; and it is a bit invidious, I think, simply to say that unless. it does this particular function it will not have any goodwill. It seems to me it would be just as well to delete that part and say, "This task, because of its essentially administrative character, would be appropriate to a specialised agency", and then strike out the remainder of the sentence and then go on, "Furthermore, it would provide", and so on. MR PIERSON (USA): Mr Chairman, I agree with the suggestion just made by the delegate from Canada. I think for mechanical reasons the amendment would have to include the addition of sone words in the second sentence. If the amendment were adopted it would have to read, "Furthermore, the performence of this task by the International Trade Orgnnisation would provide...." THE CHAIRMAN: Are the so two amendments accepted?. MR PHILLIPS (Australia): I am not quite clear as to the significance of the United States suggestion. MR PIERSON (USA): The second part of the first sentence refers to the performance of the task by the ITO. If that is to be dropped, then I think the second sentence must begin, "Furthermore, its performance by the ITO would provide..." It is a purely mechanical and consequential amendment. 41 P2 E/PC/T/C.I & II/PV/4 MR PHILIPS (Australia): I think it would be rather a pity to drop the whole of the thought embodied in that sentence. I wonder if it might meet the point made by the delegate for Canada if you stopped the sentence at "positive co-operation of Members". I do not think that is what he suggested - I am not quite certain - but it would then road, "This task, because of its essentially administrative, character, would be appropriate to a specialised agency, and its performance by the International Trade Organisation might well provide a means of positive co-operation with members. Furthermore...." and so on. I would points out also that as drafted the sentence only says that this function might assist the Organisation in gaining their confidence and goodwill. It does not suggest it is the only means by which that goodwill would be gained. THE CHAIRMAN: Are there any comments from the delegate of Canada? MR DEUTSCH (Canada): I think I would compromise with the Australian delegate on that. THE CHAIRMAN: In that case the consequential amendment will not be necessary, if that is acceptable. Then shall we adopt the wording suggested by the delegate for Australia? MR PIERSON (USA): I,would suggest one further minor change. The third line of 18 roads, "...might well provide a means of positive co-operation with Members.." It seems to me that we might strike out the word "well" and say "...might provide a means...." It seems to me it is quite clear. THE CHAIRMAN: Is there any further discussion on these paragraphs? MR PIERSON (USA): I have just one minor suggestion on 19. I would suggest that the United Nations Educational, Scientific and Cultural Organisation, referred to in the sixth line there, be placed at the end of the list of Organisations given, quite without prejudice to the good work which this Organisation may do in the field. My point is that we are more familiar with the role that the Bank and the ILO and the FAO are prepared to undertake. I would suggest a simple transposition of that Organisation to the end of the list. THE CHAIRMAN: I think that is agreeable. (Agreed.) Now, I had proposed to go on until eight o' clock. It is possible we might finish the discussion of the draft chapter before eight. I am entirely in the hands of the Committee in this matter. Shall we proceed and see how we get on?. (Agreed.) We ought to get though it today, as tine is now getting short. 42 Q1 OM E/PC/T/C.L & II/PV/4 THE CHAIRMAN: Article 1, Declaration in General Terms. Are there any comments on this? If not, we will proceed to Article 2, paragraph by paragraph. Paragraph 1? Paragraph 2? MR. LAURENCE (New Zealand): Mr. Chairman, there is a point arising on paragraph 2, in the third line: "in plans and programmes to promote industrial and general economic development". Those words suggest that if members are to agree in carrying out plans and programes, either they would be evolved by the organization or evolved by members individually and approved by the organiza- tion; and then to carry on with the, "word "promote", it may be that there would be conflict that would have to be resolved, and I am wondering whether or not it would not be better to substitute for the words "following agencies" the words "to achieve the fulfilment of purposes sot out in Paragraph 1", or, if you will, "in Article 1". THE RAPPORTEUR: Speaking as the Rapporteur, Mr. Chairman, I think that the words suggested by the delegate from New Zealand cover the thought that the Committec had in mind in using the words that are set down here. I do not think that there would be any difficulty in accepting those words, if it is the wish of the Committee. MR. LAURENCE (New Zealand): Do you mean the words already there? THE RAPPORTEUR: No, the words you have suggested as an alternative. I think they come to much the same thing. MR. LAURENCE (New Zealand): If I may speak again, Mr. Chairman, the distinction I was wanting to draw was this, that the question may arise in some actual situation as to whose plan is to be carried into effect. It may be, for instance, that New Zealand has a plan in connection with farming, and it may be that the United States has a plan in connection with farming on which there may be some conflict, and the point has to be resolved on the grounds, presumably, of which of those plans achieves thefulfilment of the purposes; and it seemed to us that it would be better to have the broader significance than to reedue the thought at that 43. E/PC/T/C.I & II/PV/4 point to plans and programmes, where in an actual situation some difficulty may arise. MR. PIERSON (US): May I ask the delegate from New Zealand whether a simple change, in which the rords "plans and programmes to" were deleted, and "promote" became "promoting", would meet the thought that he has? It would then read "and the appropriate intornational specialized agencies in promoting general industrial and economic development" MR. LAURENCE (New Zealand): I think probably that would be better. MR. PIERSON (US): Perhaps that would be the simplest way of meeting the point. THE CHAIRMAN: Is that acceptable? I take it that is agreed to. Then Paragraph 3 of Article 2. MR. SKRINDO (Norway): Mr. Chairman, I suggest that the word "shall" in the first line of this paragraph should be amended to read "may". Further, I am not quite sure of the moaning of the word "resources" in the third line of the same paragraph. If it also covers expenses for technical assistance given to an applicant country in completing its plans and carrying out its programmes, in that case I entertain some doubts, and would suggest that the words "and resources" should be omitted. I am, however, inclined to think it only covers resources of technical advice, and so on, but I should like to have some explanation on this point. THE RAPPORTEUR: Mr. Chairman, the word "resources" was, as the delegate for Norway suggested it might be, relating to its financial resources, and really related to both points he, mentioned. We had in mind the financial resources of the Organization and its technical resources. We felt that it was necessary to make that reservation, so that although it is true that if it were not made mandatory the reservation would not be quite so necessary, it as felt it was desirable to indicate that the I.T.O. did have some limitations at some point. 44. E/PC/T/C.I & II/PV/4 THE CHAIRMAN: Any further comment? MR. LAURENCE (New Zealand): Do we take it that the word "shall" is substituted by the word "may"? MR. LOKANATHAN (India): No, sir. I thought it was only a suggestio but if it is to be included I should like to say something. MR. LAURENCE (New Zealand): I had another point. I find there is some ambiguity arises from the use of the first word "its" in the second line. I only mention it as a matter of drafting. I do not want to take the time of the Committee now, but it can be taken to read that the Organization submits plans or the Member submits plans. THE RAPPORTEUR: I think perhaps it might be more correctly put. This is bad drafting, Mr. Chairman, but the meaning is "shall advise such member concerning such member's plans". MR. LAURENCE (New Zealand): Yes. THE CHAlRMAN: Yes. That will have to be cleared up. MR. LOKANATHAN (India): I only wanted to say that if the substitution referred to previously was going to be pressed I wanted to speak about it, but if that is not the intention I will not waste the time of the Committee. The reason for the Sub-Committee definitely putting the word "shall" was to lay on the organization a certain positive duty to render help and assistance in the programmes of economic development. It was really because we wanted the Organization to be an instrurment for considering plans from various members and so on, and also to act as a constructive organ, and that is why we wanted the Organization to be clothed with enough resources and competence to render this aid. 45. R-1 E/PC/T/C. I & II/ PV/4 If you can replace the word "shall" by "may", then I do not think the Organisation may have the resources. THE CHAIRMAN: Does the delegate for Norway wish to press the suggestion regarding a change? Mr SKRINDO (Nor way): No, Sir. THE CHAIRMAN: Now I do not think there is much in point in trying to go any further with this. We shall have to have one more meeting. I understand there is a meeting, of Committee IV tomorrow morning and a meeting of Committee II tomorrow afternoon. It is just a question of whether we should choose to meet in the morning or the afternoon, Mr STEYN (South Africa): Mr Chairman, I was wondering whether we could not perhaps have a meeting tomorrow morning early - at 9.30. Mr. FRESQUET: How about a meeting later this evening? THE CHAIRMAN: Yes, we could have a meeting, but I am afraid I shall not be able to come, as I have an engagement. I have people coming to dine with me. If I had been dining, with somebody, I would have cried it off. Mr. HELMORE (UK): Mr Chairman, when we are moving at the speed at which we are, we must have an opportunity of speaking to our members who are on the other Committee and between 9.30 and 10.30 is the only time for that. THE CHAIRMAN: If it is agreeable to Members of the Committee, I suggest the Committee meet again after dinner tonight with another Chairman, Shall we do that? (After a pause:-) Very well, we will do that. As this will be the last time I shall be presiding over the delibera- tions of this Committee, I should like to say what a great honour and pleasure it has been, how grateful I am for the unfailing co-operar- tion, help and assistance that I have received from the Members of the Committee, and, If I may say so, how adaptable the members have shown themselves to be in appreciating the points of view of delegates from other countries. I think the meetings of this Committee have been very successful, and I think it is entirely due to that spirit of accommodation that, has been shown by all the delegates. I would also 46 . E/PC/T/C.I&II/PV/4 like to express my gratitude on your behalf for the very excellent wor done by the Secretariat. Their work has been of a kind of which I can only say this; that it is like a machine that has been running without our knowing that, the machine was running: it has run so well. Last but not least I would like to thank on your behalf Mr. Hartnell who ha not only shown tremendous industry in preparing this Report, and we all know what an admirable document it is, as we have seen now, but has also exercised infinite patience. I am most grateful to him, as I am sure you all are. Thank you very much, The meeting is now adjourned till 9 o'clock. (The meeting rose at 7.55 pm.) (For verbatim report of next session see E/PC/T/CI&II/PV/4- Part 2.) 47. R-2 S & T.1. E/PC/T/C.I & IV/PV/4 - Part 2. (The meeting resumed at 9 p.m.) COMMITTEE SECRETARY: We will start the meeting now; but since we have no Chairman or Vice-Chairman to preside over this meeting, I suggest we nominate somebody to take over the Chair for this meeting. Are there any suggestions? MR LAURENCE (New Zealand): Mr Acting, Chairman, what about our Rapporteur acting in the Chair? MR LOKANATHAN (India): I second that. (The Rapporteur, Mr B.W.Hartnell, Australia, then took the Chair) THE ACTING CHAIRMAN: Thank you very much, Gentlemen, for the very signal honour you have done me. I think we were about to begin consideration of Article 3. Are there any comments on paragraph 1? MR FRESQUET (Cuba): Mr Chairman, will you give me leave to add in the letter (b) "raw materials. " THE CHAIRMAN: In consonance with what we have done before, is it the wish of the Committee that that be done? I think the words before were '"materials" with no qualification. Is that the wish of the Committee? With that modification, Gentlemen, is paragraph 1 agreed? MR LOKANATHAN (India): What is the proposal, Mr Chairman? THE CHAIRMAN: (b) of paragraph I now reads: "equipment, materials, advanced technology," etc. MR LOKANATHAN (India): I have no objection to it, only I feel that our intention is not to suggest all the hundreds of thousands of factors that enter into this: our real point is only to emphasize more the difficulties of countries in regard to materials, because they may have those materials but do not have other things, generally speaking. However, I have no objection to this. THE ACTING CHAIRMAN: Can we take it then that paragrarh 1 is agreed? Paragraph 2. If there are no comments on paragraph 2, we can take that as agreed. Paragraph 3. If I may inteppolate here, Gentlemen, speaking in my capacity as Rapporteur of the sub-committee, there has been a typographical omission in paragraph 3. After the word. "co-operate" the following words should have been inserted, "within the limits of their power to do so," 48. T.2. E/PC/T/C. I & II/PV/4. so that the paragraph nowreads: "Members agree to co-oprate within the limits of their power to do so with the appropriate international agencies, " etc. Are there any comments on paragraph 3? MR LAURENCE (New Zealand): I am wondering whether the paragraph would be clearer if the word "such" before "facilities" could be amplified, such as "such facilities as are enumerated in paragraph 1" - wheher it would not be better to include that. THE ACTING CHAIRMAN: Speaking as Rapporteur, the Article proceeds from paragraph i where it enumerates the facilities required for economic development, and in paragraph 2 you will see a reference to facilities required for economic development, and it was felt that rather than recapitulate again the use of the adjective "such" would be sufficient. MR LAURENCE (New Zealand): I do not want to press the point, only reading the sentence just as a sentence one has a feeling that it is left in midair, somehow. It can be taken into account in drafting, if there is anything in it, but I do not want to press it. THE ACTING CHAIRMAN: Perhaps we can leave that to the Committee that is going to meet next January to polish up the draft, if that is agree- able to the New Zealand delegate. MR LAURENCE (New Zealand): Quite. THE ACTING CHAIRMAN: May we proceed now to paragraph 4 ? Are there any comments? MR STEYN (South Africa) : Mr Chairman, I would like to find out exactly what is the meanifng of this particular section, because I do not know, and it has rather left me guest. I would like to get a line from you as to what was actually the intention. THE ACTING CHAIRMAN: The intention of Article 4 was first of all that there should be an undertaking that no unreasonable action should be taken by Member countries. where those Members were receiving their supplies of capitale or equipment and so on from other countrics. However, it was felt by the sub-committee that that perhaps was of rather wide application, and it was felt therefore that it woulred mo clearly give the intention which the sub-committe had in mind if there were a qualification pro- vided, that countries would conform to the provisions of any international 49. T.3 E/PC/T/C.I & II/PV/4. obligations entered into already or in the future under paragraph 5 of Article 50 of the Charter, and then just add a general overriding sentence, that in addition to that, they might take no unreasonable action which would be injurious to the interests of members' business entities or persons supplying them with those facilities. It may well be that the drafting of the paragraph could be improved, but no doubt that will go through the screen that the drafting committee next year will apply to all these proposed articles. MR LAURENCE (New Zealand): I can sympathize to some extent with the difficulty that the South African delegate has had. The impression on my mind from reading the paragraph was that it mainly comprised seeing that members would do what they were already obliged to do; but the sub-committee, no doubt, has its reasons for making these statements here, and in the light of your explanation I am wondering whether it would make for clarity if after the word "will" in the third line you made the text read, "in addition to conforming to the provisions of their relevant international obligations, whether now in effect or which they may undertake pursuant to paragraph 5 of Article 50 or othewise,." and then strike out the words "in general," "that they will take no unreasonable action," etc. THE ACTING CHAIRMAN: Might I suggest to the delegate of New Zealand that I think to follow his suggested amendment it would be necessay to delete, not the words in the second last line that is suggested, but the word "and" and the words "that they will." MR LAURENCE (New Zealand): Yes, whatever is consequential. J fols. 50. U1 E/PC/T/C.I & II/PV/4 MR. FLEMING (UK): Mr. Chairman, I should like to point out that this might involve a slight substantive change. If it were a matter of pure drafting I would agree with the delegate from New Zealand, but/under the present form of the paragraph the complaint procedure of paragraph 5 would apply also to those existing international obligations, under the redraft of the paragraph the complaint procedure would no longer apply to those obligations I think, therefore, there is a real, substantive change here, and on the whole it is preferable that this document should, as it were, take under its wings the existing bilateral obligations so as to interest the Organization in them and obtain the sponsor- ship of the Organization for any consultations that might be undertaken to ensure that they are carried out. For that reason I think we should prefer to retain the present form of para. 4. MR. LAURENCE (New Zealand): I do not wish to change the form. It was just that it seemed we were doing no more than saying that members would do what they were obliged to do. THE ACTING CHAIRMAN: I think that the point taken by the United Kingdom delegate, if I may again speak as the Rapporteur, is of substance. The intention was that the complaints which a member may make, either in respect of Article 2, 3 or 4, would enable a complaint to be lodged in respect of any violation, if there were such, of an obligation under an existing agreement, whereas the wording suggested by the New Zealand delegate would probably exclude such an obligation being complained of. MR. LAURENCE (New Zealand): I do not want to get into abstruse points, Mr. Chairman, but in the light of what the delegate from the United Kingdom has said, are we to take it that the words are intended to mean more than "It shall not be a requirement of this Chapter or the obligations imposed by the Chapter that member should contravene any relevant international obligations"? It is intended to go boyond that, is it? 51 ~~~~~~i E/PC/T/C.I & II/PV/4 THE ACTING CHAIRMAN: The intention is, that they will first of all conform to obligations under international agreements, and, secondly, that in addition they will place no unreasonable obstacles,or take no unreasonable action in this case, and if either of these two sets of obligations are violated then a member may complain. MR. LAURENCE (New Zealand): But the international obligation has the greatest force. THE ACTING CHAIRMAN: I do not think that is necessarily implied by the wording of 4. MR. LAURENCE (New Zealand): Well, I do think, Mr. Chairman, the clause is unsatisfactory. THE ACTING CHAIRMAN: Do you mean from a drafting point of view or from the point of view of the intention which we have endeavoured to explain? MR. LAURENCE (New Zealand): I do not know that I fully appreciate the intention, because as I read it again I still see that members are saying that they will do what they are already obliged to do; but I may be a. bit dumb. MR. PIERSON (US): Mr. Chairman, I should just like to ask the United Kingdom delegate again whether the suggested drafting change would not be an improvement, and whether on reconsideration his point might not be covered, if I understand his point. If in addition he said "they will/conform to the provisions of their relevant international obligations, now in affect, or which they may undertake pursuant to Paragraph 5 of Article 50 or otherwise in general take no unreasonable action injurious", and so forth, that seems to cover the drafting point, although it is a rather long sentence. I believe also that would leave the same obligation with respect to obligations now in effect or to be undertaken as exists in the paragraph at present, and although that is a matter on which I would how to Mr. Fleming if he is confident that the opposite is the case, I wonder whether it is 52. E/PC/T/C.I & II/PV/4 not about as brand as it is long from that point of view, and whether therefore the drafting, consideration might not well prevail. MR.FLEMING(UK): Mr.Chaairman, we are getting to very fine points now, I feel. I agree with has been said about the drafting of Paragraph 4 if it stood isolation. I do not think Para.4 means any more than it says on the face of it and as it has been interpreted by the New Zealand delegate. The real point is that Para. 4 is,as it were , in corporated in Para.5. Now when we consider that aspect of the problem I think the advantage in drafting is defineitely the otherway. If we want to make it/clear that complaints can come forward under Para.5 relating to exesting relevant international obligations, and not merely to the general provision about unreasonable action -if we want to make that absolutely clearv the way to make it clear is to leave para. 4 as it is. If we say "in addition to conforming to the provisions of the relevanat internationl obeligations" then, it may, I agree with Mr. Pierson, possibly be taken to be covered in Para. 5, but then it becomes ambiguous, so, that from the point of view of clarity I should say it is better to retain Para.4 as it is, and the it is absolutely clear that you can complain with respect to any ordinary bilateral international obligation covering the provisions of treatment of other members supplying facilities for industrial and general economic develop- ment. MR. LAURENCE (New Zealand): Might I suggest, Mr. Chaitiiman, it should not be necessary to go to Para. 5 to find out what Para 4 means, so that we think have the acknowledgment there that there is a drafting problem. THE ACTING CHAIRMAN: May I suggest to the delegate from New Zealand aened the from the delegate from the United Kingdom that it might be possible to cover this we difficulty if would agree to let the wording stand as it is, both making reservations that they will brief their representaties at the meeting next January to 53. E/PC/T/C.I & II/PV/4. onsure that the appropriate wording is incorporated. MR. LAURENCE (New Zealand): I would like to meet your wishes, Mr. Chairman, but South Africa and the United States and ourselves are suggesting a different wording. I do not think there is much between us, but I do think that if we could get together before this has to be typed to go into the main Committee we may be able to resolve the points of difference. The point I have in mind is this, that since some of us here acknowledge confusion and we are living in the atmosphere of it, what is it going to be when the proposals go to points here they have not got our advantages? THE ACTING CHAIRMAN: Would the Committee agree to letting Para. 4 pass, subject to its being examined, before submission to the Preparatory Committee, by a Sub-Committec consisting of the delegates from New Zealand,, South Africa, United States, United Kingdom, and myself? Would that be acceptable? MR. LOKANATHAN (India): Mr. Chairman, I should like to make just one or two comments upon this. I think the first important point which the New Zealand delegate raised was, what is the good of affirming a tnghwi ch ih inancys aeery evmeembr country should conrf toom ? Evey remberme country should conform to the provisions of relevant international obligations. wNo iisat generally true that this sort of truism exists, but can to coenicc ovof a me orformal truism than Article 3 (1)? The eris in my opinion. nao greater commonplace an deatergr truism than in Article 3 (1), h wich have accepted, that the develop nmt of a country depends upone te hcvailability of capital funds. We recognize that tehse aer all commonplace things, but they do serve an important point, becausehe er our purpose as to bring together certain things whijh ere oolatedcto this paragraph, For instance the question of the treatment of foreign capital bay country is mentioned in Para. 5 of Article 50, and therefore we bring together the relation between this and that. Similarly, we also feel that if there are 54. E/PC/T/CI & II/PV/4 international obligations we should conform to them. The fact that we recognise it does not mean it is superflous or unnecessary or anything of the kind. So I personally feel .. this 6sa Vbrymportawnt reMason -wzhgi Kre. lomin-gao; wbecausorc tthe righmtm eof a noeb cuntry to complain to bQput so thwat it -ll cover all the obligations, and if you simply say that in addition to conforminge to th provisions wthey iell tak no unreasonable actieon,e th oprativew part ill eonly b taking unreasonable action injuriouse to th interests, and so on, and therefore any complaint can only be in relation to that, Foer thos varerious asongges I sustw that e simply leavcit as it is.e !ftc all, everye mecbc is going teo havc further opportunity to consieder th drafting changes, and I am told that withere ll be a Dgraftin Ceommitte wwhich ill go intow theis hoel. mattr MR. MARTINS (Brazil) (InterpretatiMon): r. Chairman,ee I agr otiwrcl vih the suggestion of the ereeprscoesativoff -Idia, because it seems eto m this is a question, not of substance, but purely of for, and eeit sms to me that as it is only a question of fweorm o migreht ppare a draft whwich ould have another and this time definite fowrm, hwich ould express clearly the thoughts oef tmh Comittn eee othje subct. 55. 1-1 E/PC/T/C. I&II/PV/4 ACTING CHAIRMAN: Gentlemen, I suggest that we might pass over Article 3 for the time being and come back to it perhaps at a later 'our in the evening. There seems to be some talking going on surreptitiously. I suggest we might now address ourselves to paragraph/of Article 4. The system of simultaneous translation is out of action for the present; so if delegates wish to have translations made, will they call for them, please, Are there any comments on paragraph 1 of Article 4. Mr LAURENCE (New Zealand): Mr Chairman, there is just a point in connection with paragraph 2 of Article 4. Do you want to confine that paragraph to the question of adjustment? I was wondering whether it is adjust- ment or functioning. Adjustment suggests something that is happen- ing after disruption, and I thought you intended it to have more significance than that. THE ACTING CHAIRMAN: Well, I think the Committee probably had in mind the modifications that might be required if the development in another country resulted in particular industries encountering difficulties requiring switches perhaps to other industries. I think that is what was in mind. Mr LAURENCE (New Zealand): If it just has that particular application THE ACTING CHAIRMAN: Are there no other comments on paragraph 2? Paragraph 3 (a). Mr FRESQUET (Cuba): Mr Chairman, I would like an explanation about paragraph (a). What I want to know is, if this Article means that any country that may decide to establish a quota or subsidy system, even if it is for the purpose of the economic development of the country, should fool that that is one of the cases where it has to go to the Organisation and follow the procedure establishment; or whether the position is that only whon the protective measures are established without any relation at all to any programme of industrialisation has the case to go to the Organisation for consultation or permission. It may be that I have not made myself clear. The question is this: the Charter as a general principle establishes certain limitations on the use of protective measures; but here in Article 4 Members are 56. V-2 E/PC/T/C. I & II/PV/4 in a way granted opportunities of using protective measures to help, their industrial development. So it does not seem clear to me how this is to be interpreted, according to paragraph 3 (a), when the protective measures are against the principle of the Charter or against the obligations that that nation has according to the Charter. THE ACTING CHAIRMAN: I think the intention of the Sub-Committee was that if at any time a Member wishes to use a protective measure which is otherwise forbidden by any provisions of the Charter, particuIarly those in the commercial policy chapter, whether it involves giving protection to a commodity which has had no protection up to the present or whether it is a question of giving additional protection to a commodity which is already receiving some protection permitted under the Charter, then the Member will go to the Organisaton; in other words, this sub-paragraph proposes that you will only go to the Organisation when you want to use a measure which you could not otherwise use under the Charter. Mr FRESQUET (Cuba): Mr Chairman, that means that the principle - we have to call it something that is established in paragraph 1 of Article 4 only works through the decisions of the Organisation; that means that it has no meaning in itself. Is it the Organisation that in every case has to decide if the protective measures are established in accordance with the principles settled in paragraph 1 of Article 4? THE ACTING CHAIRMAN: Under paragraph 1 of Article 4 there is a general recognition that protective measures may be used to promote industrial development. The protective measures are not specified. There is no limitation on the interpretation of protective measures in paragraph 1, but in paragraph 3 provision is made for obtaining a release enabling Members to use protective measures which are otherwise not permitted under the Charter, the point being that there were two ways of doing this. One was to go right from the commercial policy chapter and make provision for release in every case in every Article, The alternative, which the Subcommittee decided to adopt, was to propose one Article, namely, Article 4, which would give the Organisation the power to give a release to a Member to use the protective measure otherwise forbidden. V/4 V-3 E/PC/T/C. I & II/PV/4 Mr FRESQUET (Cuba): So the release established in paragraph 1 is not a release at all until the Organisation decides so, because any protec- tive measure will be against Chapter 4 of the Charter, and so in every case Members will have to understand that those protective measures are against the principle of the Charter and will have to go to the Organisation in order to get the benefit of this release established in No. 2? THE ACTING CHAIRMAN: If I may say so to the delegate of Cuba, I think paragraph 1 of Article 4 is merely a recognition of a principle. It is not intended to be a release. It is a recognition of the principle that protective measures of any kind may be used to promote the estab- lishment or reconstruction of particular industries; but, in view of the fact that in other parts of the Charter we are making a provision that certain protective measures will not be used, it is necessary in the same Article, namely, Article 4, to make provision for a release of those; Mr FRESQUET (Cuba): So really this is a rule to the Organisation and not a principle directed to the Members: it is a rule to the Organ- isation that will regulate the way the Organisation will release certain Members of certain obligations? HE ACTING CHAIRMAN: That is so, Mr FRESQUET (CUBA): It seems to me, then, that in No. 2 we already propose something like a law or the establishment of what constitutes a criminal offence; and then in 3 (a) we provide that Members will not comply with what is established in No, 2. That is not making an unwise use of protection. I think it will be better and not do unfair to the Members if we just change the whole thing and allow the Members following the principle established in No, 1 and the restric- tion or limitation or regulation established in No. 2, to establish certain protective measures, and if those measures really harm the trade of other Members, then those other Members will go to the Organisation and will complain about that, and that will afford an opportunity for the Member who desiresthe protective measures to show the administra- tion that that Member has one it following the principle established or E/PC/T/C. I&II/PV/4 in No. 1 and to try to prove it, but not in every case out that Member in the position of having to go to the Organisation asking for permission, because he will permanently be suspected by the Organis- ation of being unfair in relation to the principle established in No. 1 or the regulation established in No, 2. Why do not we follow the procedure that the Anglo-Saxons have in their criminal law by which a man is always presumed to be innocent until it is proved that he is not? 59. V-4 W.1. E/PC/T/C.I & II/PV/4. Why not let the members use' their protective measures following the principles we established in thin chapter of. the Charter, and then if that member does not follow those principles and those regutations, there will be opportunity to punish him. The Organisation will have in its hands a powerful means of penalising or punishing any members who do something which is against the principles established in the. Charter. May I repeats: I think it would be fairer and at the same time more practical, because with these procedures we are really putting a lot of work into the hands of the Organisation, because in every, case in which a member tries to establish any protective measures, that principle has to go to the Organisation and the Organisation has to file all the evidence, proof and statements, etc. If we use the other method, and allow members to use protective measures, and only when someone complains will the administration deal with the matter, then the administration will have less work to do, and it will be a simpler and more practical approach to this problem. MR WILCOX (U.S.A.): May I undertake to explain what is contemplated in this Article as I understand it? In the f first place, if a member desires to use subsidies; subsidies are not forbidden in the Charter and he is free to use them; and the procedure set up in paragraph 3 is not used. In the second place, if a member desires to impose a tariff or raise a tariff on an item concerning which he has made no commitments internationally, he is free to do so, and the procedure in paragraph 3 is not required. If a member has promised, has undertaken a solemn obligation not to raise a tariff above a cortain level for a certain period of time, the procedure in paragraph 3 would enable him to get the assistance of the Organisation in securing a release from that obligation. Without this procedure, if he raised a tariff which he had agreed not to raise, the effect would be that the other country concerned would then withdraw from him the concessions that they had made to him, and the cost of the action would be very high. A mechanism is established here, under which the prestige and authority of the Organisation can be employed to obtain for him a limited release from an obligation which he has voluntarily assumed, without incurring any penalty. .60- E/PC/T/C.I & II/PV/4. Finally, if a member desires to impose quantitative restrictions under conditions where they are forbidden by the Charter, and if he has agreed to the Charter and agreed to accept its provisions, he may then avail himself of the method set forth here, whereby the Organisation can grant him a release from that obligation. ' The procedure in paragraph 3 comes into play only when a merger desires to have the assistance of the Organization in getting release from an obligation that he has voluntarily assumed, without incurring penalties. MR LOKANATHAN (India): I think Mr Wilcox has said nearly all I intended to say, and so there is very little I should like to add to what he has already said. I appreciate the difficulty in interpreting the whole of this, because it is only after an explanation which Mr Wilcox has given that members will be in a position to understand this document. It is a little hard to understand, but I think he has stated the position admirably, and that is the correct position. But there is of course a difficulty that we still feel, and that is that since quantitative controls ar not permitted, whereas subsidies are allowed, tariffs are allowed, and quantitative controls as methods of protection are not allowed, if a country wants to employ quantitative controls as a protective measure, then it necessarily has to go to the Organisation, in order to employ then In the case of tariff s' it is open to a country not to enter into negotiations in respect of commodities which the country desiree to protect. Again, it can have a much wider free list. It can simply say that these are possibly commodities which we should like to develop in our own country and. therefore we shall not enter into tariff negotiations in respect of those commodities. In respect of subsidies, there is a degree of protection by which a country can subsidise production. But where you deal with quantitative controls, whether it is right or wrong, many countries consider that quantitative controls are a justifiable form of protection.' The difficulty arises. here: it is because there, is no permission to use quantitative controls that as a protective measure that every tine a country wants to employ quantitative control it has to go to the Organisation, and here an elaborate procedure has been laid down. That elaborate procedure would be quite appropriate in regard to tariffs and subsidies, because they are an obligation undertaken-by the countries; but in regard to quantitative: control, -thiz elaborate procedure might weaken the Position of a country, especially when the thought behind this (namely, that 61- E/PC/T/C. I & II/PV/4, quantitative controls areo an undesirable form of protection) Will govern the decision of the I. T.O, also, Therefore, those of us (we may be right or wrong) who have the feeling that quantitative controls should be regarded not as a thingper se bad, (but it all depends in what manner they are used) have a feeling that the whole of paragraph 3, in so far as it affects quantitative controls, is a little more complicated and a little more tortuous and little more dilatory and a little more unhelpful than it need be. I do not wish to say anything more. I have already said what I wish to saying connection with paragraph 16 of the Report. But this is the real position. I think it is worth while, on our part, to recognise the great concession that 3 (a) (b) and (c) do afford to the under-developed countries. It is open, under Article 3, to go to the Organisation and get release, and I do not think we shall be justified in minimising the value of that concession, and. Mr Wilcox has done thing .. trahe right/in emphasiznings the real point of pagraph 3. My objectio i purely confined to thcoune difficulty iagetting quick action when a.ory wants to employ quantitative control. 1 FRESQUET (Cuba): I wish it to be stated or the record that Cuba reserves its position on letters (a), (b) a;ac)'o paragraph 3. TEACTING CELIM Tht will be done. Are there any mrens on paragraph 3(b)? M BANG HIV China): Kr hairman, sit sceems to me that this xubent f our indusmtrialnisation is such an iportat subject on this draft; the .whole thing is out of proportion. If, according to Mr Wilcox, this only refers to a pcrlotective measure specifialy as a quantititave restriction, which is something on which we have to get a release, could not we make it simpler, because it certainlwy appears to n that the Yole cchaptecr on the draft on eenomie development is out of all proportion. 1 UCOX (U.S.A.): I do not know any way in which what is said in paragraph 3 couimpld be said any more sly than it is there. I was one of those who worked on the paragraph; it. went through a great many drafts, and every draft was simpler than the last one, and we finally had something that we thought we could understand. 62. V;. E/PC/T/C. I & II/PV/4. MR BANG HOW (China) Could we not point out point blank that is what we are referring to as a qhuantitative restriction? THE ACTING CHAIRMAN: l think there might be a difficulty about that, in that . while ew have in the report instanced quantitative restrictions, the intention of the Drafting Sub-Cmmoiteet was that it should apply generally to any obligation in Chapter 4 which would have otherwise restricted the right of a member to use any particular method to give protection in any particular case. It has been -suggested that quantitative. restrictions, Article 19,.. ay. well be the artilec from which releasem ay be most sought, but I do not think that that is necessarily exclusviely the case. There may be .points arising under the Article ,-say, relating to State trading; ther emay be points arising under Articl e18; there may be points relating to the articles on preferential regional arrangements, and there may be others; so that the view of the Dafrting omCmittee was, I think, that it should have general application rather than be directed to any particular article in Chapter 4. Ri WILCOX (U.S.A.)- Perhaps it would be helpful to explain the difference between subparagraph (b) and subparagraph (c). Subparagraph (b) applies to cases in which a member has entered into an agreement. with. respect to tariff that is not set forth in the Charter; and it is necessary, therefore, to provide a different procedure in that case, :because the, detailed agreement with respect to tariffs entered into in negotiations where reciprocal concessions are made will not be spelled out. in the Charter at all, 63. xi. In that case it will be necessary to sponsor and assist in negotiations between the member who is a party to that tariff agreement and the member who is appIlying for release from that tariff agreement. Sub-paragraph (c), however, refers merely to obligations under the Charter, of which the quantitative restriction is an outstanding example. Subparagraph (c) is simpler and shorter than sub-paragraph (b); but it is necessary. to meet those two different cases. MR BANG HOW (China): Mr Chaarmrn, I thiM Ir 'Wilcox' s first explanation of tehos three subra-paagrahs is very useful abecuse iit wll clear up cctaimn rsuendcstandings on som. of the.points atlt.weercnot calor e o eecmn esc ramyesmrsf r7 ov.n delegation. Theraefwre I em vondering whoher vrcould incorpooerated scm f Mr Wilcoax's exprlntioens on tho points in this note by thge draftmmin eesub-coitt fo themm Joeint Coitte on Indusetrpmeial Devlocnt, the essential points as he has explained them, because that would help to clarify a great deal oheref these t sub- paragraphs, whiceah hase alrdy cben charateriezed by th Indian delegate as very confausing to certain extent. THANMR IMXLN.ia) On a point of personal correction, I did not say that this was confusing,. but the difficulty as it is drafted now is that unless ppeole understand the connection between those subparagraphs (a), (b) and (c) together with the whole of: the rest of the Charter, it is difficult to understand the relations, and t haatprticular relation has been brought out by Mr Wilcox. I entirely endorse the valuable suggestion of the Chinesee gdlioneat that we should have an explanation because without an explanation, beliemeve , I do not think many members could understand the real concessionws hich are incorporated in paragraph 3 (a), (b) and (c). May also suggest in this connection, to thee dle- gate of Cuba that if he really wants a little imlluination here he Oghto t6have ga eSalno,provision that by quantitative treadocontrols protective measures are permissible and that permission is somewhere in the Charter, and release is easier he.er It is because there is no w; byrwhich quantitative controls aercpermitted under the Charter teha there is difficulty in this because you haec to go through all those . , ~~~~~~~~64, procedures in order to impose, quantitative restrictions or regulations. THE ACTING CHAIRMAN: Is it the wish of the Committee that action along the lines suggested by the Chinese delegate should be taken? MR BANG HOW (China): May I take up one more minute of your time, Mr Chairman, because I appreciate the difficulties and the different points of view that have been discussed in the subcommittee for the last six meetings. This is a very excellent draft - I say it with all my heart - and I think it is an excellent piece of work. I think that if my first suggestion that we might be able in some way to shorten these three subparagraphs were adopted, or, alternatively, my suggestion to retain this as it is, asking the Committee to make a note in substance on what Mr Wilcox has explained on this paragraph, that would meet the position. THE ACTING CHAIRMAN: I think that can be done. MR LOKANATHAN (India): Mr Chairman, you will remember that Mr Pierson submitted an excellent draft in regard to this matter at one of the meetings of the sub-committee, and if you can use that it will help a greoat deal to clarify this matter. THE CHAIRMAN: I will arrange with the Rapporteur in conjunction with the Secretary to see that that is done. MR LAURENCE (New Zealand): Mr Chairman, there is one point that arises under subparagrarph (b) in the fourth line. This is the old point that the Charter is a negotiating instrument in regard to the obligations of members or which are assumed by members as a result of the negotiations which will take place in Apiril. Now, they may not be in pursuance of the Charter or of Chapter IV because the Charter will not be in force then. THE ACTING CHAIRMAN: I think that is a point, except that I have always assumed that the Organization will at in early date after its establish- ment take note of these agreements made next year under Article 18. -MR AUREMNCE (New Zealndl): u~t it is not pursuant to Cha;ecr IV., is it? It is really in prospect with what is in mnid for Chapter IV, which will ultimately coma intoe fefct. I just awnt to mkae the point, but I do not press it in anywa y because no doubt it will be covered in some 65. E/CP/T/C. I&II/PV/4 3 E/PC/T/C. I&II/PV/4 legal drafting later. But I do think there is an anarchronism there. THE ACTING CHAIRMAN: I think that Will be another point that will be dealt with by the meeting next January. Are there any other comments on paragraph 3 (b) and (c)? If there are no further comments upon that we can now go back to paragraph 4 of Article 3, where there was a private meeting carlier. Are there an further comments on paragraph 4? MR FLEMING (UK): Mr Chairman, I think that we secured agreement with the New Zealand delegate on a rewording of paragraph 4 which was something like this: "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 conform to the pro- visions of their relevant international obligations now in effect, or. which they may undertake pursuant to paragraph 5 of Article 50, of otherwise, but also that in general they will take no unreasonable action," etc. I think, Mr Chairman, that covers the point that one takes it for granted that countries will carry oot their obligations; it also retains their relevant international obligations as obligations under paragraph 4, THE CHAIRMAN: Any comments upon the suggested amendments of the U.K. delegate? MR LOKANATNAN (India): I accept them. THE ACTING CHAIRMAN: We can then pass to paragraph 5, Article 3. Are there any comments? If not, I think there is only one thing that remains to be done, and that is to look again at the draft message to Committee II, where we did not finalize the wording of the last two lines. Now, I have worked out, speaking as Rapporteur, some alternative words which I suggest for the consideration of the Committee. The last two lines of that paragraph I suggest might read: "To finance the needed imports of gods for the carrying out of such plans, " that is plans for industrial development or reconstruction, "unless it imposes regulations restricting the imports of certain classes of goods. Any comments on that) May we take it that is agreed? Could we now turn to the first page where the Report proper is incorporated. The first paragraph. Are there any comments? 66. E/PC/T/C. I&II/PV/4 MR LAURENCE (New Zealand); This now becomes the report of the General Committee? THE CHAIRMAN: Yes, there will have to be some consequential. changes, gentlemen, right through. As a matter of fact, in making those consequential changes there may be minor editorial changes involved, but I assume that you will permit the Rapporteur and the Secrtariat to do that on your behalf? MR MARTINS (Brazil) (Interpretation): Mr Chairman, I wonder if you will allow me to come back to the draft of this last amendment which has been added to the draft Message to Committee II, because as I understand it the words "consumer goods" have been left out in the final draft. I think that in reading it you have left out those words, and without those words "consumer goods" it is quite impossible to understand the meaning of the draft, because there is absolutely no meaning to it. Restrictions on importations regarding consumer goods bring about the necessity of giving preferential treatment to consumer goods. If one deletes the words "capitol goods " and consumer goods" then the whole recommandation has no meaning and becomes useless. 67 Y. fols. Y1 E/PC/T/C . I & II/PV4 I insist that the senseo and meaning of this fulI Report must make this distinction very clear, or delete all this. recommend- ation completely, as one cannot change the meaning which has been original/acccpted by an amendment to tho draft. It would completely take away all the meaning or reason which has motivated the drafting of the proposition made by the Brazilian delegation. Therefore, I ask you to examine this very carefully and see if there is not some possibility of keeping at least the final words "consumer goods". MR. FLEMING (UK): Mr. Chairman, is the position not this, that the formula which you have suggested is more exact than the formulwa hicwh as the original formula, but is perhapse lss explanatory of the intentiowenhich lay behind eth proposal. Could both pointse b mety b eth use of the phrase "for example", in oerdr to illustratwtehat is meant One might in say "resourcews ille b/adequate to finance the needed import ogf ood s,for example, capital goods, for the carrying out O such plans, unless it imposes regulationsre ±tricting tho imports of certain" - 1w ould suggest "otehr" -."" certain other classes ofgoods, ce.g., consumer goodes" an th3n I' think eit Vuld boclear. . / MR. MMAR TINS (Brazil) (Intoprcttion): 11:Cairman, I must admit that the rorosnttivo ofthe United Kingdom has- ewndcvowiliid to3 rafta soriring -hih rihring us b ckto oouree origineal meaning, but it sms to m that the use of more rrds ;il in' wn 7aywechange the meaning rhih ro d originally chosen wefor the firstdraft. Ho7er, in a spirit of conciliation ,ich is eaI;,s useful in aney moeing I should liko t think the representative of the United Kingdonm for the satisfactio hovat6d o give the Brazilian delegation and -I ccept his- version 68. PC/T/C.I & II/PV/4 MR. LAURENCE (NeW Zealand): Mr. Chairman, may we have this as it actually stands, because this is the third time have had a rendering of this, and as it was the New, Zealand delegation who raised it we are particularly keen to see tha .t# does finish upwheare the mectin .intends it to finish. HTE ACTING CHARR MNAiG oE;.N: Shell Ie we. th_ --hole paragraph. "The -nt:Ce mmittec.ao requests that in Article 20 provision should be. made to cover the position emoef wa Mbr ich, as a result of its plans for, industrial development .or reconstruct- ion, anticipates that its accruing.. international monetary resowurces ill be. inadequate to finance the needed import of goods, for sample, capgital. oods,for the carrying out of such plans, unless it imposes re-ulations restricting the imports of other clasgses of oods, e.g., consumer goods." MENR. LAURwiCE (Ne Zealand): That is not entirely satisfactory, because "other clasgses of woods'; ould suggest that you could not restrict capital goods, and the point made by India and ourswelves. as that .it may be desireed tcto rstri the import of certain capital goowds. I ould suggest that the meaning e*i.uitOclear if thse wordecertainn classes of goods" arc retained, because it is intended to embrace. either capital or consumer goods, without definition. . There is n o needt o makea definitigon to ive it clarity. MR. MARTINS (Brazil) (Ienterprtation) :Mr. Chairmawen, if are not going to accept the amendmegnt sugestede by th delegate of Great Britain I should then like to return to ewthe vipoint . I originally heeld th one ofnot mnodifyig etheis sntnce in any 'y unless it is accomp aniede.y thcformal protest of the lBraziian delegation. TEiACTING RCANHAIhI I. ame-surdthat thmme Ceeonttodoes wnot rsh to havew the-gordi- of this paragraph in any wsuchray as to mak e theBrazilian delegateeion fl that it must protest. 69 . E/PC/T/C.I & II/PV/4 MR. WILCOX (US): Mr. Chairman, I suggest both views may be reconciled by the elimination of the word "other". THE ACTING CHAIRMAN: How could it read then, Mr. Wilcox? MR. WILCOX (US): "Unless it imposes regualions restricting the imports of certain classes of goods, for example, consumer goods." THE ACTING CHAIRMAN: Would that be acceptable to the Brazilian delegation? MR. MARTINS (Brazil) (Interpretaion): Yes, Mr. Chairman. THE ACTING CHAIRMAN: May we then no go back to the first paragraph of the first page? Are there any comments on that? The second paragraph: are there any comments on that? The third paragraph? And the fourth paragraph? I take it then, gentlemen, subject to the amendments that you have incorporated during this evening -- MR. GONZALES (Chile): Mr. Chairman, the Chilean delegnation have read with the greatest interest the Report and the now draft of the Chapter prepared by the Drafting Sub-Committee Although the delegation did not have all the time it might have wished to study this document, the delegation believes that this Report is of great interest, that it is ample, and that the draft Charter represents a serious and valuable effort and basis for considering the viewpoints which have been expressed here by several delegations, but this in our opinion could only be considered as a first effort, as we believe that this draft Charter has certain Articles of great interest, but it has not established precise forms for international co-operation concern- ing industrial development. For instance, we believe that a certain number of proposals submitted by our delegation have not been sufficiently considered. For us the scope of this Chapter as it is drafted is rather a limited one. Therefore, I feel I must say that the Chilean delegation will accept this Chapter, but does not believe it to be sufficient in scope, and hopes that it may later be completed and give a wider scope. 70. E/PC/T/C.I & II/PV/4 THE ACTING CHAIRMAN: I thank the Chilean delegate for his remarks. Well, gentlemen if there are no further remarks I declare the meeting adjourned. The meeting rose at 10.40 p.m. 71.

GATT Library

gx847xw4322

Verbatim Report of the Fourth Meeting of the Sub-Committee of Committee II on Quantitative Restrictions and Exchange Control : Held in the Hoare Memorial Hall, Church House, Westmintster,1946 on Friday, 15 November 1946 at 8.30 p.m

United Nations Economic and Social Council, November 15, 1946

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

15/11/1946

official documents

E/PC/T/C.II/QR/PV/4 and E/PC/T/C.II/QR/PV/3-5

https://exhibits.stanford.edu/gatt/catalog/gx847xw4322

gx847xw4322_90220024.xml

GATT_157

A.1 E/PC/T/C .II/QR/PV/4. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the FOURTH MEETING of the SUB-COMMITTEE of COMMITTE II on QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL held in The Hoare Memorial Hall, Church House, Westmintster,1946 on Friday, 15th November, 1946 at 8.30 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. BC1. E/PC/T/C .II/QR/PV/4. THE CHAIRMAN: Before we commence I have an urgent industrial problem to settle. The question is whether it is necessary to retain the services of the simultaneous interpreters for the evening. Could I ask the French speaking delegates whether it would be convenient for us to proceed on the basis that each speaker will speak in his own language and ask for a translation only in circumstances where he finds difficulty in understanding? MR BARADUC: Yes. THE CHAIRMAN: Would that be agreeable? In those circumstances it will not be necessary for us to ask the simultaneous interpreters to stay, and we can only thank them for their attendance to this stage. I suggest that we commence by asking our Rapporteur to report progress on the redrafting of the subject matter covered by Article 19 of the original Draft Charter. THE RAPPORTEUR: Mr Chairman, all I have attempted to do in this draft of Article 19 is to go through the records of the discussions very hastily, because I have had practically no time to consult with people at all. In fact, I have done this without consultation. I have simply been through the records of the discussions, and, taking Article 19 of the United States' draft Charter as a basis, I have put in a few changes on subjects which were mentioned in the discussions and which, as far as I could see from the discussions and records, were either generally agreed or were changes which were not challenged. There are a number of other changes which were suggested of which I have not taken account in this draft, on the ground that simply from an examination of the debate and of the documents they seem to be more open to disagreement. In particular I have not taken account, for example, of the point which the delegate from Chile raised on the subject of Article 19, 2 (e), the proposal being that the Article should not apply only to agricultural products. There are certain others also which I have 2. C2 E/PC/T/C.II/QR/PV/4. not taken into account simply on the grounds that I was not sure at all from the record whether there was any general agreement about them. I hope a number of those points, although I fear perhaps not all of them, will have been met in part or in whole by the deliberations of the Joint Committee, or by the redraft of Article 20 on the balance of payments on which we have been working . I might just say something on that Article 20. A draft is included in this bundle of papers which I have prepared for this meeting, but since that was prepared I have had extensive conversations, particularly this afternoon, with the United Kingdom delegate, the French delegate, the Australian delegate, the United States delegate and the fund, and on the basis of that I have made some further changes which are now being typed. So I suggest that we do the commercial policy, Article 19, possibly Article 21, and then return to the balance of payments if the draft is ready. THE CHAIRMAN: That procedure seems to be suitable in the circumstances. I suggest that we loot at Article 19 and, seeing that we have discussed this matter now in general terms on a number of occasions, I think it might be appropriate if we take it paragraph by paragraph. D fls. 3. D1 E/PC/T/C.II/QR/PV/4 Paragraph 1 reads: "Except as otherwise provided elsewhere in this Charter, no prohibition or restriction other than duties, taxes or other charges, whether made offective through quotas, import licenses 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." There follows an Article which begins: "The provisions of paragraph 1 of this Article shall not extend to the following" - so we need not consider exceptions to paragraph 1 here. Is there any comment on paragraph. 1? I take it paragraph 1 is agreed. (Agreed.). Paragraph 2 reads: "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 transitional 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 war, or (iii) the orderly liquidation of temporary surpluses of stocks owned or controlled by the Government of any Member country: 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 con- ditions giving rise to them have ceased and, in any event, not later than July 1, 1949: Provided, That this period may, with the concurrence of the Organisation, be extended in respect of any product for further periods not to exceed six months each." Is there any comment on paragraph 2(a)? I take it that 2(a) is agreed. (Agreed.) Would you like to read paragraph 2(b), Mr Rapporteur? THE RAPPORTEUR: "(b) 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." There is no change in this from the original draft. Is there 4. any comment on paragraph 2(b)? MR PHILLIPS (Australia): I am not quite clear as to the meaning of "which are local to". Does the Rapporteur take that to mean "which are confined to the exporting countries"? THE RAPPORTEUR: Might I ask the question of the U.S. delegation? MR HAWKINS (USA): Mr Chairman, I think the reason in fairly clear for it. We are talking about distress in the country which wants to impose the export restrictions to prevent a bad shortage situation in that country being made worse. It is not for relieving distress situations elsewhere. THE CHAIRMAN: Would the word "in" in place of "which are local to" in line 3 of paragraph 2(b) meet the case? MR HAWKINS: (USA): Yes. THE CHAIRMAN: The paragraph would then read: "Export prohibitions or restrictions temporarily imposed to relieve conditions of distress in the exporting country", and so on. Is that agreed? (Agreed.) MR BARADUC (France)(Interpretation): Mr Chairman, I think that in former meetings the question has already been raised as to the precise meaning and definition of the express conditions of distress. Let us take an example. Supposing there is a country which produces coal and which keeps this coal in order to carry out its programme of reconstruction; some other countries may come and say that there is nothing to prevent the export of coal because the conditions prevailing are not conditions of distress; so I think that the meaning should be made more clear and precise. MR. HAWKINS (USA): Mr Chairman, I would welcome any suggestions as to how to make it more clear. I think that in the case stated the exception would apply if it is an essential product. The country producing it may be suffering from lack of it. It may therefore limit the exportation of it. All that is subject to any agreements itmay make with other countries. But I do not know how to make it more precise. THE CHAIRMAN: Would it be sufficient to say "imposed to relieve severe shortages of foodstuffs or other essential products"? MR PHILLIPS (Australia): I think it would be better. MR HAWKINS (USA): I think the sense would be the same. The use of the word E/PC/T/C.II/QR/PV/4 D2 D3 E/PC/T/C. II/QR/PV/4 "distress" here helps to emphasise the word "severe" That is the main difference. THE CHAIRMAN: Would "critical" or something like that be better in place of "severe" - "critical shortages instead of severe shortages? MR HAWKINS (USA): Yes, that would be better. This is intended to meet more or less emergency conditions of more or less short duration and not permanent conditions. THE CHAIRMAN: Then it would read, "Export prohibitions or restrictions temporarily imposed to relieve critical shortages of foodstuffs or other essential products..." MR PHILLIPS (Australia): "in the exporting country"? THE CHAIRMAN: Yes: "in the exporting country". It would then be "...critical shortages of foodstuffs or other essential products in the exporting country..." Is that agreeable? MR BARADUC (France): I think it would be acceptable. THE CHAIRMAN: I take it paragraph 2(b) is agreed? (Agreed.) 2(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 Organisation, the standards adopted by a Member under this sub-paragraph are likely to have an unduly restrictive effect on trade, the Organisation 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." Is there any comment on that:? I take it paragraph 2(c) is agreed. (Agreed.) 6. MR. MEADE (United Kingdom): Paragraph 2(d): "Export or import quotas in imposed under intergovernmental commodity agreements concluded in accordance with the provisions of Chapter VI." That is the same as in the United States draft. THE CHAIRMAN: Any comments? I take it that paragraph 2 (d) is adopted. Agreed. THE CHAIRMAN read paragraph 2 (e) of the Rapporteur' s draft. Any comments on paragraph 2 (e)? MR. VIDELA (Chile): At Saturday's meeting the Rapporteur referred to these words and said that after reading the reports of the discussions the changes seemed to have been generally agreed or at any rate remained unchallenged. With due respect to the Rapporteur I have to claim here that the Chilean Delegation, in the general discussion, made a clear and concrete proposal to delete the word "agricultural" in order to give the same level to industrial countries as to agricultural countries. I think it was at the first meeting on this particular matter that I moved an amendment which was welcomed by many delegates. In our view there is no reason why manufactured goods should not be included in Article 19 (2) (e). If there is any reason in favour of any agricultural product, that reason applied to any manufactured product in the sale circumstances. If the reason is to protect or develop any agricultural product, the countries with under-developed industries must be placed on the same footing. I am sure no country represented on this Committee could challenge the pricniple of placing countries on the same level. I cannot. understand why the Rapporteur, being British, put in this point. I cannot accept it. The second point Mr. Chairman is in connection with Article 29. We were discussing yesterday at the Procedure Sub-Committee this Article 29 and when I raised a question with the Cuban Delegate the Chairman said that we could not refer to Article 19 (2)(e) because the matter was being discussed here. Then I said I would like to have an Interpretation of these words in Article 19 (2) (e): "Any member imposing restrictions 3.0 E/PC/T/C.II/QR/PV/4 E. 2 E/PC/T/C.II/QR/PV/4 on the 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." I asked for an interpretation of that because the Cuban Delegate when referring to Article 29 asked if sub-paragraph (d) allowed a Government to take action in imperative circumstances without giving notice. The United Kingdom and United States Delegates confirmed that in this particular paragraph (e) of Article 19 the meaning was that notice should be given after any measure taken. Then at the Procedure Sub-Committee I reserved the right to raise this point here and to present the same amendment in order to give agricultural countries a change to have notice. I gave the illustration of apples or tomatoes, for instance, sent to Great Britain which is 30 or 40 days away. We would not like such action taken without due notice. I asked the United Kingdom Delegate if en route he had any measure dealing with goods/and he said that they did en route not take any notice of goods. That is to say, they do not care about such goods. Therefore I think my question is very important and I should like it taken into consideration here. THE CHAIRMAN: There are two points here. First is the interpretation, which I think we might dispose of first, of the sentence beginning "Any member imposing restrictions.... shall give public notice-.." I understand that the point on which the Delegate of Chile wants an assurance if possible is that the restrictions contemplated in this sub-paragraph shall not apply to goods an route. Would the United States Delegate comment on this first? MR. HAWKINS (United States): The meaning of the phrase is simply to make public the amounts permitted to be imported. As to the question regarding notice, there is a general provision on the subject, which has been dealt with by the Technical Sub-committee, which deals in general with the question of advance notice. I confess I am not able to find it here but I am sure it is in somewhere. The sense of this in our original draft - 8 - E.3 was that regulations of this sort would not apply to goods en route. I do not know what the Technical Sub-Committee has done in regard to that. Mr. Videla may know; he is Chairman of that Committee. MR. VIDELA, (Chile): There was a-discussion. - 9 - E/PC/T/C.II/QR/PV/4 OM E/ PC/ T/C.II/QR/ PV/ 4 MR. HAWKINS (United States): It was not a discussion on that particular point of en route, but I have not the documents here. THE CHAIRMAN: If the provision is left that the regulation should not apply to goods en route --? MR. VIDELA (Chile): And also there was an amendment when the Report was presented, but of course the translation was not very accurate. They said "in transit" instead of "en route", and the French delegate raised that point and the alteration in the Report was accepted, but I have not got it here on paper. THE CHAIRMAN: Can we take it then that the intention of the United States delegation in this clause is that these import restrictions contemplated in this sub-paragraph would not apply to goods in transit? MR. HAWKINS (United States) : Yes, They would be subject to what- ever was agreed upon generally as regards the application of regulations. Our original draft provided that, but I do not know whether the Technical Sub-Committee changed it, THE CHAIRMAN: Would anyone care to comment on that particular point before we pass on to the other point raised by the Chilean delegation? MR. VIDELA (Chile): If this amendment is taken I would not need to make any reservation, because we should be quite satisfied. THE CHAIRMAN; Which amendment? MR. VIDELA (Chile): Adding that the goods en route will not be covered. That is what you offered a minute ago. THE CHAIRMAN: The United States delegate suggests that they did not intend the import restrictions in (e) to apply to goods in transit, but the way he expressed his view was that this should be subject to whatever general proviso has been made about the treatment of goods in transit. He believes that that general 10. F2 E/PC/T/C .II/QR/PV/4 proviso would be subject to exceptions, but nobody seems to be too sure. Would it be an acceptable arrangement if we left this as it was, on the understanding that it means that these import restrictions would not apply to goods s in transit? MR. VIDELA (Chile): Not in transit - en route. THE CHAIRMAN: What is the difference? MR. VIDELA (Chile): The difference was made clear at the Technical Committee. Goods in transit are goods crossing a country, from one country to another country, but en route goods are goods coming into a particular country, and then they are en route. THE CHAIRMAN: Will not apply to goods en route, then. If that appears to be inconsistent with the general provision we will have another look at this. MR. HAWKINS (United States): I can say it is definitely in the American draft, but I do not know where. THE CHAIRMAN: Is that all right, that we take it that this is approved, at least in this respect, on the assumption that it does not apply to goods en route? If the general provision relating to goods en route is such as to make these import restrictions apply to such goods, then we will have another look at this in General Committee. MR. VIDELA (Chile): I would like to include here a special wording on the lines you have suggested, Mr. Chairman. THE CHAIRMAN: It would not be necessary to include such words if the general provisions ensured it. If the general provisions do not ensure it we will see that the matter is raised again so that the addition of the necessary words could be considered. MR. VIDELA (Chile): I must insist on this because I have the state- ment made by the United Kingdom that they do not accept it for goods en route. I see the difficulty and I see that you very kindly want to avoid the difficulty, but I am not going to avoid it because one country wants to avoid it. E/PC/T/C.II/QR/PV/4. THE CHAIRMAN: The only thing I want to avoid is adding words to this sub-paragraph which may not be necessary. The impression of the United States delegate is that the addition of the words is not necessary to ensure the result which you wish to achieve. I suggest, therefore, they mightbe omitted for the time being on the clear understanding that if the circumstances are not as the United States delegate believes, -this matter will be re- opened. MR. VIDELA (Chile): I am forced to oppose this, Mr. Chairman, on behalf of the Chilean delegation. THE CHAIRMAN: Any comment on that? MR. HELMORE (United Kingdom): I do not know whether you want a long discussion on this now, Mr. Chairman, or whether you would sooner leave it until we know what the Technical Sub- Committee say, but as the Chilean delegate knows very well, we have a point on this, and I should have thought it would be better to leave it until we see what the general position is about goods en route, and then see whether anything special is needed here. THE CHAIRMAN: I think if the Chilean delegate has no objections we rill note his reservation and till ask the Rapporteur to confer with the appropriate section of the Secretariat to see what is the provision and to advise us if in his opinion this matter should be re-opened. MR. VIDELA (Chile): Thank you. THE CHAIRMAN: The second point raised by the Chilean delegate is the question of whether the import restrictions contemplated in this paragraph should be limited to agricultural and fishery products, or whether they should be general, for any products, provided they observe the conditions outlined in sub-paragraphs 1 and 2. In view of the apparent uncertainty as to the views of the various delegations on this specific point of principle 12. E/PC/T/C.II/QR/PV/4 I think it would be as well if we had the views of the different delegates actually at this table. The delegate of the United States? MR. HAWKINS (United States): Mr. Chairman, I do not think the exception should be brought in to cover all products. Our general aim should be to keep exceptions as few in number and as limited in scope as possible. Now we think it is possible to limit this exception to agricultural or fisheries products, because it is intended to deal with products in which surplus situations commonly arise. That is not true generally of manufactured products. As everyone realises, the facility with which production can be contracted in manufacturing industries is much greater than in the case of primary goods. My reason, therefore, for not wanting to broaden the exception is that I do not think any exception should be any broader than is essential. MR. HELMORE (United Kingdom): Mr. Chairman, we would not wish to extend this beyond agricultural or fisheries products. MR. BARADUC (France) (Interpretation): We consider the paragraph in its present form as acceptable, Mr. Chairman. MR. RODRIGUES (Brazil): I agree with the delegate of France. MR. PHILLIPS (Australia): On the particular point we are discuss- ing, Mr. Chairman, we would not wish to extend this, but on the other hand we have some feeling that this whole exception might be tightened a bit. I think Mr. McCarthy earlier pointed out that it would be possible to have an almost nominal restriction on quantities of a like domestic product permitted to be marketed or produced, and that the quantitative restrictions could have the effect of preventing the proportion of imports from rising, even though other circumstances would have tended to make them rise. 13. G.1E/PC/T/C. II/QR/PV/4. For that reason we felt that it should at least be locked at to see whether it could not be tightened still further. THE CHAIRMAN: That is a separate point, of course. MR. LOKANATHAN (India): We do not wish to extend the scope of this section. THE RAPPORTEUR: The Delegate of Chile has suggested that owing to the nationality of the Rapporteur, the deletion of agriculture is not made. I should like to point out that in my covering note I stated that the draft was the American draft, and that the changes which I had made were those which seemed to me to have been generally unchallenged. We have just heard that this proposed change is challenged by the United States, the United Kingdom, France, Brazil, Australia and India, and I should like to suggest that it was not the nationality of the Rapporteur that caused him to leave the word "agricultural" in. I have added the words "or fisheries" which happens to be a point raised by the United Kingdom Delegation. I did so because in the records which I read I saw no challenge to that addition. That I state by way of explanation. I may say that I have absolutely no objection to my work being challenged as being unintelligent, careless, slovenly or lazy, but that it should be challenged on the ground that, as Rapporteur, I have put in something which is agreeable to my Delegation, and not agreeable to any other Delegates, is a challenge which I, personally, resent. Whether my Delegation resents it or not, I do not know. THE CHAIRMAN : In the circumstances I feel that all we can do on this point is to record the reservation of the Chilean Delegate on this point, and report it to the full Committee, when other Delegations not represented on the Sub-Committee will have the opportunity of expressing their views on it. 14. G. 2 E/PC/T/C. II/QR/PV/4. MR. VIDELA (Chile) I read the report of the first meeting, and I think I was justified in raising the point here, because I also read the declaration of the Rapporteur that it seemed to him that there was general agreement, when there was not general agreement. That was my point. THE CHAIRMAN: I suggest it is not necessary for us to continue the discussion. There is no question of the right of the Delegate of Chile to raise the matter here. He was fully within his rights in raising the matter of the deletion or inclusion of this word, and I think, if the Committee agrees, the best thing we can do at this stage is to pass to the next point on the agenda. MR. HELMORE (UK): I would like to suggest to the Committee that perhaps they would do better without the services of Mr. Meade as Rapporteur, since his good faith has been challenged, and the challenge has not been withdrawn. MR. RODRIGUES (Brazil): I suggest that we leave this matter. I am sure the Chilean Delegate had no intention of creating in this meeting a situation at all unfavourable to the representative of the United Kingdom. It is perhaps difficult for me, in language such as mine, to show to the Committee, and particularly to the UK Delegate, that the Chilean Delegate was not throwing doubt on the good faith of the Rapporteur. There was, however, no such intention, and I believe all of us would be very happy if the Rapporteur would leave this matter, and not think about it any more. THE CHAIRMAN: I suggest that the Committee might adjourn for a quarter of an hour and reassemble at ten minutes to ten. 15. H fols. HI 1 E/PC/T/C.II/QR/PV/4 (After a short adjournment). THE CHAlRMAN: I understand the Chilean delegate desires to make a statement. MR VIDELA (Chile): Mr Chairman, I am sure the Rapporteur will under- stand my point of view in trying to consure that the Chilean Delegation's views are adequately recorded in the report. It was my intention to draw attention to what I believed to be an omission from the Rapporteur's Report. I did this because I have been sent here from my country and I have to defend the interests of my country. I assure Mr Meade that it was not my intention to question his integrity, and I think we may proceed on that understanding. MR HELMORE: As I was in some sense responsible for the recent adjournment I should like to thank the Chilean delegate for his statement. I do think some of this arose because we were kind enough to allow the gentlemen in the glass box to get home early. So far as the point of view of the Chilean delegate is concerned, I am sure we all agree that the delegate was entirely right to raise that point of view of his country and we all wish to see it properly recorded in the report. THE RAPPORTEUR: I should like to thank the delegate for Chile for the extremely gracious and kind remarks he made, and to extend to him my apologies for the hasty way in which the covering note to my Report had to be drafted, and to assure him that it was in no way my intention to remove any opportunity for him to put on the record at this meeting the point which he has now recorded. THE CHAIRMAN: I think the Rapporteur has now to read paragraph (..). MR LOKANATHAN (India): There is one further point I would like to raise in regard to (e). You will recall that at the Committee Meeting the Indian Delegation raised this question of the ratio between imports and domestic production, that it should not be drastically reduced. It was pointed out how that would be more of a handicap to India and other countries. THE CHAIRMAN: Has the delegate for India any alternative to advance to 16. I2 E/PC/T/C.II/QR/PV/4. the suggested criterion? I think the intention is fairly clear. It is largely to ensure that import restrictions of the kind contemplated here are used only for this purpose and not for disguised protection. MR LOKANATHAN (India): I would suggest the inclusion of the word " unduly" or "excessively". J fls. 17. J1 E/PC/T/C.II/QR/PV/4 MR HAWKINS (USA): Mr Chairman, I should not like to see a change of that sort made. This, in effect, is a national treatment clause. The purpose is to prevent a country from requiring that foreign producers make a greater contribution towards meetings a surplus situation than domestic producers: in other words, that if imports are reduced there would be an equivalent reduction in domestic production, so that the burden would be spread equally over domestic and foreign producers. I do not know if it is clear but it seems to me rather important that that rule be preserved. MR LOKANATHAN (India): My point is that the exporter is alternative markets whereas the country is going to suffer by laving to limit its production. THE CHAIRMAN: Are there any other comments on this note? MR PHILLIPS (Australia): Just to point out that we think that in some circumstances the reverse might be true, and it might be desirable even to retain national treatment, in effect; that is to say that in some cases the level of imports relative to home production should possibly be increased. THE CHAIRMAN: What sort of circumstances have you in mind? MR PHILLIPS (Australia): Supposing there was a tenderey for imports of a commodity into a country to increase relatively to home production, it night be possible to stop that increase by putting a nominal restriction on domestic products and holding imports down to the same proportion. THE CHAIRMAN: In other words, this could be used to avoid the last provise, that account should be taken, where practicable, "of any special factors which may have affected or may be affecting the trade in the product concerned". MR PHILLIPS (Australia): If that was interpreted widely enough I think it would cover the point. MR HAWKINS (USA): I do not think it should be capable of that inter- pretation. The purpose there of the last part is merely to implement the principle that the restriction or reduction should be the same 18 .J2 E/PC/T/C. II/QR/PV/4 both for the domestic production and for the importation. Thin clause has in view a situation in which a country is having surplus difficulties in some products; it takes steps to restrict production to relieve the situation; it wants to avoid having its efforts defeated by a continued large flow of imports; it is therefore authorised to restrict them in the same degree that domestic production is restrioted but no more. That is the intent of the Article. THE CHAlRMAN: I think the Australian point is that where a country may, even if it has not really experienced a surplus, introduce a nominal restriction of production for the purpose of preventing a tendency for imports to replace local production, thus it would be limiting the effect of one of the factors which affect the trade in the product concerned at the time. MR HAWKINS (USA): That would be inconsistent with the purpose. Whether the draft carries out the purpose, I am not sure, but if any language could be devised to achieve that it would be acceptable. MR PHILLIPS (Australia): It is just a question of whether the language does it. THE CHAIRMAN: I think we could leave that to be examined by the Rapporteur as to the language. Has the Rapporteur got the point of that? THE RAPPORTEUR: I think I have the Australian point but I am not absolutely certain I have the Indian point. MR LOKANATHAN (India): The Indian point, if I may repeat it, is this: that we object to the principle laid down in the last sentence that the ratio of imports to domestic production should be maintained even though domestic production is being curtailed, and therefore I suggest a very simple amendment: to say that it shall not be such as to reduce unduly the total of imports. THE RAPPORTEUR: That is the end of the sentence? MR LOKANATHAN (India): Yes; simply "any restrictions imposed under (i) of this sub-paragraph shall not be such as would reduce unduly the total of imports relative to the total of domestic production". THE CHAIRMAN: I gather the Indian point is that the application of this 19 J3 E/PC/T/C.II/ QR/PV/4 formula would not in fact distribute the burden evenly between the domestic consumer and the importer because alternative markets may be open to the importer. MR LOKANATHAN: And the second point is that it is also not right to talk about equality there, because the burdens would be more upon the exporter. THE RAPPORTEUR: I follow that now. THE CHAIRMAN: Would anybody else like to comment upon either of those points? I suggest we now pass to consideration of paragraph (f), which, as you will recall, the Rapporteur read a long time ago. This is completely now. Is there any comment on it? MR HELMORE (U.K. ): We entirely agree with the purpose of this sub- paragraph. We only wonder whether it would be possible to improve the drafting slightly by two small changes. In the second line, after the word "imposed", insert "on private trade", and then read on "for the purpose of", and there insert "establishing a new or maintaining an existing", and it reads on from the beginning of the third line. I take it there is absolutely no difference between what I have sugge??ted and the suggestion of the Rapporteur, and I would like to ask his opinion, if I may, as to whether he thinks those words are totally unnecessary, or whether he would agree that perhaps they might be inserted. THE RAPPORTEUR: I think the words that have been suggested express perhaps rather better the thought that I was intending to suggest here. They would be perfectly acceptable from the point of view of the point I was trying to make. THE CHAIRMAN: Their effect is to enable these import and export prohibitions to be used not merely for maintaining an existing monopoly but for establishing a new one where it is a question of national policy so to do. Is there any comment? MR RODRIGUEZ (Brazil): I am sorry, but I should like to know if the proposal about the post-war transition period was taken into consideration in this Article 19. THE RAPPORTEUR: The point was raised, I think, by the delegate of Brazil in another meeting as to whether in paragraph 19 (2) (a) (ii) - the present 19 (2) (a) (iii) - there should be a reference to the orderly liquidation of uneconomic industries created during the war. I wonder if that is the point? 20 E/PC/T/C. II/QR/PV/4 MR. RODRIGUEZ (Brazil): It is right. I accept. I am sorry for taking this time. THE CHAIRMAN: We pass now, then, to the consideration of Article 21, which deals with non-discriminatroy administration of quantitative restrictions. (The Chairman road paragraph 1 of Article 21.) Any comments on this paragraph? Then we pass to paragraph 2. I call on the Rapporteur. THE RAPPORTEUR: Do I read it all at once, Mr. Chairman? THE CHAIRMAN: We will let you off with paragraph 2(a). (The Rapporteur read paragraph 2 ( a) Any comments? I take it that paragraph 2 (a) is agreed. Agreed. (The Chairman road paragraph 2(b). Agreed. (The Rapporteur road paragraph 2(c).) THE CHAIRMAN: Before we pass over that, from a purely drafting point of view is it necessary to have any reference in paragraph 2 (b) to the following paragraph? MR. HELMORE (United Kingdom): I want to make a suggestion to meet your drafting point, Mr. Chairman, but before I do so I want to make a confession to the Committee. Members will no doubt have observed that this is a tentative revised draft prepared in consultation between the United Kingdom and the United States Delegations. I would like to assure the Committee that this is the first time I have seen the document. I do not think it is because this document has not been prepared in consultation between my Delegation and the United States Delegation, it is simply due to pressure of work on all Committees, especially those which are fathered by the Committee over which you preside, namely Committee II, so there just has been no opportunity for consultation on it. Anything I say therefore must I am afraid be taken subject to the reserve that I really know nothing about it. In the light of that I would like to suggest that the way to meet your point is not to have what is now sub-paragraph (c) as a sub-paragraph, but - 21 - K. 1 K. 2 to analgamate it with sub-paragraph (b), and begin "provided that in cases where . .." THE CHAIRMAN: I think that meets that point. Any comments on the content of what was previously sub-paragraph (c) ? - 22 - E/PC/T/C.II/QR/PV/4 OM L1 E/PC/T/C. II/QR/PV/4 MR. BARADUC (France) (Interpretation): Mr. Chairman, I should like to stress first of all that I am in the same position as Mr.Helmore and there has been no prior consultation with the French delegation. I must say that as a whole this text seems to me to be an improve- ment over the original draft, but I should like to study it further, and may be I shall have to re-open the question again at the next meeting. THE CHAIRMAN: Any other delegate? Then paragraph 2(d): "No conditions or formalities shall be imposed which would prevent any Member country from utilising fully the share of any such total quantity or value which has been allotted to it." This is unchanged, I gather. Any comment? Then I take it that paragraph 2(d) is agreed. Paragraph 3. (a): "In cases where import licenses 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 there shall be no obligation to supply information as to the names of importing or supplying firms." Any comments on paragraph 3(a).? Paragraph 3(a) agreed. Paragraph 3 (b). MR. BARADUC (France) (Interpretation): What I said before applies to the whole of Article 19, Mr. Chairman. THE CHAIRMAN: Paragraph 3(b): "In the case of import restrictions involving the fixing of quotas (whether or not allocated among supplying countries), the Member applying the restrictions shall 23 L2 E/PC/T/C. II/QR/PV/4 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". Any comment? MR. PHILLIPS (Australia): I do not know whether I can make the same reservation on shall of the Australian delegation? THE CHAIRMAN: I think we can take that reservation as applying to all. Paragraph 3 (c): "In the case of quotas allocated among supplying countries, the Member applying the restriction shall punctually 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." What does "punctually" mean? MR. HAWKINS (United States): Promptly. THE RAPPORTEUR: Shall we amend it to "promptly"? MR. HAWKINS (United States): I think it means the same thing. MR. HELMORE (United Kingdom): I am prepared to take my life in my hands and support the amendment of "punctually". to "promptly", Mr. Chairman. THE CHAIRMAN: I think "promptly" is preferable. MR. HELMORE (United Kingdom): It is a word we have used many other times. THE CHAIRMAN: Any other comment on 3(c)? MR. RODRIGUES (Brazil): Mr. Chairman, I think we should like some information about the word punctually", if it implies any particular date. THE CHAIRMAN : The suggestion was that since "punctually" might be taken to refer to a particular date or time we would substitute the word "promptly" - expeditiously. 24. E /PC/T/C.II/QR/PV/4 MR. RODRIGUES (Brazil): Yes. MR. VIDELA (Chile): I only want to call attention to the fact that there are two or three of those matters which are inter- related. For instance, there was the remark of the Brazilian delegate with regard to "shall give public notice" under letter (b) . I had an interpretation of that wording from the United States delegate and the United Kingdom delegate when I referred to Article 19, and it is very clear in my mind that the notice is always given before. MR. HAWKINS (United States): Mr. Chairman, you note the words "will be permitted". THE CHAIRMAN: It is quiteclear in this case that the notice is prior notice - in this connection, anyway. 25. H. 1 E/PC/T/C. II/QR/PV/4. MR. BARADUC (France) (Interpretation): In connection with paragraph 3, if all countries which apply quantitative restrictions make known in advance the global amount of their purchases, would that not lead to a very strong rise in prices on the world market? MR. HAWKINS (USA): I do not understand why it should. THE CHAIRMAN: I presume that if a large proportion of buyers were applying quantitative restrictions and they announced proposals for quotas for purchase which, I gather, the French Delegate considers in some cases might add up to more than the prospective total supply and thus lead to pressure on the prices, the situation he envisages would arise. Such circumstances are likely to arise only where a large proportion of the world's buyers are applying quantitative restrictions, and in a situation where, quite apart from the restrictions, it would be difficult for their requirements to be met. MR. HAWKINS (USA): I would like to point out that in any special circumstances of that kind, the whole draft would permit a quantitative restriction system with a global quota. A global quota is not compulsory under this Article. A global quota is preferred, but it is not absolutely required. THE CHAIRMAN: You could control imports without licences. MR. HAWKINS (US.A.) Paragraph 2(a) is where the point is covered. THE CHAIRMAN: The US Delegate would argue that if global quotas would be likely to lead to a change in the world prices adverse to the country concerned, that country would be free not to announce its global quotas, but to proceed to limit the imports by the issue of licences without the declaration of a quota. MR. BARADUC (France) (Interpretation): This is not clearly implied by the text. THE RAPPORTEUR: Is it not so in paragraph 2(a) of the text, where it says "Wherever practicable, global quotas...should be fixed, and 26. notice given of their amount." Paragraph 2(b) says you can have import licences whether or not they are within the limits of global quotas. In the circumstances which the French Delegate envisages, it might well be held that it is not really practicable to operate global quotas, and that one would have to give licences under paragraph 2(b) not within the global quota. THE CHAIRMAN: would it be possible to meet the point by adding to paragraph 2(a) "If global quotas are not practicable, import licences or permits may be issued"? THE RAPPORTEUR: I am afraid that will not work, because paragraph 2(b) says something about import licences which is relevant to import licences whether they are within a global quota or not, THE CHAIRMAN: I think there is something in the point that there should be some statement which precedes subparagraphs (a), (b) and (c), which really are directions as to how you will operate various forms of quantitative restrictions. It does seem that it would be helpful to have this preceded by a statement that wherever practicable global quotas would be the method employed, but where this was not practicable, the member concerned could apply quantitative restrictions in the form of import licences. THE RAPPORTEUR: May I suggest that this could be met by the addition of a simple sentence at the end of paragraph 2(a) as it now stands -- "Where global quotas are not practicable, import restrictions may be applied by means of import licences without a global quota". MR. HAWKINS (USA): That would be all right. THE RAPPORTEUR: Paragraph 2(b) tells you what you do with the import licences whether they are within or without the global quota. I wonder whether that would meet the point. MR. BARADUC (France): I think it would. THE CHAIRMAN: I think that meets the point. I am not sure it is the happiest phrasing, but that does not matter. The Rapporteur might 27. H.2 E/PC/T/C.II/QR/PV/4. M.3 E/PC/T/C . II /QR/PV/4 lock at it subsequently. MR. HELMORE (UK): I do not want to press it at this moment, but I am inclined to think that as we put paragraph 2(c) into a proviso, it might now be preferable to make the sentence which the Rapporteur has just read to be paragraph 2(b) and the present paragraph 2(b) a new paragraph 2(c). I am sure the Rapporteur can arrange that. THE CHAIRMAN: If there is nothing else on paragraphs 2 or 3, we will pass to paragraph 4: "Selection of representative periods and appraisal of special factors "With regard to restrictions imposed in accordance with sub-paragraph 2(c) of this Article or under sub-paragraph 2(c) or 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 having a substantial interest in supplying that product, or upon the request of the Organisation, consult promptly with the other Member or with the Organisation regarding the need for an adjustment of the base period selected or for the re-appraisal of the special factors involved." MR. HAWKINS (USA): I think that reference should be to Article 19, 2(e). It is a typographical error. THE CHAIRMAN: If there are no comments, I take it that paragraph 4 is agreed. N fols. N. 1 "Tariff quotas. The provisions of this Article shall apply to any tariff quota ostablished or maintained by any Member." MR. HELMORE (United Kingdom): I do not want to raise any point on this paragraph, but I want to reserve my right to make a point on this Article as a whole. THE CHAIRMAN: If nobody has any comments on paragraph 5 I will take it as agreed, with the global reservation. MR. HELMORE (United Kingdom): This is a highly technical point, which I raise with a great deal of diffidence, but I am inclined to think that in this corpus of Articles relating to import restrictions and administra- tion, and import restrictions on balance of payments gounds taken together with state trading provisions, we may unwittingly have put an obstacle in the way of state traders. The point is on publication. It is quite clear that an import restriction imposed for the purpose of maintaining a monopoly of trade is a restriction to nil, and there is no difficulty in publishing that. But when a country which maintains a monopoly of trade for a state trading enterprise is in balance of payments difficulties it is allowed to extend its operation to restrict its imports below the satisfaction of the full demand. That is done under the provisions of the balance of payments Article; and I believe the non- discriminatory administration which we have just been looking at applies to the Article as well. How a state trader would publish his restric- tion in two parts, so to speak, I am not quite clear. THE CHAIRMAN: What are the two parts? MR. HELMORE (United Kingdom): The first part is that no private person may trade; and the second part would be that the limitation of the operation of the buying of the state monopoly itself - in so far as that limitation took place under the balance of payments Article - would, when read together with this Article for publication, require the state trader to say he was restricting his imports by 20 per cent. of what he might otherwise have bought. Sincee the state trader would clearly have a purchasers' programme 29. N. 2 E/PC/T/C.II/QR/PV/4 in mind he would have to divulge the sources from which he was buying. I do not know if I have made the point clear to the Rapporteur. THE RAPPORTEUR: No. THE CHAlRMAN: You certainly have not to the Chairman. MR. HELMORE (United Kingdom): Then may I tried again? You have the restriction to safeguard the balance of payments Article; a state trader may restrict his imports to a greater extent than he would be allowed to do under the normal operation of the state trading Article. Now, when a state or a state trader does that he is operating a balance of payments restriction. The balance of payments restriction has got to be administered in the light of this non-discrimination Article which we have just been reading. That non-discrimination. Article requires publication of the extent and nature of the restriction. I do not think it is practicable for a state trader who can do as any other trader does - that is, to keep his buying programme to himself, like an ordinary firm - to be required to publish. It has been pointed out to me that there is no obligation to supply information as to the names of importing or supplying firms; but that only relates to the names, and I am not sure that "importing firm" is a correct description of a state trading monopoly. THE RAPPORTEUR: Might I make one suggestion, in order to make confusion worse confounded? It has occurred to me that a good way of dealing with this problem -- and I think it was felt it might be a good way of dealing with this general problem -- is not to mention state trading restrictions on balance of payments grounds under Article 20, but to mention them under the Articles on state trading with reference back to Article 20. In other words, under the state trading, Article you have certain provisions which say that the state trader must not restrict his imports by more than a certain amount. There you would say "except in those conditions under Article 20", in which a private trader would have been permitted to restrict still further, in which case it can do so to the same extent and under the same general rules. By that means you 30. N.3 L/PC/T/C. I I/QR/PV/4 would avoid what has always seemed to be a bit of an anemally, calling a restriction by a state trader on balance of payments grounds a private quantitative restriction. I do not know whether or not that is a good way of doing it. THE CHAlRMAN: It might be a kind of limit, but it does not overcome the difficulty with which Mr. Helmore is concerned. If you provide in the state trading section that a state trader may, for balance of payments purposes, restrict his imports to the extent as provided in the section dealing with the restriction of imports by private traders, then presumably it would be subject to the same provisions about publication. You would have to have another exception excepting the publication.. THE RAPPORTEUR: No, I think not, because Article 21, which we are on, is The on non-discrimination, x/state trading Article, as I understand it, has its own rules about non-discrimination. The reference which I am suggesting in the state trading Article would not refer to the non- discriminatory treatment of restrictions, but only to the extent to which you could limit your imports. You would merely say the state trader can import less than he would otherwise have to under the state trading Article to the extent which would be allowed under Article 20. MR. HELMORE (United Kingdom): From what the Rapporteur has just said I am satisfied that his denial that he understood my point was quite wrong, and that he understood it very well. I am, like you, Mr. Chairman, a bit doubtful about his solution, but I have great confidence in his ability and will leave it to him. THF RAPPORTEUR: First of all I would like to point that I did not understand Mr. Helmore the first time, but I did the second. The logic of my suggestion is that we should ask the sub-committee dealing with state trading to deal with this matter, or ask the drafting committee. THE CHAIRMAN: Apart from that suggestion I think we can proceed. Mr. Hel- more will be able to reopen the point he has in mind if it is not adequately dealt with in the state trading section. That, I think completes Article 21. 31. N. 4 E/PC/T/C. II/QR/PV/4 Now I think we may revert to Article 20, "Restrictions to safeguard the balance of payments," for which there is a revised version. Perhaps Delegates would appreciate a few minutes in which to read it. THE RAPPORTEUR: May I point out one small nisprint which I have just observed? There may be others. In 2 (a) the second line should read, "restrictions except to the extent necessary. . . " 32. OP 1. E/PC/T/C .II/ QR/PV/4. THE CHAlRMAN: Did all the delegates get that amendment? THE RAPPORTEUR: The word "necessary" should be put in before the bracket in the second line of paragraph 2 (a). (After a pause) There is another serious misprint. Have I your permission, Mr Chairman, to point it out? THE CHAIRMAN: Yes. THE RAPPORTEUR: --t the top of page 2, paragraph 2 (b) the first line should be crossed out. The sub-paragraph should simply begin: "(b) To eliminate the restrictions when conditions would no longer justify" etc. THE CHAIRMAN: / Gentlemen, it seems to me that the hour is getting a little late to examine with very great care an Article dealing with so technical and complicated a subject. I would suggest, tlherefore, that we adjourn shortly, and we will consider in a moment the time for the next meeting. It has been suggested that, while it would be obviously unfair to ask delegates to agree even tentatively to a document of this sort as it now stands, it would perhaps facilitate the consideration of it if we just ran through it paragraph by paragraph to see if anybody has any question which he would like to ask at this stage as to the meaning of any part of the draft, or, if he has already prepared any suggestions, to read them out, but we will not discuss any of the items in detail. Is that agreeable? _re there any questions on paragraph 1? MR BARADUC (France) (Interpretation): As you have asked us, we are not going, to open a discussion now, a discussion which has already been hold, but we intend to submit a proposal for the modification of the first sentence. However, we are not going to submit it tonight. THE CHAIRMAN: You have not got it ready now? MR BARADUC (France): No. MR HELMORE (U.K.): I do not know at what time we are going to meet or when, but I do hope that if the French delegation have their suggestion ready they will do their best to get it ready privately for members of this Committee before we meet, so that we can have a chance of looking at it. MR BARADUC: Certainly; I quite agree. THE CHAIRMAN: Anything else on paragraph 1? Paragraph 2(a)? Paragraph 2(b)? Anything on paragraph 2(c)? 33. E/PC/T/C. II/QR/PV/4 Any questions on paragraph 2? MR. RODRIGUEZ (Brazil): I am not sure of the exact meaning of the word "pro- gressively". I think the intention is not to say "progressively" but "regressively". THE RAPPORTEUR: The intention is to impose "regressively" and relax "progress- ively". Is not that so? THE CHAIRMAN: I am not quite sure I understand the point. MR. RODRIGUEZ (Brazil): In the Portuguese language one could not use the word "progressively" in this sense. THE RAPPORTEUR: "Continuously" might be the word. MR. RODRIGUEZ (Brazil): "Gradually", perhaps, but not "progressively. " I do not know. - perhaps it is all right in English. MR. HELMORE (United Kingdom): I think, in the use of English, "relax them progressively" is perfectly all right, though I see that it may present difficulties in translation. MR. PALTHEY (France) (Interpretation): I think it is quite easy to translate it into French. THE CHAlRMAN: I think it is all right. Anything else on paragraph 2? Paragraph 3(a)? Paragraph 3(b)? THE RAPPORTEUR: In the very last line of 3(b) there is a small missprint. It shold be, "... institution, and subsequently maintained under paragraphs 1 and 2 of this Article." THE CHAIRMAN: Anything further on 3 (b)? 3(c) ? MR. VIDELA (Chile): I have a small remark, but not on (c) in this paper, (c) in the draft Charter, which I think becomes (d) here. THE CHAlRMAN: Then, 3 (d)? MR. VIDELA (Chile): When I made a speech here I had instructions from my colleagues to call attention to this paragraph. At the first meeting of this Sub-Committee I said that our Delegation held the view that a country imposing quantitative restrictions applied to another should carry the burden of proving that the latter' s balance of payments is not unfavourable. - 34 - Q. 1 Q. 2 E/PC/T/C. II/QR/PV/4 I think here, after saying that it may oring the matter for discussion, we should add "after proving that there is a prima facie case". THE CHAIRMAN: I do not think we will discuss that now; has everybody noted the suggestion? MR. HELMORE (United Kingdom): I am not absolutely clear where the words come in. MR. VIDELA (Chile): I think we should add after the phrase "may bring the matter for discussion to the Organisation", "And after proving, that there is a prima facie case. " THE CHAIRMAN: I think it might be more appropriate to put it a little further down and say, "The Organisation may, if it is satisfied that there is a prima facie case, consult with the International Monetary Fund" etc. MR. VIDELA (Chile) I think that is better. THE CHAIRMAN: It is a more appropriate place to put it. We will note that. Anything further on (d) ? MR. PHILLIPS (Australia): There is a very small verbal change, may be a missprint, in the second to the last line - "Members" should be "Member" - "towards the Member". THE CHAIRMAN: Paragraph 4? E/PC/T/C.II/QR/PV/4 THE CHAIRMAN: Paragraph 5. MR. RODRIGUES (Brazil): There is another word here, Mr. Chairman, and I am almost afraid to raise a question about its meaning. It is line 3 "apparent disequilibrium" . Could we not substitute "real" or "possible" or "potential"? It looks right, but it seems to me it is not right. THE CHAIRMAN: Supposing we delete "indicating" and replace it by "suggestiom", and then we could delete "apparent". MR. HELMORE (United Kingdom): We were just going to suggest leaving out "apparent", but I think we would prefer the word "indicating" THE RAPPORTEUR: The thought I had in mind, as far as I was Rapporteur on this, as to remove the word "apparent", indicating the exist- ence of a disequilibrium. THE CHAIRMAN: I suggest we leave that and that the Rapporteur will deal with the suggestion made. Is there anything else on Paragraph 5? Paragraph 6. MR. HELMORE (United Kingdom): Mr. Chairman, I simply want to give notice of a very heastily scratched out amendment which may meet the complicated point which I had to put twice because I failed the first time to make myself clear. It would be to add at the end of Paragraph 6: "provided that no Member shall be required to disclose information which would hamper the commercial operations of such a State Trading Organization." I would like to say I am not in the least wedded to the exact words, but I think that may be the best way to meet the point which I raised. THE CHAIRMAN: Any other question on 6? Any other general question? I suggest, gentlemen, we adjourn at this point, but we must first decide when we reassemble. It would be possible for us to meet tomorrow afternoon at 3 p.m. There are scheduled for tomorrow afternoon a meeting of the Drafting Sub-Committee on State Trading, but we understand that is expected to be a meeting of minutes only, and then at 3 o'clock there is a meeting 36. E/PC/T/C . II/ QR/PV/4 of the Procedure Sub-Committee, which I gather will not affect necessarily the members of this Committee. It is suggested, therefore, that we might reassemble tomorrow afternoon at 3 o'clock. THE RAPPORTEUR: In order to discuss this Article? THE CHAIRMAN: In order to discuss this Article. Article 22 deals with the same general subject-matter, I think, and we could therefore consider Article 22 also, and Article 23, Exchange Control. So that is Articles 20, 22 and 23,and 24, which is also Exchange Control. The meeting will now adjourn, and we reassemble at 3 p.m. tomorrow. The meeting rose at 11.26 p.m.

GATT Library

dm944zw9900

Verbatim Report of the Fourth Plenary Meeting held at Church House, Westminster, S.W.l on Friday, 18th October, 1946 at 10.30 a.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/PV/4 and E/PC/T/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/dm944zw9900

dm944zw9900_90210004.xml

GATT_157

E/PC/T/PV/4 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the FOURTH PLENARY MEETING held at Church House, Westminster, S.W.1 on Friday, 18th October, 1946 at 10.30 a.m. Chairman: M. M. SUETENS (Belgium). (From the Shorthard Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street Westminster, S.W.1) 1 E/PC/T/PV/4 THE CHAIRMAN (Speaking in French: interprtation): The meeting is open. I caIl upon the if the : Netherlands. DR SPEEKENBRINK (Netherlands): On behalf of the Netherlands Delegation, which, as you knew, includes representatives of the Netherlands In lies and which also will have to keep in mind the interests of Surineam and Curacas, 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 a complexity and interdependency, a balance statement can only be made at a later the,. This the more as where, as I said before, my Delegation will have to judge the proposals which will he male at this Conferense in the light of the interests of the four different parts of the Kingdom, which interests partly are of such a diverse nature. To prove this print I only have to traw the attention of the Preparatory Committee to the great importance of stability in the prices of the primary pruets for the 70 million inhabitapts of the Netherlands Indias. Moreover, in this territory the problem is not so much how to prevent unemployment but far far more raise the social and economic level of this population. Industrial development must be one the further means here, as in other under- developed countries. Thus I can associatee myself to a great extent with opnions expressed by several of our collengues round this table. On the other hand, thee territory in Europe also faces a period of readjustment owing to the sufferings and consequences of the war. The late liberation of Hollands and of the Netherlands Indiesi from a ruthless for presents my Government with special problems for which a solution still 2. E/C/T/PV/4 must be found, notwithstanding all the work already done in this respec . 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 develompment the world in the coming years. If in normal times my Government would have welcomed a Conference such this, the more s1 it in the present circumstences. If fully n ress the initiative, of the U. S. Government and thereafter of the Economic and Social Council as it considers it to be of the utmost impertance for the Netherlands and the eversean parts of the Kingdom that the international treat will as much as possible be ffree from the barriers which ahve impaired its development in the past and might again cndanger this development in the future. In this respect ot I fully subscribe to what has been said by my Belgium celleague on the subjectof close collaboration between the Netherlands and the Belge-Luxemburg Union. Mr. Chairman, I wouldd like to take a firm stand in saying that , without an outlook such as the American Proposals ultimately suggest, in the future would be without hope. Whilst thus applauding the ultimate object of this Conference we should, however, not forget that these trade barriers hdid not arise in that fateful peria-.il between two catastrophic wars out of the sheer whim of Governments. After the 1914-1918 war fundamental changes h, t,- be coped with, as will be the case now. For the Netherlands, for instances, there is the fateful problem of the Mid-European hinterland, the present less of which makes itself so severely felt not only in the agricultural and industrial fields but not less with regard to transport and transit 3. E/PC/T/PV/4 As Sir Staffer Cripps so rightly put it in welcoming this Conference on behalf of the Government of the United Kingdom, these problems cannot an may not be solved by simply experting unemployment from one country to another. We are therefore of the pini-in that special stress should be laid on the regulation of international economic life, keeping fully in mind the interdependency of international trade and employment and not laying too much stress on the wor, "freedom" - yet. In our opinion there should be a regulation of full employment in a positive way, having in mind a set of rules which, within certain margins, must be followd by the countries of the world when trying to reach this common and so important aim. It may, however, very well he 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. We also un berlin again the paramount importance of stability in the prices of raw materials. We therefore support and more the proposals for a World 'Jarl)l Board as prepared by the Director-General of the Food and Agricultural organisation, which proposals have been studied. and discussed at the recent Conference in Copenhagen, where the gneral aims thereof were accepted, reading as follows: (a) developing and organizing production, distribution and utilization of the basic foods to provide diets an 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 Governments commodity agreements should be put into operation as a parmanent element in the forthcoming international coe .ration and collaboration. I want to make it qaite clear that this is necessary both to 4. E/PC/T/PV/4. avoid unwarranted expansion and to high prices as well as to avoid oatastraphic 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 avoide in the course of time. Now, I consider it as one of the biggest advantages of our work that we have to frame an Organisation in which may be used as an iinstrument to avoid one-sided action and to make it possible instead to promote mutual understanding, concerted solutions and binding decisions to 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 agreement with the general purpose of this conference and how much welcome the directions of the Economic and Social Council with regard to the importance of stability in the prices of primary products and of promoting the economic activity of under- developed countries.. I should, however, fail in my duty if I did not again draw the attention of the prepparatory Committee to the special problems which face the Kingdom of the Netherlands together with many other countries in this extent difficult transitional period and which to a great extent must after attitude at this Conference. I do so without any hestitation as I think that the Netherlands and the overseas parts of the Kingdom have amply shown in the past, as they do at the present time, how much they value international co-operation in every 5. E/PC/T/PV/4 M. ALPRAND (France)(Speaking in French: interpretation): May I interrupt for a moment? I would like to say that this morning the system of automatic interpretation is functioning perfectly, and I wonder whether, in order to save time, we could use it exclusively. I think it would be agreed by everyone. THE CHAIRMAN (Speaking in French: interpretation): I have noticed the same thing and wanted to make the same preposal myself. I would suggest that after the interpretation of the speech of the delegate of the Netherlands (the simultaneous interpretation of which I was not following) , our proceedings should be conducted solely by means of the telephonic system. 6. E/PC/T/PV/4 THE CHAIRMAN (Stcaking in French: interpretation): I thank the delegate of the Netherlands, and I call upon the delegate of New Zealand. MR. J.P.D. JOHNSEN (New Zealand): Mr. Chairman, I would like firstly to say that New Zealand is in full agreement with the general objective of expanding employment and of increasing world trade, and is pleased to have the opport- unity to be represented at this Conference for the purpose of exploring ways and means whereby that aim might be achieved. New Zealand has a spacial interest in this question, since her overseas tradd represented by both imports and exports per head of the population is extremely high in relation to that of other countries. world trade is a tremendously wide and complex problem which has not as yet been covered by any compre- hensive international set of rules. We feel, therefore, that the greatest contribution towards achieving some- thing 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 to are really here. If they are to have wide acceptance any set of rules which are ultimately adoated must, of course, take counis- ance of the economic position of all countries and must allow for flexibility to meet varying conditions. Obviously, although each have their particular problcms, 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 7. E/PC/T/PV/4. different catogory from countries such as New Zealand, which has a shall population, which rolies largely on a narro range of exports of primary products for its economic stability which is as yet underdeveloped 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, frm which would flew an expansion of production and demand leading to incresed world trade. Countries within the latter category should, it is felt, have acess to means for achieving their purpose particular 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 warious aspects of commercial policy which will come under revew 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. (Applause). THE CHAIRMAN (Speaking in French: interpretation): I thank the delegate of New Zealand and I call upon the delegate of the Union of South Africa. MR. A.T. BRENNAN (Union of South Africa): Mr. Chairman and gentlemen: 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 after- wards. My colleagues and I from the union of South Africa feel particularly honourod to have the privilege of sitting 8. E/PC/T/PV/4 around this table as representatives of a country that has beena appointed by the Economic and Social Council to carry out the work that has been entrusted to this partic- ular Coummittee, and I regard myself as a member of that Committee. My colleagues and I like of think that in 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. (Aapplause) In looking ovor 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 industrialisation 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 rcalm of international trade, have not set us entirely as good an example they might have set. I recognise 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 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 mambe 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 dispose 9. E/PC/T/PV/4 to say that because a billygoat 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 fron right to left and left to right, I feel that I want at 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 came 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 according- ly on that basis I should like to allocate a piece of that particular tribute to the representatives 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 these 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, but I am sure that is only a matter at present of just purely geographical position relative to the Union of South Africa. 10. E/PC/T/PV/4 Mr. Chairman, while listening to the remarks that have gone around this roon 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 aim- ing 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 orn 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 recognise that there has been a tremendous change - and each one of us recognises 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. I am reminded of the stories that used to be alleged with regard to, maybe, some of my own forbears - and I feel that the remarks I want to make now I make with the 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 amiss - in that it used to be sai of some of those forbears that they started off round the world and' bad the Bible, the Word of God, in one hand and samples of cotton piece goods in the other hand. In like 11. E/PC/T/PV/4 manner it has been said that in the development of our conversations of an international nature we should comport ourselves in cartain ways. I think it was quite a famous American gentleman who many years ago, or may be 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 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 cognisance 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 tabla, and, as I have remarked, I feel a particular interest in that there is so much community of thought in regard to what c are actually endeavouring to achieve. I thik it was Abraham Lincoln who, on one of his many wonderful occasions, speaking to those round about him who had diffrernces of opinion, merely drew their attention to the fact that they were all going to the same place. Hr was not talking, in terms of their after-life; he was talking of the direction in which they were moving, aIthough there 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 rade, and connoting with that a development of employment, which necessarily to us means 12. E/PC/T/PV/4 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 own achieve the wishes of each of our/parents, that each of our sons and daughters will start off a littIe batter 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 alking 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; o- -*c may even have had preefence 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 regard to the other fellow, and, at the same time, a blue- print of an road that requires a lot of preparing. I recognise that some of my younger colleagues and maybe some of my older colleagues of the more industrialised nations may feel that in the preparation o-f that blueprint there would like to contemplated using more advanced road- makers - bulldozers - -here some of us might not feel that we had yet arrived at that particular stage, recognising that possibly in tthe 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 13. E/PC/T/PV/4 against the flints on the roadsides - and I was not for one moment referring to my Australian 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 wer 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 blueprint and the round 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 September 4th, 1946, by Mr. Will Clayton, the present Under-Secretary of state of the United States, and who was at what time Acting Secretary of the United States, which included the were "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 moving away from the chaos that will surely engulf them if they cling to the esclusienist, discriminat- ory practices that during the prewar years diverted trade into uneonomic channels, resulting in a severe shrinking of trade wolume, and intensified the political tensions that prepared the way for the second World War." I feel that our celiberations must be directed towards an expanding economy, and, as I remarked before and I reiterate, I include in that exopanding economy the right of everybody to work for his economicc advantage and for his betterment. I feel that the Charter that we finally decide upon must necessarily be realistic and therefore must be 14. E/PC/T/PV/4 elastic and flexible. Otherwise, we run the risk of setting up a machine which will be so cumbersome and so cluttered up with restrictions and strings nad tales and require the pulling of so many wires that when we look back on it afterwards and history looks back on it after- wards it will be found that instead of producing somothing that was really worth while we have failed in the job that is our pargicular job as technicians, namely, the preparing of whe bluepring. I think there is a quotation from Tennyson to the effect that - "The war drums three no longer And the battle flags are furled, In the Parliament of man And the federation ofthe world." I think we have a particular job, to set up a piece of that edifiee. I recognise that it is not going to be a rapid process. It is going to be very slow, but I recognise at the same time that although it may be slow in terms of our lives it is going to be wonderfully fast in terms f history. Thank you, Mr. Chairman. THE CHAIRMAN : "(Speaking in French: interpretation): I thank the develope of the Union of South Africa, and I call upon the delegate of the United Kingdom. MR. H.A. MARQUAND: 15. E/PC/T/PV/4 MR. H. A. MARQUAND (United Kingdom) Mr. Chairman, 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 internaitonal 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 tho 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 Coalition 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 mass unemploy- ment so long as the total demand for its goods and services is maintained at a high level, but in this country we are obliged to consider external no less than international demand. The Government are, there fore, seeking tocreate, through collaboration between the nations, conditions off international trade which will make it possible for all countries to pursue policies of full employment to their mutual advantage. " And then in another paragraph the White Paper says:- "A country dependent on exports, and relying largely, as we do, on the export of manufactured goods of high quality, needs prosperity in its overseas markets. This cannot be achieved without effective collaboration among the nations. It is, therefore, an essential part of the Government's employment policy to co-operate actively with other nations, in the first place for the re-establisment of general economic stability after the shocks of the war, and, next, for the progressive expansion of trade." 16. E/PC/T/PV/4 I would like to emphasisc again that that is a document common to both the major political parties in this country. No when the war ended we had a very full opportunity of discussing with the Government of the United States of America ways and means of restoring and expanding international trade. After those discussions had taken place the Government of the United States of America pulished their proposals for the establishment of an international trade organization. When they were publish- ed, the two Governments, the Government of the United Kingdom and the Government of the United States of America, made this statement:- "These proposals have, the endorsement of the Executive Branch of the Government of the United States and have been submitted to other Governments as a basis for discussion preliminary to the holding of such a Conference. Equally, the Government of the United Kingdom is in full agree- ment on all important points in these proposal and accepts them as a basis for international discussion, and it will, in common with the United States Government, use its best endeavous to bring such discussions to a successful conclusion in the light of the views expressed by other countries." Since then we have been able to hold 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 pronouncement of the Governments of other nations represented here. Now I noted with interest and warm approved the praise and thanks which all the delegations extanded 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 17. E/PC/T/PV/4 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 epparent form --hat 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 clear warning given to us by the delegate of the United States of America when he said that very large countries like his own, with abundant natural resources, could probably survive a failure to gain international agreement on those a matters, but that for the rest of us failure would spell catastrophe. I agree very strongly indeed with that I was glad, too, that he started so clearly his conviction that the differences in economic philosophy which do exist between us need not prevent our collabora- tion in the feffect to establish an international trade organization. We certainly agree with him about that. The delegate of India appeared to have some doubts about this. I would like to assure him that the present British Government would not have agreed to the proposals if they had involved any commitment to abandon our political principles. Well, Sir, already we have gained the gratifying impression that, though there is a difference of emphasis, there is such a wide area of agreement on principles and aims that the differences of detail can be evercome. We agree that through the freeing of trade and the reduction 18. E/PC/T/PV/4 of barriers are essential to secure prosperity for the peoples of tjhe world, they are not by themselves sufficient Thus we are in sympathy with the delegates from Belgium and Luxenburg, Brazil, China, and I dare- say with other who may have made this point alos, but those are the ones I noted. We are in agreement with them that more than negative decisions are required from third Conference, and thus we have great sympathy with the Australian place that constructive suggestions should be put formed. In Committee we shall ourselves endeaveur to do that and to bring forward constructive proposals, to which we have given a great deal of thought. On this general question of the industrialisation of the countries not so fully developed as some of our of the countries not so fully developed as some of our countries are, I would like to say to the delegates of China and India and Latin-America, the Lebanon, that they will not find us without sympathy for their point of view. We have creat expericnce 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 then we shall never forget. King George III a very long time ago tried to prevent an undeveloped country from becoming more diversified in its economic structure, and the result of that is the slight division which separates us this Sir, the delegtes from Canada and Czechoslovakia. have indicated that this is an occassion 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 19. E/PC/T/PV/4 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 Conferonce. 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. 20. E/PC/T/PV/4 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. (Applause.) THE CHAIRMAN (speaking in French - interpretation): Gentlemen, the period of exposition has now come to an end. I am happy to note, as we have all noted - and it has already been mentioned by several of the Delegates, particularly the Delegates of the United Kingdom and of the Union of South Africa - that there is no real opposition between the different and divergent points of view. The divergences really underly mostly the account and importance to be placed upon and given to the different questions, in that some of the Delegations have placed special importance upon certain questions, while other Delegations have attached particuIar importance to certain other questions. On the whole, however, we are all agreed; we want to study the same questions and we all want to agree and understand one another. This is a good siga for the end of our work. If no other Delegation wishes to speak at the moment, I shall declare that this public meeting should rise, and I shall invite the heads of the Delegations to meet with the Officers and myself in 10 minutesd in one of the rooms of the Subcommittees. Does any one of the Delegations with to speak ? There is something Mr. H7ydham White wishes to announce. THE EXECUTIVE SECRETARY (Mr. E. Eyndham White , UK): Before the Committee adjourns, I would just like to carry through one piece of formal business. That is the approval of an amendment of the procedure which is made necessary by the decisions taken in the Executive Committee about the atten- dance at the various meetings of the Comittee. The corrections are contained. in a document which was circulated to the committee yesterday as corrigendum of document E/PC/T2. The amendment refers to Rule 47, which deals with the records of the meetings. The effect of the amendment is that verbatim records of all public meetings shall be freely available to the public; but the verbatim records of private meetings shall be available to all members of the 21. E/PC/T/PV/4 United Nations and to the specialised intergovernmental agencies. I should be greatful if the Committee would approve the amendment of Rule 47 in that sense. THE CHAIRMAN (speaking in French - interpretation): Gentlemen, are there any remarks on the subject of Mr. Wyndhen Emite's proposal? (After a pause:-) There the new text is herby approved. Gentlemen, the meetding is closed. We shall meet again in 10 minutes and I shall expect the heads of all the Delegations in the Subcommittee room 143. (The meeting rose at 1140 o'clock.) 22.

GATT Library

bf753nz4485

Verbatim Report of the Ninth Meeting Committee V : Held at Church House, Westminster, S.W.l. Wednesday 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.V/PV/9 and E/PC/T/C.V/PV/9-12

https://exhibits.stanford.edu/gatt/catalog/bf753nz4485

bf753nz4485_90230015.xml

GATT_157

E/PC//T/C.V/PV/9 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbation Report 4.- COMMITTEE V held at Church House, Westminster, S.W.l. Wednesdaym 7th Novembre, 1946 at 10.30 a.m. ~R -(.S (Irorn te. Shorthna Notes of NNELL,.-uRY ,SOIKz a- FMTL, 58, Victoria Streat, westminster, S.W,1.) A.2 E/PC/T/C.V/PV/9 THE CHAIRMAN: I call first upon the Secretary for a statement with reference to the report of the sub-committee. COMMITTEE SECRETARY: Mr. Chairman, there has been distributed a document No.W/2, which is the report of the sub-committee set up to consider Articles 52, 54, 55, 59, 60 and 62. I think that I have explained to certain members of the Committee that cwing to the short time available between the completion of the sub-committee's work and this meeting it has not been possible on this occasion to circulate the document simul- taneously in both working languages. That is a rule which as you knovw the United Nations adheres to very strictly; and it is hoped that in the exceptional circumstances of this occasion that remissness on our part will be overlooked. Secondly, there has just been circulated a typewritten copy of the re-draft of Articles 75 and 79 as agreed to by the sub-committee set up- to deal with the question of amendments and withdrawals. If sufficient copies are not available of that document now and if anybody does not have one, or will be coming in very shortly. I think that is all that is necessary. THE CHAIRMAN: The first item of business this morning is the report of the Ad Hcc sub-Committec on Articles 52, 54, 55, 59, 60 and 62. I am sorry. The Secretary corrects me. We will proceed with the report. I was under the misapprehension. that there was a Chairman of the sub-Committee who was going to make a statement upon it. THEh COMMITTEE SECRETARY: I should explain that the sub-committee conducted its business in a rather informal. way and dispensed with electing a Chairman; so that I think I would suggest, if it is agreeable to you and to the Committee, that we might simply take up each of the recommendations in turn.. THE CHAIRMAN: Yes. The first Article referred to is Article 54. It is recom- mended that this Article be approved without change; but there is a note which states: "It was agreed that the Committee's report might recommend that consideration be givenm when the rules of procedure of the Conference are being drofted, to the possibulity of including some appropriate provision 2 E/PC/T/C.V//PV/9 which would c-.'Iaea special session of the Conference to be called at the requst of less than a majority of the members, e.g., for the purpose of appealing against decisions of the Executive Board." Are there any comments on this recommendation? MR. AI'I:2'I~LL (Cuba): Mr Chairman, I just want to call the attention of the which Committee to this, that the sub-committee/had to deal with articles 75 and 79 thought that a majority, say, of ten per cent. could call a meeting if some new abligations were to be placed om members. Therefore, I just call the Committee's attention to that, because that was a case where less than a majority was suppposed to be able to call a meeting. THE CHAIRMEN: Are there any further comments? If not, is this Article approved? (Agreed). Now we come to Article 55, paragraph 1. It is recommende that this paragraph approved ;-. ange.out chn^c. Pf=:.rais 2. ommended ec_ ..ie.rparagraph is approvede _;)omrao without change. d,t is note, howeveW, that, "Jith reference to matter of vztin.-i othis And^ ther -rticleag, id was -remmend recao-e;nc th-t wndec it is ,psivide to -a two for :. tv-thirda vote of zll the members of the or-(anizati n nceuding _tinine abstairig,)or absentX, ing followrin oormuba used: b'e UIC d:'y awoote of t. -thirdsmbeof the meers,' and th-t in whe casnsy-,ere orl two-thirds of the actual votes cast is feeme suf e appropaite formula roorzi-to shuld be: 'oy a oote Jf tw.- thirdembe t p mo~--rs -resent and voting.'" There arparagraphs,raro:hs hereako bep oden u- An this -rticle that I tmink it ightebe betttr if wa Dausedeand act6d oparagraph p 'gbap;ara&r-ch, rather than that I snouidrm d there ull t1rogh first; so that I think I had better pause tpos ocint arn for commepts ?aph a, p b graph . Iehav e aylrad read paragraphs.hs. paragraphgl ahreed ged without change? I take it that it isg? eArecd). pIs grara-aha2 greed without change, and also is the nope aypd dezi therepprove-,red? LTHE;LT=Y (Francenterpretatienttio): M r Chairmar, egiarparagraphgrah 2, I should likeptopoJeoosc a slimht Modification in the last sentence, 3. A. 4.. E/PC/T/C.V/PV/9 which reads, "obligations of Members undertaken pursaant to Chapter IV' of this Charter." Alter that to read, "pursuant to the present Chapter." THE CHAIRMAN : I would ask that the proposed amendment be repeated. The Chair is not clear as to what the proposal is. Give us the exact wording. MR. PALTHEY (France) (Interpretation): "obligations of Members undertaken pursuant to the present Chapter, " instead of " pursuant to Chapter IV of this Charter." THE CHAIRMN: would the French Delegate be willing to comment as to what the force and purpose of his suggested amendment wculd be? MR RALTHEY (France) (Interpretation): According to the present text, it provides that some exemptions should be given to particular members in particular cases from the obligations pursuant to Chapter IV, that is Tariffs and Custems obligations. It was thought that if we want to preserve a certain amount of flexibility, though that flexibility must not necessarily entail substantial modification of the Charter, we c.an leave it to the Conference to envisage the possibility of suspending; the obligations on some mambers under the provisions envisaged in Chapter IV, or more particularly in Chapter V and Chapter VI,. which would also be revised if the need arese THE CHAIRMAN: You have heard. the proposal of the French delegate. Are there any comments? Mr. VAN TUYLL (Netherlands): I would like to support the proposal, which, if I understood correctly, is to delete the words "Chapter IV" in the last line of paragraph 2. M LAURENCE (New Zealand): Mr Chairman, I am wondering if we can have it on record as to exactly what this phrase "by a vote of two-thirds of its members" means. Taking a hypothetical case---- THE CHAIRMAN: I see that you are raising another question. MR. LAURENCE (New Zealand): Yes, that is right. THE CHAIRMAN: Perhaps we had better postpone that until we have disposed of this matter. 4. E/PC/T/C,V/PV/9 MR., HOUTALN (Bolgium) (interpretationn): Mr Chairman, I wish to call the attention of the Committee to the importantce and scope of the French amendemnt Indeed, if under paragraph 2 of Article 55 we have en- visaged the possibility of exempting members from the obligations pur- suant to Chapter IV it is because Chapter IV bears on the question of general commercial policy, and there in particular under Article 29 we envisage the possibility of emergency action on imports of par- ticular products. That is the reason why in Article 55 few exceptions are envisaged. I de not wish to oppose the French amendment; I simply wish to emphasize that if we adopt it, then members can be exempted from all obligations as soon as the exemptions are said to be of an exceptional character, and that might lead us to having a member exempted even from the obligations which they have undertaken under the general such as such as the principle of full employment in particular. I only wish to underline the implied importance of the French amendment, and I realIly wonder whether it is lesirable that we should envisage a rule for exemption in all cases. MR. K ELLOGG (USA.): Mr Chairman, I should like, with the permission of the Committee, to reserve the position of the United. States on this suggestetion until a fortheeming meeting. THE CHAIRMAN : In view of the fact that there has been some differcnce of cpinion expressed on the suggestion of the French delegate, and that one delegate wishes to reserve the position of his Government upon that, I wonder whether the French delegate would be agreeable to our coming back to this provision at a later meeting? MR PALTHEY (France) (Intepretation): I agree. MR LAURENCE (New Zealand): Could we have it on record, Mr Chairman, just what we say is the meaning of this phrase "by a vote of two-thirds of its members"? Assuming that the organization has 33 members does the phrase mean that if 22 vote and there is a simple majority the proposition is carried, or does it mean that the proposition would have to earn the support of 28 of the 33 members in order to be carried? 5. E/PC/T/C.V/PV/9 THE CHAIRMAN: The Chair will answer tlhat, subject to correction. It is the impression. of the Chair that it means precisely what it says, namely, that two-thirds of the members of the Conference must have approved; in, other words, if there were 30 members and to approved it would carry by a two-third majority vote. MR. LAURENCE (New Zealand): I would respectfully suggest, Sir, that if that phrase as it stands became the subject of argument in a court of justice the learned judges would not necessarily agree with your view. THE CHAIRMAN: Well, Sir, far be it from me to assert that I am more learned then the learned members if a court of justice, but that would be my understanding of this rule; and I would be glad to have the views of others with reference to what it means, and if there is a clearer way of formulating it, of course, we ought to make it clear. MR BURY (Austrealia): Mr Chairman, I think that the point raised by the delegate of New Zealand is already taken care of because in all cases where it is not two-thirds of the total membership there is some phras- ing used, such as "by two-thirds of the votes cast," or that will be altered slightly; but the term "votes cast, " or "members present and voting." We decided upon that question in one of the sub-committees; so that if in all cases other than where it is two-thirds of the total membership voting, we have stated that it is the members present and voting or the votes cast, that point surely would be looked after. MR LAURENCE (New Zealand): If I may speak again, I would suggest that it should not be necessary to look beyond the words themselves for the meaning of those words, and while I do not want to take up time, if the Conference has recourse to skilled legal advice, if there is a difference of opinion, I would like to have the assurance of a legal opinion that this is clear and not capable of more than one construction. THE CHAIMAN: The Secretariat could very well be instructed to consult legal advice on the form of words. I think we are all agreed as to our purpose, and if there is a better form of words I am sure this Committee 6. E/PC/T/C .V/PV/9 would concur in the use of it. MR MARTEN (UK): Mr Chairman, I suggest that we change the words from "by a vote of two-thirds of its members" to "by a vote of two-thirds of the membears of the Conference." That would cover the point raised by the New Zealand Delegate, I think. 7. B.1 E/PC/T/C.V/PV/9 THE CHAIRMAN: If there are no further comments on paragrah 2, we proceed to paragraph 3. MR LAURENCE (New Zealand): Do I take it that this wilI be the subject of legal opinion? THE CHAIRMAN: In the absence of any comment I assume that that will be done. MR LAURENCE (New Zealand): Thank you. MR COUILLARD (Canada): I have a further question in connection with paragraph 2, and poossible the delegate for the United States could clarify this matter. With regard to the French amendment, namely, that "Chapter IV" should be deleted from paragraph 2, I would ask the drafting country to confirm any impression of the wording in paragraph 2 that the Conference will establish criteria and set up procedures only in those cases where escape clauses are provided in the charter and will not provide criteria and procedures before the event, so to speak. Is that correct? MR KELLOGG (USA): In reply to the question of the delegate of Canada, it was the thought of the U.S. in drafting this section that members would take advantage of such escapes as exist in the rest of the charter first, and this was meant merely to cover cases Which were exceptional and caused particular hardship to any particular member and were not covered by the other escapes provided in the charter. This is to cover cases which are not covered elsewhere. MR ALAMOLLA (Cuba): Mr Chairman, I think we are talking here of the possibility of a member waiving the obligations of Chapter IV, and it seems to me that we are getting the impression that that member would be able to do it just by applying to that. I believe paragraph 2 says that the Conference, by a vote of two-thirds, is going to say when and how those obligations may be waived; therefore it is not for the member to waive; it is for the Conference itself to apply the two-thirds vote and determine those criteria, and also the rules as to how those criteria are going to be applied. That is how I understand it. MR PALTHEY (France) (Interpretation): Mr Chairman, since the Committee is ~~~~~~~~~~8.. B. 2 E/PC/T/C.V/PV/9 going back to the discussion of the amendment which I proposed, I think it is desirable that I shouldhere clarify my thoughts. I agree with the United States delegate when he said that in paragraph 2 they envisaged only exceptional cases under Chapter IV, cases for which there would be no other escape clause in the charter, and I agree with him when he says that these should be only exceptional cases; and I do not think that my new proposed wording for paragraph 2 should lead us to infer that a member would take the initiative of waiving the obligations undertaken pursuant to the charter. Nevertheless, I do not agree with the delegate of Cuba - at least, not quite - for according to Article 2 the Conference would establish a procedure and would determine the criteria with a view to exempting certain countries from the obligations undertaken; but not always, because the Conference would not always vote by a two-thirds majority. In other words, it might happen that the Conference would empower the Executive Board to take decisions with a view to granting those exemptions according to rules of prceedure which would have been fixed by the Conference already, and perhaps even the Conference might indicate to the Executive Board what the nature of these exemptions should be. So in fact the scope of my new amendment would not be so wide as the Belgian delegate was pleased to say. If you accept that some countries in exceptional cases can appeal to the Conference or to the Organisation which this Conference is going to set up in order to be allowed to waive the obligations undertaken under Chapter IV, there is then no difficulty in having the same provisions for the same members regarding other parts of the charter. No country should escape the obligations which it has undertaken. It is understood that that would not be the case. All we suggest is that in more exceptional cases temporary exemptions might be granted when the precise obligations of the charter would impose some economic hardships on some countries, those hardships, I repeat, being of a temporary character. THE CHAIRMAN: We had agreed that the decision on the suggested amendment 9. . c~~~~~~~ B. 3 E/PC/T//C.V/PV/9 Of the delegate from France should be deferred this morning, and we will be coming back to it. It may be that this particular paragraph should be remanded to a Sub-Committee for further consideration when we set up new Sub-Committees to deal with other paragraphs. At any rate, I think for the moment it might be best to pass over it, as some of the members of the Committee may wish to consider the matter further in the light of the comments which have been made. THE CHAIRMAN: Once more we pass to paragraph 3. It is proposed "That the words 'under the provisions of Chapters II and VIII' be deleted." This amendment had been provisionally accepted by the full Committee. Is it agreed? MR ALAMILLA (Cuba): I just want to comment on this, because Chapter II is the one to determine membership and Chapter VII is the one which deals with the Organisation. I think it would be rather awkward that the ExecutiveBoard may be entitled to change the Organisation and to change the membership, on which substantially the Organisation will be based; therefore, without making a strong point of it, I want to call the attention of the Conference to the fact that those are essential things which should be left always for the Organisation; and if the words are to be deleted and it is to be left to the Executive Committee, this should: be done only with a very strong majority. (After interpretation): I would like to add this, Mr Chairman. I understand now that it is even stronger than I was asking for, and so I am perfectly satisfied with it. THE CHAIRMAN: I take it, then, that paragraph 3, with the amendment recommended by the Sub-Committee, is now approved. (Agreed.) Paragraph 4. It is recommended "That this paragraph be approved without change." But the Sub-Committee appends a note, which states as follows: "The Sub-Committee was not able to give final consideration to this paragraph as it had not had the benefit of hearing the views of the Delegate of Cuba, with respect to the amendment which his Delegation had submitted in writing (Document E/PC/T/C.V/9). It was 10 B. 4 E/PC/T/C.V/PV/9 also suggested that the Preparatery Committee right recommend in its report to the Economic and Social Council that the expenses of the organisation should be apportioned among members on the same principles as applied to their contributions to the United Nations." Is there any discussion on this? MR ALAMILLA (Cuba): Mr Chairman, the main point that we make here is a point that is common in every business. If we are going to come into something, we would like to know how much it is going to cost us. The only thing is this. Before we start to discuss our two suggestions in here I would like you, Mr Chairman, to ask the delegate from Norway (I understand he is an expert on United Nations matters) if he would be kind enough to give us a very briof idea of how this matter is dealt with in the United Nations; because, as I see it, in the general provisions of the United Nations it was left to the assemblyy to decide. I have not had time to go into this, as our delegation is working night and day, but perhaps after I have heard an explanation from the delegate of Norway I will be able to drop our suggestions. MR COLBAN (Norway): Mr Chairman, I am afraid I am not as much of an expert as my Cuban friend believes, but I can tell you (most of you probably know it) that the United Nations have not yet finally decided the apportienment of the contributions amengst the members. The Assembly at its first session here in London in February last asked for the constitution of a special committee to go into that matter, and, as far as I know, that committee has not yet made a final report. MR ALAMILLA (Cuba): I just want, then, in the absence of these precedents that I thought might have been already established, to give you a very general idea of what I mean. It is said here that it is going to be left to the Organisation. As you know, we are going to be tied up when we get into this business, for some time, and therefore we think it is a very important point to be looked at now. We have suggested two alternatives, and I understand clearly that it may be very difficult for us at this moment to decide on either one of them. One was that the allocations be based on the ordinary budget of cach member, which I 11 B. 5 E/PC/T/C.V/PV/9 understand to be a very difficult point to decide, because we do not know what this budget may be. The second proposal was to base it on the volume of the foreign trade of each member. In the second case I think that we have there a very specific point on which we could base our contributions here, because each member is interested in this Organisation and hopes that it will promote its foreign trade; therefore they should be obliged to pay as much as they get in advantage as a result of it. But on this second point I am not insisting because even here I can visualise all the difficulties we may find. Cuba is a member of the United Nations and I hope that she will continue to be a member, and whatever is decided there we will accept. I suggest, then, that we approve here this suggestion made by the Sub-Committee that the way that we should pay our contributions to the Organisation should follow the rules to be established by the United nations f or payment by member governments, not making it a strict rule but only a recommendation. I really think we should have some kind of provision here. MR BURY (Australia): Mr Chairman, there is nothing in this suggestion which in any way precludes the final decision being made by the Conference. It would in fact have to be made by the Conference. All this is is just a suggestion that the Committee in its report should perhaps point out the advantages of adopting the same scale of contribution; but the object of making this suggestion is that unless thereis some strong reason why the same scale that applies to the United Nations should not apply to this Organisation, it would save an immense amount of dispute and questioning between members, I feel sure, as to what their relative shares should be. The fact that the members of L.T.O. and United Nations are not the sane does not vary the principle; their relative contributions to the United Nations amongst themselves. should be the same relative contributions as they make to L.T.O. If in the final analysis for some reason the scale which the Contributions Committee of United Nations eventually B. 6 E/PC/T/C.V/PV/9 decides on is not suit able for I.T.O., it will still be perfectly possible for any other system to be brought up. That is the point of this suggestion. It does recognise that the position is still flexible. MR ERASMUS (South Africa): The Australian delegate has said what I more or less wanted to say, and it seems to me that the Cuban delegate, while not; withdrawing his proposal, has to some extent fallen back on his position as regards apportionment, in accepting the view that the United Nations procedure should be recommended here. I suggest that we leave the matter open until we are able to see what is decided in the United Nations, and then the matter can be taken up again; and we can take that as a lead or guide, and ifit is not suitable we can try to work something else cut. MR QURESHI (India): Sir, after listening to this discussion I feel that we shouldnot go into all the final details at this stage. The question of contributions would come up later. All we have to do at this stage is to find what is the general agreement, and, of course, some sort of agreement would have to be arrived at for apportioning the expenses. The United Nations have not yet decided and there will be plenty of time for this Committee to do so. When may friend from Cuba knows exactly what the United Nations have decided he will be in a better position to give his views. Therefore I suggest that at present we merely agree to this principle and at a later meeting we can formulate our views more definitely, when we know what the United Nations have done. 13. C. E/PC/T/C.V/PV/9 MR DAO (China): Mr .Chairman, if I am not mistacken, the delegate of Cuba is not insisting on these amendments. Therefore I will address my self to this recommendation in the report of the sub-committee "that the expenses of the organization should be apportioned among members on the same principles as applied to their contrilutions to the United Nations." I take it that the same principles as here suggested do not mean the same scale. As I understand, the principles as embodied in the recommendation of the Preparatory Commission of the United Unations, are "capacity to pay," with due consideration to be given to the tem- perary dislocation of economies due to war and the exchange reserve of members states. On this understanding the Chinese delegation has no pbjection to the recommendation here, that the same principle be applied in the apportionment of contributions of the members of the I.T. O. Furthermore, as we have pointed out, that this principle may be adopted on the assumption that the voting system will be that of one country one vote and that the members sitting on the Executive Board will be on a purely elective basis without any preference or any permanent arrangement for some other members to be sitting on the Executive Board. On these two assumptions we have no objection to this recommendation. MR. ALAMILLA (Cuba): Mr Chairman, what I was really not insisting on was my two specific amendments, but when I finished I said that I wanted to qualify paragraph 4 of Article 55 and that I accepted gladly the suggestion of the sub-committee, but that that should be either by way of an appropriate Article or in the way of a specific recommendation from this Preparatory Committee that this voting should be on those principles to be applied to the contributions made by each government to the United Nations. Therefore, I would ask that this kind of suggestion be taken into consideration. I do not want it to be, a specific article, ke, and I would strongly support, the siggestion tjat ;gg~~D-1 -k =CIt I1 W aie ndTu d- atrothe su.-estion that a, e vp C 'c r Cie XI at shouId be mad on those lines. f theLBA!Rgate ay): I quite appreciatsirth e deleret& of Cuba , ,. s . .. .. ...t. to have some idea of the contribution when he signs and ratifies our Charter, and I also think that the recommendation which it has been suggested should be made to the Economic and Social Council should to soe extent give him satisfaction. If we all agree to that recommendation being presented more or less as explained by the dele- gate of Australia, and in order to make my own ideas perfectly clear, I see it like this. In the absence of aru other agreed solution, we fall back upon the principles of the United Nations for the contrib- butions, and that should be perfectly satisfactory to everybody. It would give the Cuban and all other delegates the assurance that we are not simply going out into the unknown, but that we have really something to fall back on. On the other hand, it may be that our Confercnce, when it meets, may find it desirable to adopt a special scale of contributions for our Organization, and I would not cut that out before it is necessary. So that I would simply make this recommendation, that the expenses of the Organization should, in the absence of any other agreed arrangement, be apportioned among members on the same principles, and so on. THE CHAIRMAN: There are two or three members who have requested the floor and, of course, I am going to give it to them; but I do suggest that we have been on this note in this report for quite some time and we have got a lot more business to transact this morning, so that I hope that we can shortly pass on to the next paragraph. MR. ERASMUS (South Africa): Mr . Chairman, I just want fully to support the delegate of Norway and suggest that we postpone discussion of this question now, seeing that we cannot get aany further on it, and that we wait until such time as we hear from the United Nations and get some other documents. MR. KELLOGG (USA): I merely waent to support the suggestion of the delegate of Norway aIso. MR AIAMILLA (Cuba): I accept the proposal of the Norwegian delegate, as I understand that a recommendation on the lines suggested is going to be made. 15. C. E/PC/T/C.V/PV/9 THE CHAIRMAN: I take it, then, that the Committee is agreed that a recommendation should be made to the Economic and Social Council in the context suggested by the Delegate of Norway. (Agreed). We pass next to paragraph 5. The sub-committee recommends that this paragraph be deleted, and it appends a note as follows: "It was decided, after full discussion that no useful purpose would be served by retaining this paragraph in Article 55 in view of the fact that its Provisions were already covered by Articles 57 (1) and 68 (1). is there any comment? MR LAURENCE (New Zealand): Mr Chairman, I would like to voice this view. If there is a Case for deleting paragraph 5 from Article 55 there is. an equivalent case for deleting paragraph 6 and paragraph 7, and possibly paragraph 8, from the same article. It raises a point of principle in drafting of whether the powers or the obligations that are specifically imposed on the Conferene are recited in this Article or whether the powers and obligations that are specificlly either covered or imposed by other Articles are left to these other Articles. I do not want to pursue the matter further than that; but I made the point in an earlier discussion that there should be consistency in drafting. Just to illustrate the point, taking Article 25, we have paragraph 4 reading; "Any determination required or appropriate to the operation of this article shall be made under procedures established by the Organization in accordance with paragraph 6 of Article 55." All that we have to do to make paragapah 6 unncessary is to say, "shall be established by the Conference in consultation among the members having an important interest in the particular product concerned. I do not mind whether the provisions are in Article 55 or not, but I do ask for conciseness and consistency in drafting tne document. MR BURY (Australia): On the point just raised by the New Zealand dele- gate, there does seem to me some slight difference or distinction to be drawn. The paragraph that the sub-committee proposed to delete was in another of Chapter VII, and it does seem to me that there is a 16. E/PC/T/C.V/PV/9 difference between having everything that the Organization, as such, does all in one form or in one chapter and that there is more case for deleting overlapping provisions within that chapter than there is in deleting things from Chapter VII just because they refer back to earlier chapters. MR. KELLOGG (USA) : Mr. Chairman, I agree with what the Austrlian delegate has said; and possibly it might be of some vaIue to explain to the New Zealand delegate the basis upon which this Charter mas drafted. We tried with one exception, which I will mention in a minute, to put all the provisions in which various functions and duties are dele- gatee to organs in Chapter VII of the Organization. There is one ex- ception, and that is Chapter II dealing with membership; we thought that it might be convenient to put the delegation of functions into the chapter dealing with the actual substance of the matter. We might, in conformity with your suggestions, move that back into Chapter VII and that would be for more consistency; but, other than that, we have tried to put all the provisions dealing with the way the work is carried on in one chapter. Hence for consistency (s sake we put in paragraphs 6, 7 and 8 in Article 55. THE CHAIRMAN: It seems to the Chair that the record has been made sufficiently clear on the point raised by the delegate from New Zealand and that it becomes the duty of the interim drafting committee to wrestle with the matter. Next we come to paragraph 6 and 7. The sub-committee recommends that these paragraphs be approved without change. Is there any comment? (Agreed). Pararaph 8: it is recommended that this paragraph be amended to read. "The Conference may, by a vote of two-thirds of its members present and voting, adopt" and so on. Is there any comment? MR PALTHEY (France) (Interpretation): I apologize once again for asking a question which I am very much afraid the Committee will not be able to answer. Under paragraph 8 of this Article of the Charter the 17. C. E/PC/T/C.V/PV/9 Conference "may by a two-thirds majority of the votes cast, adopt the standards, nomenclature, troms and forms described in paragraph 7 of article 16." Yet in the Charter there are some decisions which are to be taken by the Conference for which a majority has not been decided upon; but no precise indication has been given; according to the terms as they stand now, we should therefore conform to the provisions of Article 53, that is, a simple majority. I wonder whether we could not envisage the possibility, in some important cases, of having a two- thirds majority. To give you a few instances: We could have a two- thirds majority in the cases envisaged under Articie 20 (3)," . . shall be entitled to impose balance-of-payments restrictions, whether during or after the transitional period provided for in paragraph 2 of this Article, subject" and so on. In this case it is the balance-of-payments restrictions. Then under Article 25, 3 (b) we deal with the question of the elimination of export subsidies, exceptions and so on; then again when we come to the Problem described in Article 29, Emergency Action on imports of particular products; or again Article 30, when we come to discuss the problems of consultation between members; Article 35, recommendations on cartels; or Article 45, where it is envisaged that surpluses are to be entered before any intergovernmental commodity agreement can be passed. So that I think we should consider whether we could not adopt the principle of the two-thirds majority in such important cases. THE CHAIRMAN: I take it the suggestion of the French delegate is not intended to depart in any way from the phrasing of Article 8, and that he is not recommending any change in the amendment as put forward by the subcommittee, and that he is merely making some collateral sug- gestion with regard to the rest of the Charter. Do I understand him correctly?- - ..: - Interpretationi-t I av ano c): he objection to deferring the icle to a Inter date itidl1to hand to link it up witv the r Arti n e which wot cle, to on10 aiepria uld seem most appro te l8, _... to the Committee. If the problem is not relevant to Article 8, then I see no objection to having it deferred and to study it in connection with another Article. MR. COUILLARD (Canada): Mr. Chairman, the French delegate has just apened up a very broad and important subject; but it does strike me that all the Articles which he has mentioned form the basis of Discussions in various other Committees, and those Committees presumably had in mind at the time of their discussions all the pros and cens, for example, in connection with Article 25, 3 (b), veting arrangements which would govern the acceptance of any other article, litigation, carteIs, sur- pluses, and so on, as provided for in the Charter; and it does seen to me that the voting arrangements under those various Articles were considered in detail and form an inherent part of the discussions in those Committees and that this Committee wuld be really undertaking too huge a task to review their work. For that reason I would suggest that if there is any possibility that the other Committees have not studied these questions we might approach the Chairmen of those other Committees, but that certainly we should not go into the problem here. THE CHAIRMAN: It occurs to me that this is pretty much the point which the French delegate has put, that in the case of Articles 6 and 7 it is left to the Conference to establish procedures for carrying out certain matters mentioned therein, but in the case of Article 8 it is explicitly provided that any such procedure would have to be carried out on the basis of a two-thirds majority of the votes cast. I suppose the question is why so much flexibility is provided for the Conference in the case of Articles 6 and 7 in view if the provision requiring a two- thirds majority is inserted in Article 8. Is that the question that is really at issue? fols. 19. E/PC/T/C.V/PV/9 MR PALTHEY (France) (Interpretation): Mr Chairman, the questicn asked by the French delegation indeed corresponds partly to what you said. We may indeed wonder why in the charter there is such a careful consideration regarding questions of poceedure, as regards Articles 25, 45 and so on, and why the charter insists so much an a rigid two-thirds majority in the other case. That is a purely formal question, but I think beyond that we must alse study the question of voting on important issues. Surely, as the Canadian delegate said, that question should be left to cach Commission; it should be the task of each. Commission and each particular Committee should study the problems arising from the subject matter which they are studying, and they should decide whether it is going to be a two- thirds majority or a simple majority. But I think that this has not been discussed and I think that the question of voting in the Organisation falls within our purview, and we could consider it, subject naturally to the setting up of a Joint Committee of Committee III and any other Committee which Would be interested in the question MR BURY (Australia): I did see wisdom in the draft as it exists for having it fairly specific in the case of Article 16, where I think the problem can be foreseen fairly accurately, and leaving it flexible in the cases of Articles 25, 45, 29 and 30, where the future procedure is far less cleareut; particularly in the case of Articles 25 and 45 that Committee locks at the moment as if it will re-cast them entirely, so there is a certain wisdom in the charter as drafted, although, as the French delegate points out, it should be considered in relation to those committees a little later on as to what vote shall determine those procedures. MR HOUTMAN (Belgium) (Interpretation): Mr Chairman, I do not agree with the various opinions which I have heard. I think it is the exclusive competence of this Committee to decide on the question of voting, because if we proceed to consultations within the frame of a Joint >..b. --; . . way very well ha7ttee. ~ kA w~l happen that we will reach different g to it~toes a ccgi~-t this with Committee I, 20a . ,, D1 D2 E/PC/T/C.V/PV/9 Y/- ocmaittee II, and so cn. e I tmmik here we arc a Co.i0ttee for Organisation and we nust envisage a msy stem of voting. comonto all different Cczmssions. It follows from the text of the charter that all decisions shoulm be maopted by a siiple rejority, except in sone particular cases when a larger majority is envisaged for important questions; that is the case, for instance, with Article 75, on amendments. The question of amepndments is a very imortant cne, and there I understand fulmy why a two-thirds rajority should be required; only we should like to know why the U. S. delegate, when drafting this chapter, envisaged the -ossibilwty of requiring a tvo- fhirds majopoty fcr Lar less imn-rtant issues. LTiIKELCplGL (USA) : in res to the question of the delegate of Belgium, Articlec16e pare 7, is a ^asc which is comparatively new in inter- naticnal organisacioe. ehat is a _aso wherc we had to scme extent a casu of inteonational legislaticr. Under Article 16 the organisation w uld ha-e the powcr- to adopt certainostandards and so fcrth, which womle bind all the mezbors without ratification. That is not entirely wiTheut preceOrnt.isation ealth ganrsisvat-has similar pro-isions in it. But, nevertheoess, in the field ef international organisation previous tc the present time there have beenovery few examples cf crganisatioembwhch c-n bi-d ernfors without thoir ratification or agreeprot.d That is rc-viced in Articde 16, para. 7, an6 becaupe the mayteew comnarativel-enoe and because mcmbcrs are thus beinz bound without their ,xpress agreementt; we thought protection should be gwo-ven by having a tvthirds vote. TM COKFKN: You have hearietheovarious vfrawscn the matters that havze been .ndeI discussion it seems to the Chair that perhaps the best way to leave the matoer is to endeavcur to secure provisional ageemcnt on these paragraphs in linem with the recomandations made by the Sub-Cormittee, but with the understanding that there will be coommitateon by Ccm-t tec V. withi the oth r Commttees of'this Conferhnce and that tneir attention will be called to this matter; and if any of those Committees wishes to recommend some different language, 21 D3 E/PC/T/C.V/PV/9 in view of the particular problems that they have in their respective fields, we will be advised of that and we can come back to consider the matter later. MR PALTHEY (France)(Interpretation). I am agreecable. MR COUILLARD (Canada): I am also agreeable. MR HOUTMAN (Belgium) (Interptetation): I am also agreeable, but as here we are dealing with a matter of consultition, I consider we should only have consultations with the other Committees to set up Joint Committees for the study of this problem. The question of vote is a matter of principle and is for Committee V. to decide, and the final decision should be the responsibility of this Committee. THE CHAIRMAN: With that understanding, then, I think we may new proceed to paragraph 9: "That this paragraph be approved without change. " Is there any comment? I take it that the recommendation is agreed to. (Agreed.) We pass next to Article 59. The Sub-Committee recommends "That this Articie be amended to read as follows: '1. The Executive Board shall adopt its own rules of procedure, including rules concerning the convening ofits 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. "' Are there any comments? MR COLBAN (Norway): Mr Chairman, as to point 2 of Article 59, in a. previous meeting I made a suggestion to strike out the words "and other officers", but, in the light of what is said in a note to Article 62, paragraph 2, namely, "It was agreed that the Committee's Report might recommend that the regulations referred to in this paragraph, should include provisions that would enable the services of a permanent chairman and Secretary to be made available to each Commission", I think it is now beyond doubt that "other officers" does not imply members of the seartariat, and in that case I have no objection to the words beng kept. - 22. D.4 E/PC/T/C.V/PV/9 Kr;< LM KMLOGG (USA):o m In cmenting on the suggestion of the delegate of Norway, I think it was thought by the mmb-Ceruittoe which worked on Irticle 62 that the Secrooary wculd probably be, supplied by the Secretariat. I therwoulodvfcoUJ nct want it to be believed by this Ccmoittee that the new paragraphA2 of Lrticle 59 suggests teat thp Secretary should be elected by the Execuoive Bcard. I was a little confuseo by ycur remarks. HR UOLoANa(Ncrw7y): Thexactly ahais wa-t I wanted: that that term "any cther officers" should not include the secretariat staff. AIRM:N CIW;A: Are there any furomme ccro-nts cn article 59? 1va flna): I would kelk some clarification of ragrpaaph 3. Does it imply that the Chairman of the Executive Board, if he is a representitevc of a country at eho Coeferonce, can make his choice asowhtcether he will be ehc Chraimao cf the Board or be the represonta- tive of his country? BARONANJ'UYLTTL (Netherlands): As the insertioo cf 3 in Artirle 59 was made am =y suggestionI ;wou dC like to answer theopcint of the delegato cf China. It is very probable that the Cirmahrn of the -MecutiveoBcarwill11 be his Governme'tts representative at the Conference,namd therefore it may smen that there is not a case for including paragraph 3, as has been suggested by the Dratfing mmrrittee. On tho cther hand, the representative of that Government right wantotC make remarks in his function as Chairman of the Executive Board, and therefore theowcrds "as such" have been included in the wording of this paragraph. THE AIRMIUAN. If there is no furtheromm~aent, I assume that Article 59, as amended, is agreedotc. (Agreed.) Article 60, paragraph 1. It is remormended "That the word 'oupersi'e beusEbstituted for the word, 'review' in the third line." That is a matter that was sconussed, I believe, in one oo cur earlier meetings, and I take it there is no objection to that chang.s Paragraph 2: It is reomrmended "That this paragraph be approved 23 D. 5 E/PC/T/C. V/PV/9 without change." Is that agreed.? (Agreed.) Paragraph 3. It is recommended "That the word 'may' be sub- stituted for the word shall" I believe that also was suggested in one of our general sessions, and I take it that that is also agreed to. (Agreed. ) Paragraph 4 It is recommended "That this paragraph be approved without change." But there is a, note, which states; "It was agreed in full Committee that the last sentence of paragraph 1 may need later consideration in the light of the recommendations of the Joint Committee on Industrial Development." I should state for the record that the note to which I have just referred really relates, of course, to paragraph l, and should be read in connection with the remarks addressed to paragraph 1. Is that paragraph agreed? (Agreed.) Article 62, paragraph 1. It is recommended "That this paragraph be amended to read: 'The Commissions shall be composed of persons invitedby the Executive Board and who are qualified....' " There is a slight mistake in that wording. The two words in the second line, "who are", should be omitted, and it should read, "The Commissions shall be composed of persons invited by the Executive Board and qualfied...." There is a note stating that "It was agreed that the Commitee's Report might recommend that in inviting qualified individuals to serve as members of Commissions, due regard should be paid to the importance of selecting such members on as wide a geographical basis as possible." Are there any comments? MR DAO (China): I am not certain whether the two observations the Chinese delegation made at the last meeting should come into this note or the note following. We made observations to the effect that in inviting qualified, individuals to serve the Executive Board may consult with the the countries of which o. -;:.hi- :. ..sh . *.the Qcuntri a. of W~hi~ thc also observed that not more t';.:-a-:4- .--e toan oeeperson -sh-uld bc selected. remarks in conjunction with the note h.,4 r the noteihere oth' oe ~~~~- X- - -~~ --*-~~W~-~**' 24Z ..tN4-- D. 6 E/PC/T/C.V/PV/9 THE CHAIRMAN: It seems to me that the matter raised by the delegate of China makes it douirable for us to consider paragraphs 1 and 2 together, and I. therefore lay before the Committee the recommendations of the Sub-Committee with reference to paragraph 2, so that they can be considered in conjunction with each other. With respect to paragraph 2, the Sub-Committee recommends that "on the second line the word 'service' be substituted for the word 'office' "; and there is this note: "It was agreed that the Committee's Report Might recommend that the regulations referred to in this paragraph should include provisions that would enable the services of a permanent Chairman and Secretary to be made available to each Commission." MR ERASMUS (South Africa): Mr Chairman, I note here it should include provisions that would enable the services of a permanent Chairman and Secretary to be made available. I wonder whether it would not be better if we put "It should include provisions for the appointment of a permanent Chairman", and strike out the words "and Secretary", because the Secret any would be appointed by the Director-General under his powers, and I do not see why we should write into the charter these other words. The idea there really was that there should be a permanent chairman appointed and that chairman will most probably, through discussion with the Director-General, get a secretariat to help him, but I do not think we should put that in about the secretary; we should strike that out and justput in about "a permanent Chairman". 25 E. E/PC/T/C.V/PV/9 COMMITTEE SECRETARY: If I may be allowed to speak for the sub-committee, or rather to explain what the contention of thec sub-committee was, it is my understanding that the reference to the secretariiat was not intended to imply that he would be drawn from outside the ranks of the permanent secretariat. It is fully understood that he would be a member of the staff made available by the Director-General; but the idea was that he should be more or less permanontly attached to a particular committee so that there would be continuity in the secretariat of commissions as well as in the Chairmanship of commissions. I mean, he would not be attached to a particular commission one week and then another commission other week and do anothar job the follow- ing week. I think I am correct in that - and the Belgian delegate will correct me if I am not - but I think that was the intention of this suggestion. MR COLBAN (Norway): I am in entire agreement with the proposal of the South African delegate and I consider that making a specific mention of the country is really a vote of censure on the Director-General. We cannot imagine that he would be foolish enough to have the same secretary working with all committees, walking about from one to another. He will certainly try to find out who is most fitted for each particular job and he will keep him there. so long as he does his work well.k w611 .: MR HOUTMISBelgium) (iMrnterirmpn, retation)-:i.ha=nado not insist oht thi5question of the secretarict but it is an important one, be ause Iwas-~ s1rcckportance of the several duties which were to be in aSSed te commissions, p paiculaprly nursant to the provisions rticle i'ciand so0oni; he commissions will missions will receive complaints and then they will adth: fen they various kinds of action,. advise th Exeecutive oBard ,and so forth; so that I think it would be referable to have a Chairman and Secretary who would wh Secretawo o-Yuld look after the ~ia ~ *d :;;nety shus3 ensure.continuit ee that we should have a permanent W 3e- ar E/PC/T/C.V/PV/9 order to ensure this continuity without any amendement or any note whatso- ever. THE CHAIRMAN: Is it agreed then that we should strike out from the note under paragraph 2 the words "and Secretary"? MR ERASMUS (South Africa): Mr Chairman, there is absolutely no disagreement hare, and it is just a question of wording. But my point was this, that I wanted to bring out the importance of the Chairman and not to curb or censure the Directer General, so that, as a compromise, we could most probably put in words to cover the appointment of a permanent Chairman, the Director-General ensuring the services of the permanent secretariat to each commission, so that we definitely do give him the right to make appointments, and it is within his powers; but, as I say, we need not put it in. It is not a matter of disagreement, it is just a matter of wording. THE CHARMAN: It seems to the Chair that the situation is taken care of by the mere omission of the two words "and Secretary I hope that will be agreed to. (Agreed). Now the hour is wetting late, and I am sure there are Various delegates who have appointments. On the other hand, we are so near to being through with Article 62 that I had hoped we could complete it. The Delegate for China, however, has made some suggestions which are substantive in character. He has suggested, as I understand him, that in the selection of members for commissions the governments of the various countries involved be consulted, and, secondly, that no more than one member of a commission be designatead from the same country. Am I correct in my interpretation? If it appears that those suggestions are going to provoke pro- longed discussion we shall have to carry over. I am not able to tell at this moment what the situation is going to be. MR COUBAN (Norway): I fully appreciate the importance of the two Chinese suggestions, but I venture to appeal to the Chinese delegate not to insist on them being put in writing in any chanter or any recommendation. 27. E/PC/T/C.V/PV/9 I take it that the Executive Board will in appropriate cases ensure that a committee member is persona grata with his own government; and it is quite superfluous I should think to make this an imperative rule. Also, I take it that the Executive Board would most carefully avoid putting two people of the same nationality on the same committee. There would be such competition for this high and honeurable posts that certainly the different governments would put forward, without being asked to do so, candidates for cach one of these posts ; and therefore I think that the Chiniese delegate will obtain absolute and full satisfaction on the two points raised without anything being said in the Charter or even in a recommendation about it. THE CHAIRMAN: Does the delegate from China still feel that he would like something written into the Charter in regard to these matters? MR DAO (China): Mr. Chairman, it is not intended to write into the Charter anything, on these points but to include it in a recommendation I do not say that the Charter should contain such detailed provisions. What we desire to see is some sort of mention made in our recommen- dations. Now, with due deference to the Norwegian delegate, I see that part of the provisions is somewhat covered by the reference to the geographical basis; but we envissage that in inviting individuals to serve as members of commissions names may be put forward of people other than nationals of the particular country concorned without prior consultations, which may give rise to an embarrasing situation to the particular member concerned. That is why we would like to have some mention made to the effect that prier consultation is desirable when putting forward names of members of commissions. I wilI make a compromise suggestion - whether the first part of our proposal can be included in the first note, that consultation should be made with the government of the country concerned, and then due regard had, and so on. MR COLBAN (Norway): I do not insist at all, but I have just explained my own personal view, that it is unnecessary to make such a rule eppecially with regard to consultation. I was a little bit afraid that it might 28. E/PC/T/C.V/PV/9 lead to difficulties always to oblige the Executive Board to consult with individual governments, because then they could not address themselves to a very suitable candidate without having beforehand asked his Govern- ment whether they would agree, and it would normally start by sounding the person himself beforehand, so that there could be complications, but I do not insist. THE CHAIRMAN: In view of the fact that no delegate has expressed support for the suggestion made by the Chinese delegate, I am wondering whether he would be satisfied if we simply agreed that in transmitting our report the views which he has expressed be incorporated as his views? MR DAO (China): Since no one has spoken in support of my compromise suggestion, then I would be satisfied with the ruling from the Chair. THE CHAIRMAN: Thank you. Now I realize that it is late, but we have just one paragraph to deal with which I suspect is rather a routine matter. Could we get it approved? Paragraph 5. It is recommended that this paragraph be amended to rea: "As set forth more fully in paragraph 2 of Article 71, the organization may make arrangements for representatives of other intergovernmental organizations. . " Is there any comment upon that? In the absence of comment, I take it it is agreed. (Agreed). The next question is our next meeting. I assume that we will want to arrange for a meeting as soon as possible. We have yet to take up the report of the sub-committee on amendments and withdrawals, and that would be the first order of business at our next meeting, which I rather assume will be tomorrow. The meeting, is adjourned. (The Meeting rose at 1.5 (p.m.) 29.

GATT Library

sm531kd0121

Verbatim Report of the Ninth Meeting of Committee II : Held in the Hoare Memorial Hall Church House, Westminister, S. W. 1. on Friday, 15 November 1946 at 11. 30 a. m

United Nations Economic and Social Council, November 15, 1946

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

15/11/1946

official documents

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

https://exhibits.stanford.edu/gatt/catalog/sm531kd0121

sm531kd0121_90220012.xml

GATT_157

A.1 E/PC/T/C.II/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 COMMITTEE II held in the Hoare Memorial Hall Church House, Westminister, S. W. 1. on Friday, 15th November,1946 CHAIRMAN: at 11. 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. 2 E/PC/T/C.II/PV/9 Corrections to the Verbatim Report of the Eighth Meeting of Committee II (E/PC/T/C.II/PV/8), Thursday, 7th November, 1946: Page 36, line 13, to read "MR. C.L.TUNG" instead of MR S.H.HSU (China)". Page 36, line 21, read "No fixed date could be applied to all countries. Desides," instead of "No fixed date could be applied to the Articles." Page 36, line 30, to read "In regard to the question as how to" instead of "In regard to the section to" Page 36, line 31, delete "the requirements of quantitative restrictions." Page 37, line 1, to read industrial development, of under-developed countries, we have prepared a paper to suggest that there should be inserted in this Section a separate Article, to be entitled 'Restrictions to facilitate industrial development.' But I will not take any time of this Committee until that paper is submitted." la. B1 E/PC/T/C.II/PV/9 THE CHAIRMAN: Gentlemen, the purpose of this meeting this morning is to hear from the representatives of the International Chamber of Commerce and the World Federation of Trade Unions a statement of their views in so far as they affect the work of this Committee. The procedure which I suggest to you is that we should invite the representatives of those Organisations to make a statement verbally. They have, of course, already circulated to the Conference as a whole statements on different aspects of our work. It has occurred to me that some delegates may wish to put questions to the representatives either on statements which they have issued or views which they have expressed this morning or perhaps for the purpose of seeking enlightonment on any of the matters which come within the scope of our work. Is that procedure acceptable to the delegates? If so, I would call on the representative of the International Chamber of Commerce to make a statement to the Committee. MR WALLACE B PHILLIPS (International Chamber of Commerce): Mr Chairman and gentlemen, I greatly appreciate this opportunity of saying a few words before a Committee which is discussion matters that are of particular importance to the members of the organisation I represent. Before proceeding to details, I should explain that arising out of the nature of our organisation and the arrangements made for consultation at this Conference, it should be understood that as the delegate of the International Chamber of Commerce I am representing and speaking, in the name of the leading trade, industrial and financial organisations of thirty-one countries, and that to give a true consensus of opinion of all these interests, based on our machinery of consultation and investigation, unfortunately requires a great deal more time than we have had at our disposal. Moreover, everyone here will agree, I am sure, that unless a person is constantly involved in the day-to-day discussions, it is most difficult to keep up with the rapid progress of a Conference such as this and therefore a most impossible to interpret the views of the International Chamber of Commerce in terms of what has been decided by the several Committees and Sub-Committees. Will you therefore forgive me if some of my remarks appear a little bit out of date? You have received the International Chamber's Brochure No.101, 2. B2 E/PC/T/G.II/PV/9 together with supplementary suggestions circulated as document E/PC/T/9 of 8th November, 1946. These represent the considered policy of the International Chamber as so far defined by its Council. The most complex sections of the work of this Conference are the commercial policy-provisions of the future International Trade Organisation Charter. Undoubtedly, the most valuable contribution the International Chamber of Commerce can make to your work will be at a later stage when we can go through article by article the provisions agreed upon at this meeting. We shall do this as soon as the Conference documents are published, and we hope to have available before the next meetings of the Preparatory Committee and, in any case, before the International Conference itself, a detailed commentary stating the views of world business on the Proposals claborated by the Government experts. I shall therefore concentrate on a few general aspects of the subject in the hope that some, at any rate, of my remarks will be useful in the final drafting. The first point I would make is this. At a later stage the Governments may find that the political and economic difficulties from which most countries of the world are suffering at the present time may turn out to be an insurmountable obstacle in the way of adopting a really detailed Charter covering all possible contingencies. That was the International Chamber's fear when it first studied the admirable Proposals put forward by the United States Government. We felt that perhaps the intention was too ambitious for the present state of the world. In other words, there appeared to be two alternatives. One as to agree upon a simple statement of objectives defined as precisely as possible, allowing merely in general terms for countries at present unable to realise those objectives to catch up at a later date; and the other was to work out everything in great detail allowing for each country's individual problems and idiosyncrasies. The International Chamber of Commerce favoured the former, mainly because it felt that the inclusion of every country's particular emergencies might make agreement possible in words, only to be nullified in acts later. As an illustration, the International Chamber has undoubtedly been worried by the number of detailed exceptions and, in some cases, permanent B3 E/PC/T/C.II/PV/9 exceptions, to the general principles of the proposed agreement. Obviously, there would be little point in discussing these matters at great length if the resulting agreement were to be merely a reflection of what already exists without effecting any fundamental change. This is merely what the InternationaI Chamber of Commerce feared, and perhaps this Preparatory Committee has succeeded - we sincerely hope so - in avoiding the dilemma. Another point upon which the International Chamber has placed great emphasis is the need for translating international co-operation into practical terms. It seemed to the Chamber that a practical test of whether people really meant something by expressions of willingness to co-operate would lie in their willingness to accept some from of inter- national arbitration for disputes with other countries. If a given country is authorised by the Charter to do something in certain specified circumstances and acts accordingly, and some other country holds that the justifying circumstances do not actually exist, it is not enough to have a mechanism of investigation or even of investigation coupled with some form of sanction; there must be a readiness to accept the decision of some impartial international body. It seemed to us that the only way in which this could be achieved would be by the prior acceptance in the Charter itself of international arbitration as a recognised system of settling at least those disputes which do not involve matters of essential policy for the countries concerned. My third point is that the members of the International Chamber of Commerce will certainly be unanimous in their approval of the prominence given in this Conference to the most-favoured-nation clause. . In the original Proposals of the United States Government there was almost no reference to this valuable instrument of achieving non-discrimination and multilateral- i.sm This has now been remedied, and the International Chamber would merely urge that the exceptions to most-favoured-nation treatment provided in the Charter be as few as possible and as clearly defined as possib.le Before concluding these very general remarks, m Iay express my appreciation of the unfailing kindness and courtesy we have received B4 E/PC/T/C.II/PV/9 from everybody connected with the Conference, and pay a very special tribute in this respect to the extremely hard worked Secretariat. Mr. Chairman, and gentleman, our members in all countries are looking to the Conference with very great hope and the most profound wishes for its success. Its failure would be an international disaster, and if the InternationalC hamber of Commerce can in any way contribute to staving off that disaster, you may be sure of our unstinted collaboration. I thank you. THE CHAIRMAN: Woul d any delegate wish to put any questions to the representative of the International Chamber of Commerce? If not, it only remains for me to thank the representative of the International Chamber of Commerce for his very helpful statement and hope that this will not be the last opportunity for us to obtain the benefiot f the wisdom and experience of his organisation. I understand that there has been some delay in the arrival of the representative, of the World Federation of Trade Unions, and I would suggest, therefore, that the Committee might adjourn until quarter past twelve, by which time it is hoped that we will be able to hear a statement from him. The meeting is adjourned until 12.15. (The meeting adjourned for 15 minutes.) 5 C & D. I E/PC/T/C. II/PV/9 On resuming: THE CHAIRMAN: We will now hear a statement from the representative of the World Federation of Trade Unions, and the views of his organization on Matters which come within the subject matter of this committee. It was arranged earlier that the procedure should be to invite the representative of the Federation to make a verbal statement, and then if Delegates wished, and the representative was willing, they could put such questions as they desired to put arising out of the statement which he had made, in the committee or cut of the statements which have been circulated/on behalf of the Federation. I now call upon the representative of the Federation to make his statement to the committee. MR. DURET (W. F. T. U.) (interpretation): The World Federation of Trades Unions has been particularly anxious to be heard by Committee II. Indeed, we consider that Committee II discussions problems which are absolutely essential for the success of this Conference. In particular, the World Federation of Trades Unions groups within itself a series of countries which are now in the period of transition as it is called. We consider that if the authors of the Charter have included the period of transition in their text it is because in reality it has seemed, even to the most convinced defenders of economic liberalism, that if this policy was applied immediately on a world scale, and if it were applied without any distinction to all countries, the results and consequences of such a policy might be infinitely dangerous. For there still exist a series of countries whose economy has not yet reached a level which can be compared with that of the most economically developed countries. On the other hand there exist countries whose economy has suffered cruelly from the occupation and from war. If those countries were obliged to apply immediately all the clauses, and if these countries were obliged to suppress rapidly all their means of defence, it is certain that one would not be able to foresee either a stabilisation of the balance of payments of these countries or a policy which would allow them to ensure full employment for their labouring classes. 6. D. 2 E/PC/T/C.II/PV/9 As the difference between the economic possibilities of these countries and those of the more developed countries is still very con- siderable it is quite certain that these countries would never be able to cover the difference which now separates then from the countries which are economically more develoed. That is why we ourselves consider that to the notion of the period of transition we must give a very broad meaning, and that we must allow countries in general which are still in an unfavourable economic position to improve considerably their economic possibilities, and to come closer to the technical and potential stage of the more advanced countries before one can apply to them the common 1 w and say that they can meet the competion of their more favoured rivals with equal chances. Therefore, we consider that we must give to the notion of the period of transition a particularly broad meaning, and we would like to know to what extent the ideas of Committee II meet ours. That is why we have asked a series of questions, which you have had occasion to read in the reports which have been circulated, and which I now take the liberty of reading to you. The F.T .U. asks for a definition of the precise conditions in which countries concerned may claim the application in their favour of measures of this kind; for a detailed list of the exemptions from general obligation which may be granted to such countries; and what regulations will govern the relations between countries enjoying the specials tatus referred to in the previous sub-paragraph and other countries not granted such stages. 7. E. 1. E/PC/T/C.II/PV/9 For a detailed definition of the conditions that will bring the trans- itional period to an end when a country, granted special status, will no longer be able to claim the above privileges. One point which seems to us particularly important is that of knowing whether in the so called transitional period the countries aimed at will be able to preserve their integrity and their sovereignty as regards their economic policy. The World Federation of Trade Unions considers, indeed, that those countries themselves are the ones which are particularly capable of judging what measures are appropriate to insure to their populations a policy of full emloyment and, on the other hand, a stabilization of effective demands on foreign markets. That is why we have asked a question to which we attach particular importance: we ask that it should be decided as to what body will eventually be responsible for deciding whether a country is in a transitional period - that is the first question - then, secondly, to what extent a country may be granted special privileges; and, thirdly, when it should cease to enjoy such privileges. We also wish to know to what extent the organizations which will arise from the foundation of the I. T.O. will take the place of the States themselves in directing their economic policy. Finally - and this is a point which for us, is of particular importance we have to recognize that amongst these countries which are members of the United Nations and whose working class organizations are members of the W.F.T.U., some are represented at this Conference, while others, very important ones, are ,absent. We would therefore like to know quite clearly what will be the relationships between the countries which are members of the I. T.O. and those which will not be members, and also what methods the Organization intends to adopt in order to attract to itself countries which up to now have not been members; but we would like to say at once that if it is by sanctions and by penalties that one is to expect to be able to reach this end, the path thus chosen seems to us to be infinitely dangerous, because, instead of achieving a normalization of international economic relations, it would lead one finally to the creation of two blocs and to an even greater international tension. That is why we ask Committee II the following. E. 2 E/P/C/T/C.II/PV/9 questions: The World Federation of Trade Unions asks what means the International Trade Organization will be able to employ in order to draw within itself members of the United Nations which are not yet members; and in my speech I have tried to indicate the meaning of this question. It seems to me that some provisions contained in the original Charter do not appear to assure to those countries which are economically weaker the possibility of putting into practice a policy of full em- ployment and of catching up with the more advanced countries. That is why the W.F. T. U. asks you this question: What are the commercial con- siderations provided for in Section F of Article 26, and how do these provisions ensure stability of production and the development of new fields of production in the different countries? Finally, why is the obligation to publish in advance the amount of their foreign purchases imposed solely on those countries that have set up a state monopoly of foreign trade and not on every country? We consider, indeed, that many countries, in order to ensure their economically maximum production and to allow this economy to have a rhythym of development more rapid than that which would have resulted from a policy of economic liberalism, will have to practise a planned economy; and that is why those countries are often called upon to co-ordinate also their policy of exchanges with other countries and their foreign commerce policy. The paragraph which I have just read to you seems to penalize such countries and to deny to then the commercial considerations provided for in Article 26, ex- cluding reciprocal and planned exchanges of goods. In view of the existing distribution of purchasing power between nations, can an agree- ment to exchange one class of goods for another really be considered discriminatory if it is an open agreement to which third parties can subscribe? Finally, should Article 26 be read as implying that a country setting up a state trading enterprise should be obliged to import or expert merchandise at the prices ruling until the home or foreign market is saturated? Indeed, a.perusal of this paragraph in the Charter leads us to believe that if this text were rigidly interpreted a country 9. E.3 E/PC/T/C.I I/PV9 which had instituted a monopoly in foreign trade would be obliged to import products even if those products were not indispensable to its economy and even if there were other products which would be much more important and useful? It would nevertheless have to import those products until its home market had been saturated. Now, the W.F.T. U. would like to ask this question, the importance of which will not escape your notice: whether States have sufficient power to ensure that the discriminatory policies which have been renounced by them are not in fact applied by private organization possessing exceptional powers and which would free them, in practice, if not in theory, from all control, and, if not, would methods could be applied? It would seem, indeed, a paradox if one prevented States from applying discriminatory measures, whereas private organizations were able to go over their heads and in full freedom to practise that very policy of discrimination. That is a contradiction which in our opinion is extremely serious; and we would like, on this point, to be satisfied by Committee II. The W. F. T. U. also asks what provision is made for the conclusion of long-term inter- national agreements between countries for the maintenance of full em- loyment? It seems to us, indeed, quite clear that some, productions might not be developed if strict agreements did not guarantee to them the conditions of time and stability which are so indispensable. The production of many articles which has just started might be stifled and iintiative paralysed if we did not manage to give some guarantees that the production of those articles, which, in the beginning, are in a difficult position, might be able to rely on a definite time-lag in which their development would be assured. The W.F.T.U. also asks whether Article 8 of Chapter IV, Section 4, should be interpreted as implying that even fundamental differences in production potential between countries should not enter into account. It is quite sure that when a difference in quantity is too great between two countries the rights which are granted equally to the one and to the other have an absolutely differen tconsequence in the one from that in the other. It is quite 10. E/PC/T/C. II/PV/9 clear that an agreement signed with a relatively weak country can for the country which signs it have some excellent results, but if the some terms of agreement are transferred automatically to a country whose production potential is much higher the consequences can be quite different for that country and may be extremely dangerous. That is why we wanted the Second Committee to explain to us how it understands and reads this paragraph. We consider it absolutely indispensable that countries which deliberately practise the policy of full employment should be able to dispose of sufficient means so that, if necessary, they could be able to protect themselves from a deflationist depression if such a depression arose in an economically powerful country and in a county which, in our opinion, is perhaps too faithful to the doctrine of economic liberalism. The W.F. T. U. is quite sure that a depression of a deflationary nature, with under-consumption in such a country, might have on world economy extremely grave repercussionsand countries which on their side are doing everything they can to ensure full em- ployment for their populations and would be using for that purpose methods of planned economy in particularly difficult circumstances, should not find themselves in such a situation that they would not be able to resist the consequences indefinitely, which would be infinitely more serious, of a deflationary depression for which they are in no way responsible. E.4 F. fols. 11 F2 E/PC/T/C.II/PV/9 That is why we do not consider that these measures and facilities can be granted only to these countries at the last moment. Now they must be able to have in their arsenal sufficient power to be able to resist this grave threat whenever necessary. Gentlemen, the world Federation of Trade Unions and the tens of millions of workers organised within it follow with great interest the discussions of this Conference, because they all hope that economic relations between nations will be facilitated thereby and because they hope that the conclusions of this Conference will be such that the periodic depressions which for so long have struck world economy will be, if not set aside, at least weakened; but in order to reach this end your deliberations must take into account the whole of the problems and all these often very different situations in which strong and weak nations find themselves; and your decisions and drafted texts should be clear enough to ensure that no interpretation can arise which in the long run might be unfavourable to the ends which we are all following. THE CHAIRMAN: Thank you. Would any delegate wish to put any question to the representative of the World Federation of Trade Unions? If not, it only remains for me to thank the representative of the Federation for his very valuable statement and to assure him that the members of the Committee will find the study of the very penetrating questions which he has put to us of considerable value in the further stages of their work. Thank you. The meeting is adjourned. The meeting rose at 12.50 p.m. 12

GATT Library

dk457cv8073

Verbatim Report of the Ninth Meeting of Committee III : Held at Church House Westminster.3.W.1 on Saturday, 16 November 1946 at 11 a.m

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

https://exhibits.stanford.edu/gatt/catalog/dk457cv8073

dk457cv8073_90220064.xml

GATT_157

E/PC/T/C.III/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 COMMITTEE III held at Church House Westminster.3.W.1 on Saturday, 16th November 1946 at 11 a.m. CHAIRMAN: Senor Gonzalez. (From the shorthand notes of W.B.Gurney, Sons & Funnell, 58 Victoria St., Westminster, S.W. 1. ) B1 E/PC/T/C . IIl/.PV/9. THE CHAIRMAN: Gentlemen, to-day's session of our Cormmiittee will be concerned with the Final Report of the Committee to the Preparatory Committee of the International Conference on Trade and Employment. Before I open the debate on the documents before you., namely, the Final Report (document E/PC/T/C.III/l7) and the Specific Instructions, to the Drafting, Committee (document E/PC/T/C.III/W.5), it falls to me as your present Chairman to report to you briefly on the genesis of these documents, and on the work undertaken since our last meeting by the two Sub-committees which you had appointed, namely, the Drafting Sub-Committee and the Liaison Sub-Committee.. As you recall, the last session of our full Committee ended with the approval of the 'Rapporteurt's Draft of the Final Report as contained in document E/PC/T/C. III/.W4. In view of the fact that this arrangement of the Report did not entirely conform to the arrangement envisaged by the Heads of Delegations, you appointed a Sub-Committee to redraft the Final Report in cooperation with the Secretariat and the Rapporteur, along the lines prescribed by the Heads of Delegations for the final report of the Preparatory Committee as a whole. According to the then prescribed arrangement, Parts 1 and III of the Rapporteur's Draft were to remain substantially unchanged, while a new text for Part II, entitled "Instructions To The Drafting Committee", was to be produced. Furthermore, it was understood that Parts 1 and II were to be published, while Part III, containing, the text of the proposed Chapter on Restrictive Business -Practices, was to be kept out of general circulation. In compliance with these instructions, some members of the Drafting Sub-Comittee, in cooperation with the Secretariat, produced a new draft of the Final Report, which was debated and approved in two sessions of the Drafting Sub-Committee. The second of these session's took place yesterday, and ended with the complete approval of the Drafting Sub-Commttee, and of the Rapportour for 2. B2 E/PC/T/C .III/PV/9. the text which wals to be submtitted to you for your final approval. This was the situation at the noon hour of yesterday. At the some time that our Drafting Sub-Comittee approved the final text, a new Hmeeting of the Heads of Delegations hwtook place, at which a new arrangement was desined for the final reports of the working Commitees and the final repport of tho Preparatory Committee as a whole. The substangece of the changes decided upon by the Heads of Delegatmmions may be summrized in this manner. The Report is to consists of two arts only, both of which are destined for publication. There is no change in the contents of the first part, which deals with the history of the work of the Committe. The second part, however, contains a fusion of Parts II and III, in such a manner thaeat under each heading of the Agenda, the general principle which formed the substance of the discussion in the Committee, are to be presented, feolgloewed by the agree draft text, and the amendments, revisions, additicons and suggestions submitted by individual delegations; without, however, attributing those reservations to any specific delegation. The attribution of reservations, additions, amendments, etc., to specific delegations Will be contained in a separate document, not destined for general publication. nof view of this radical change in the arrangement, since the last sessiourn of o Drafting Sub-Committee, we had to consider a postponement of to-day's meeting until Monday, so that the Secretariat maight change the arrangement and submit it for final approvtal to he Drafting Sub-Committee and the Rapporteur. Consultations between the Secretariat, the members of the Drafting Sub-Comnittee anRd the apporteur took place yesterday in the course of the afternoon, and it was the concensus of opinion that to-day's meeting should not be postponed for reasons of a purely formal arrangement of the Report. The Secretariat took it upon itself to re-arrange the Report as approved by the Drafting Sub-Committee, 3. B3 E/PC/T/ C.II/PV/ 9. without chagning one sinlge word of the text which had been approved. By straigning all forces of the Secetariat engade on this task, it was possible to finish the work late last night, and thus to put into your hands this morningt the final text as contained in documents E/PC/T /C.III/17 and W.5. I said force that there has been no change in the text of the draft which formerly was contained in the third part of the Report. This is true with one qualification, namely, Artiecle H, corresponding to the former Article 65 of the United States Draft Charter, which, as the result of the work of our Liaison Sub-Committee, has been added to the text. The Liaison Sub-Commite met yesterday - you can see fromh this recital that we have been keeping fairly busy those days - with the Chaiman an the Secretary of Committee V, and, in cooperation between the two Committees, a new text for the former Article 6 was elabroted, and it as decided to send this new text to Committee V as the one recommeded by Commitee III, and to incorporate it into our report as well as into the Final Report of Committee V. I may say about this now text that it rperesents a compromise draft between the text of the Unitd States Draft Charter, a text submitted by the United Kngdiom, and a re-draft by the United States, and that all members of our Liaison Sub-Committee, after a debate on the subject, felt that this formulation would enable the International Trade Ogranization to perfo,r the functions assigned to it in Articles A to G inclusive, in an effective mannner. I now open the debate on the Final Report of this Committee, and may epxress the hope that the labours of our Sub-Committees and of our Rapporteur will meet with your full approval. MR TERRILL (U.S.A): Mr Chairman, I move to adopt the Rapporteur's Report as the Final Report of Cormittee III with such additions and modifications as may be agreed at this meeting. THE CHAIRMAN: I would like to know which are these additions and Modifications . MR HOLMES (U.K.): Mr Chairman, I would like if I may to call attention 34 E/PC/T/C. III/PV/9 to one point which I have already explained at meeting of the Drafting Committee. The point is a very small one, and I do not think it will raise any difficulty. It arises in connection with that part of the Report dealing with obligations of members, which will be found as Section 4 of Part 2 of the version before us, that is, Paper No. 17. It is felt by the United Kingdom Delegation, and I knew by at least one other delegation, that there is a slight inadequacy in the provise in connection with the supply of inform- ation requested by the Organization. It is said that Members should be free to withhold confidential information affecting national security or production technique. I would like the Committee, with your permission, Mr Chairman, to consider the addition of one sentence at that point, which. I do not think would involve any alteration in the text of the Draft Charter or the Revised Draft Charter. But it woull serve as a guidance to the Drafting Committee to take note of this extra protection and perhaps to firlJ a form of words at leisure which would meet the point. C fls. E/PC/T/C .III/PV/9 My proposal therefore, Mr.Chairman, would be that after the words " production techniques". in Section 4, a sentence on the following lines should be added to the explanatory para- graph before Article D is set out. The sentence would be:- "It was felt, however, that there should be screne provision in this obligatfion of members to furnish such information whereby the legitimate business interests of particular enterprises should be safeguarded as far as feasible from possible injury which might. arise if detailed informawtion were to fall into the hands of their competitors or other private persons." The point, as/will be seen, his that there would be no desire on the part of members to impede inquiries, but that details regarding. the operations mof comercial enterprises in accordance with .their normal agnd legitimate trade practices commonly confidential to such enterprise might be withheld if wthey there not essential to the Orzanization's inquiries. I ,hope Mr. Chairman, that a sentence on the line s I have read out might be added at that point. Whether or not it could be necessary, if so,to make ,just a small note directing the attention of the Drafting Committee to that sentence in connectiwon ith Article D(d) on the following pagew, would be a matter, I think, entirely fyor our ruling. THE CHAIRMAN: I shall have to direct the attention of Mr. Holmes to the fact that his observation actually involves a point of substance which has not been faced during the past proceedings of this Committee; According to the resolution which we passed at the last meeting of this Committee the debate on points of substace is closed, and I am not ready to have any such debate re-opened. However, if it is clearly understood that there is no re-opening of any debate on a matter of substance, and provided there is no objection from any 6. E/PC/T/C.III/PV/9. member of this Committee, I feel that I might suggest a solution satisfactory to Mr Holmes and to the whole Committee. The new recommendation suggested by the United Kingdom delegation is actually a point of principle, and, I think, a principle to which no one on this Committee could take exception. It is understood that truly legitimate business secrets which have no bearing on the question of harmful restrictions should be sa-feguarded. I therefore propose to add this principle, as formulated by Mr Holmes, to the presentation of principles regarding the obligations of members on page 13 of the Final Report. If this should meet with the unanimous approval of this Committee I shall instruct the Secretariat to. insert on page 13 of the Final Report between the words "actions have been taken" and the words "the following text" a new paragraph according to Mr Helmes' recommendation. Will you please tell me if there is any objection to this suggestion? MR McGREGOR (Canada.: Mr Chairman, I do not believe that the point raised by Mr Holmes is likely to give rise to any debate on the. subject Jerta-inly we would be quite: in accord with the proposal that has been made, supplemented by your own proposal as to where it should be included. That is, included not in the text, but in the other memorandum which precedes the text . THE CHAIRMAN: Since there is no objection, I take it it is the Resolution of the Committee to insert this new paragraph on page 13, and the Secretariat is instructed to provide for Ouch an insertion. I wold like now to ask Mr Terrill if his notion concerns E/PC /T/C . III/17 ? MR TERRILL (United States) Would you repeat that question, hr Chairman? My motion was for the adaption of the Rapporeur's Report,. subj ect touch modifications of form and additions 7 as may be agreed upon at this meeting. I take it that this particular addition has been agreed upon. There is one very slight correction I should like to suggest. On page 9 the heading of Section 2 now reads "Procedure with respect to Complaints". I suggest we add "and Conforences", since there are tro techniques involved in this present text. The same change would be appropriate in the heading of Article B, which appears on the next page, page 10 - "Procedure with respect to Complaints and Conferences." THE CHAIRMAN: If there is no objection I think we should approve the suggestion of Mr. Terrill. MR. TERRILL (United States): I have one more suggestion I should like to make at this time.It arises because I found myself extremely confused when I first inspected the Rapporteur' s Report, and I find that other delegates also were confused and I am sure the public would be confused by the present form of the Repert. I suggest that Part Two be arranged along the following lines: the text and the notes should appear in one Section, and the commentary or deposition in another separate Section. That, I think, wouldd facilitate the reading of this by the public and also the publicity which we all hope it will receive. THE CHAIRMAN: We will give instructions to the Secretariat. accordingly. MR. NAUDE (South Africa): Mr. Chairman, I presume we have finished with that point? THE CHAIRMAN: Yes. MR. NAUDE. (South. Africa): I notice that in the specific instruct- ions, and in other places, to, the question of services has been quite forcibly raised again. I. do not at this stage suggest any substantive change in the Report. I am merely 8. E/PC/T/C.III/'PV/9 E/PC/T/C . III/PV/9 wondoring - and I will abide by whatever the Committee decides - I am merely wondering, in view of the fact that the American Draft Charter was published and that this is to be published, whether there might not be sound reasons for giving in the explanatory notes a brief statement describing the reasons for wlich services re excluded from the scope of the Charter. THE CHAIRMAN: In the last page of our Report, in the General Notes, there is an observation about services. MR. NAUDE (South Africa): .what had in mind was the explanation given by Mr. Dieterlen one day, that there as doubt as to the interpretation of the instructions of this Preparatory Committee as received from the Economic and Social Council. You may remember there was a quest on whether ?? were supposed to come in. What I have in mind is merely that members of the public will notice the difference and they will not know the explanation. MR. ?? (India) Mr. Chairman, what I have to say at this stage is that if the suggestion made by the delegate of South Africa is adopted, and you give the reasons for excluding servrice, than I think that you should also give the reasons advanced by us as to why services should be included, because if one set of reasons is given, and the reasons on the other side are excluded, it ill not make very fair reading. I have no objection if it is left as it is, but if the suggestion of the South African delegate is accepted and reasons for exclusion are given , then I think the reasons should also be given as to why we feel so strongly that it is essential that services should be includedd. THE CHAlRMAN: I thank the hon delegate of India, and I quite agree that iIf we do not leave it as it is here we should also in his case give an explanation. MR. GUERRA (Cuba): Mr.Chairman, I think that the proposal made 9. P E/PC/ T /C . I II/ PV/ 9 by the Indian delegate is a fair one, in the sense that both sides should be given the same chance, but as far as my experience goes in Committee IV, and I think in other Committees also, I do not think there has been an explanat- ion giver on any point, but they just put in an amendment as a statement of fact. Otherwise, we should have to produced in the Report the whole of the discussion we have had in favour of or against certain points. I suggest, therefore, that we carefully consider this point, or otherwise we may be reprofucing in wrritten form all the discussion we have had on every one of the points on which we have not reached agreement. MR .McGREGOR (Canada): Mr Chairman, i f the matter of services is going to be dealt with by the Preparatory Committee as a whole, since I understand the reference to services has been eliminated through all the chapters of the Report, might it not be expected that a general reference would be made to the subject; rather than that each Committee should make its own reference? I merely raise the question of whether it is going to be discussed by the Preparatory Committee as a whole. MR. NAUDE (South Africa): If what the Canadian delegate says is in fact the case, that a general reference will appear somewhere else in the over-all Report of the Preparatory Committee; I of course withdraw my suggestion. THE CHAIRMAN : Then I think that question is now settled. THE EXECUTIVE SECRETARY: I have no action myself, Mr. Chairman, or no information myself of any general reservation of that kind, and I think if the feeling of Committee III is that such a general statement should appear, covering the whole of the work of the Preparatory Committee, and that it is on that assumption that no special mention is made in the Report of Committee III, then I think it should be reported to the 10. E/ PC/T/C. II I/PV/9 Plenary Committee at the time when the Report of Committee III is presented. It could then be the subject of a general state- ment in the Plenary Committee when the Reports are considered. A written statement could accompany the Report when it is transmitted to the Plenary Committee. MR. TERRILL (United States): I recommend that the suggestion Mr. white has given to this Ccmmittee be adopted, and that a written statement be given to the Plenary Comnmittee reflecting this THE CHAIRMAN: We are going to instruct the Secretariat to carry that out, and I will ask the Secretariat to have the record show that the final Report has been unanimously approved by this Committee, with the changes made today. There only remains the quest ion of the French version of this Report. I am asking the representative of France and the delegate of Belgium to provide the Secretariat as promptly as possible with the French version of our final Report, and it is understood that this French text will not be a translation, but an equal original French version of our Report. No I would like to ask the hole Committee if Document E/PC/T/C. III/W5 has the approval of the member of this Committee? it is with regard to the specific instructions to the Drafting Committee. THE EXECUTIVE SECRETARY: Mr. Chairman, I am rather puzzled about the arrangements for the French text. Is there net a danger that if two texts are produced, of equal authority, there may be some question later as to which is the authoritative text, if there are differences between them? I should have thought it was essential that the texts should be identical, in the sense that the one should be an interpretation of an agreed official text of the Report of the Committee. 11. THE CHAIRMAN: We understand that the French text is going to be an exact translation; we till say, of the meaning, of the English text. THE EXECUTIVE SECRETARY If that is clear, Mr. Chairman, I think that satisfies my point, but as I heard it explained before it was that an independent French text would be produced, which would reproduce the general agreement, but could not be an exact counterpart in French of the, Engl ish text, and that would mean there .would be two texts of equal authority which might differ in some respects and might therefore lead to misunderstanding and confusion in the future work of the Committee and it s interpretation outside the Committee. 12. E/PC/T/C III/PT/9 D. 1. E/PC/T/C. III/PV/9 However, as I understand your ruling now, it is that steps will be taken to ensure that the texts are, in fact, identical. THE CHAIRMAN: That is so. We will issue an instruction to the Secretary on this point. MR. MCGREGOR (Canada): Is it definitely understood that the text of the several article, A-G plus H, will appear together and not be subject to interruption by other comment, such as are made in the draft report in its present form? THE CHAIRMAN: Yes, they will be altogether. We have now arrived at the end of our long and sometimes arduous labours. I believe that the final product of our labours is well worth while. In genuine co-operat ion, and wi th the will to understand each other, and to view this highly important Subject in the light of Many widely dif fering economic environments; we have worked together trying to chart the course for an effective future international control over restrictive business practices. The final result may be far from perfect, but if I may look back for a moment to the.wide cleawage of opinion which manifested itself in our first sessions, and if I may now look at our final Report, which has the approval of all of you, then I f eel that a very aus- picious beginning for true international co-operation against harmful business practices has been achieved by cur work. It remains for me - and I feel I speak for all of us - to express my sincere gratitude to all the members of our Sub- Committees,and especially to our Rapporteur, for their tireless efforts, which have led to this successful termination of our work. I also wish to thank you, once more, on my own behalf and on behalf of the country which I have the honour to represent, for the distinction which you have accorded me in electing me as your Vice-Chairman. Before we end, I would say that we realise that some editorial work will be required to co-ordinate the work of our Committee with that of. the other Committees, and I think 13. D. 2. E/PC/T/C.III/PV/9 we can agree that this task can be left to the Secretary? Yes? Then, Gentlemen, permit me to exercise for the last time the authority which you have vested in me, and to declare the closure of this session of Committee III. Tho Committee rose at 11.54 a.m. 10

GATT Library

vr382ny4595

Verbatim Report of the Ninth Meeting of Committee IV : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Wednesday, 20 November 1946 at 5 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.IV/PV/9 and E/PC/T/C.IV/PV/8-9

https://exhibits.stanford.edu/gatt/catalog/vr382ny4595

vr382ny4595_90220094.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL of the INTERNATI0NAL CONFERENCE ON TRADE AND EMPLOYMENT ? Report of the NINTH MEETING of COMMITTEE IV ? in The ? ? Hall, Church House ?, ?. on wednesday, 20th November, 1946 at 5 p.m. CHAIRMAN: MR. J. R. C. HEIMORE (U.K) (From tho Shorthand Notes of W. B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster. S.W.1. ) 1. E/PC/T/C.IV/PV/9 CHAIRMAN: We have before us the Rapportour's revise of the report ot this Committee, on this occas8on in English only, as arranged with the French Delegation last night. Before I come to the report I went to ? ? Committee know that Mr. ? W.tcehas had fr=omthe Nce York office of the IUnioeh Nations an inquiry w.ehteor teo as eot unborn I.T.O. w0 eishos endsqrany c r pa'ty to represent it at thA..e F.omO. Cmission in Washing o nowtnhata, the labours of thimms Ceeoitet are ovr. It occurred to me twehat migeht b ine ae bttr poositin tmo coe toiew a v on thatw ifnew wew emho aenyg DIeatiorns ae idntgncnd to have Win .sghin tonfor ima temi mners who have taken part in the preocedings of thism Comee.itt I wonder if I could ainsk w mho any cases that .ll be so?Will 'Deeloeato raise ethcr.hands if that is so? - -- - Theerfeor in ate last feiv cesas those who have attended this Cmomieett will b inW :shington for a imtl. M a-wova .vice to the Cmmoottee would ebcthat we should askM r. Wyundamh W hiet to eplly to New York in teh senes that as at least fi? national Deelgations will have in W ashignton officials who have eebn resent at the neetcngs of thisiCommixte weothink it is unnecessarySf'or us to take on the some what invidious task of designation one particular person or two or three particular persons to represent this Committee, and that in fact the objective will be achieved by the presence in Wshington of the pceple Wwo have indicated that thier Dleegations will be prsenet. Woul dthat ngereally agrrebal?e .W amy n wo turn to the report of this Comimitee I think the cquikset method -- an d I ma sur ethe Committee wnat meto adopt the quickest emthod- would be if I wer toe call ache paragrh, apor in some cases groups of arapgraphs, an,idf the Rapporteur eree iedimmatcye to say vey srhortly what is the content of the paragraphs. If it is historical or descriptive probably the Comitmt -fellwible prepared, having s toeehe rovpious version, to pass it without too much detailed attention. If the Rmpaortur etells us that the paragraph incorporates a reservation or, a coentmm of spciU inalterest to one Delegation, then we can spnd ea fw meinutes longer n tohospare ticular paragraphs. ulwWd that be an acceptable ay. of proceeding? wiIll start ithw paragraphs o1 6 on paes g1 and 2. . A. 3 E/PC/T/C.IV/PV/ 9 THE ?: These paragraphs are purely a descriptive outline of the Committee's work, the number of meetings hold, the papers received and so on. There is nothing of substance in them. THE CHAIRMN: I assume those are adopted, as there is no comment. Page 3, paragraph 1. THE RAPPORTEUR: Paragraph 1 attempts to present a statement of the broad considerations, why there should be a chapter on commodity ? in an international trade charter. It simply sets out the contributions also that international commodity arrangements can make towards the fulfilment of the purposes of the Charter. CHAIRMAN:: Are there nyrc mmesnsb? Then that4 is dopted. 2 Now pagaarrph 2. TE ARUOPT UREt This pargraGa h-ontains the point made at 'he? mMnetin,g9 that the Cmomittee did not attempt to lay down prcoedures an mdethdos for ealingd ith particular commo~i-ies, but mnrely attempted to draw up broad principles which might cover every type of circumstance. THE CHAIRMAN: Paragraph 3? THE RAPPORTEUR: Paragraph 3 is a short statement of the scope of the problems that are to be covered in this chapter. Here is the statement of the Iimitation to primary commodities and the paragraph contains the point made at the last meeting, that the Interim Drafting Committee might examine the use of the words "primary, agricultural, mineral, etc." throughout the chapter, with a view to obtaining a uniformity and consistency in their use. We are simply askng the Drafting Committee to look at this question. MR MOSTIN (Belgium) (interpretation): Mr Chairman, yesterday the question of ministries was brought up, and I see that there is no mention of it in paragraph THE RAPPORTEUR: It is mentioned in another place. THE CHAIRMAN: Paragraphs 4 and 5? THE CHAIRMAN: paragraph 4 describes the objectives of inter-governmental commodity arrangemnts; and. paragraph 5 goes on to elaborate them further. commodity~d You will notice at the end of paragraph 5 that the question of fisheries is entioned there. The mpoint w-s Le yesterday that the objective concerning the conservnaation of tural reousources wld neead some clrification particularly with reoference t its effect upon Fishery Conventions, and it is specifically stated that it is not intended that that objective should rraignmeclude anents regardi Fisheries Conventions. : There has not been an opportunity to consult the Norwegian Delegation on th isording, g tho:u I havee very reason to believe that it would be satis- fig to them;. Perh aps .em CoGmitee would g iveme authority, if there is an oprportuynit, to speak to the Norwegian Delegation early tomorrow to insert an additional sentence, if they wish it, reporting their views. The sentence wdoul, inyn a case, begin: "One Delegation thought t.ha"t.. Paragr aph6? B.2. E/PC/T/C.IV/PV/9. THE RAPPORTEUR: Paragraph 6 describes the procedure suggested for initiating intergovernmental commodity arrangements, and describes in particular the procedure for setting up study groups. THE CHAIRMAN: Paragraph 7? THE RAPPORTEUR: Paragraph 7 goes on to discuss the intention of the Committee regarding the development of an intergovernmental commodity arrangement, from the study group stage to the setting: up of a Commodity Council; and in particular it brings out the intention of the Committee that the participation of countries should be an increasing one-as you go from the study group up to thehM mComodity Council. Yowu ill recall that yesterday a point was made that there was msoe inconsistency between the requirements of Article 31 of the Charter and the extension of benefits under this chapter to noMnm-ebers, and at the end of the paragraph attention is dwran to this, and the Intergovernmental Drafting mCorriittee is asked to lock into thims att.er an THEHAIR ACMN: Would the mComittee accept a proposal forme/dmanent fmro the Chair? I think perhaps the last sentence should read: A "ttention was drawn tAo rctile 31 paragraph 2 of the United States Draft Charte".rs E RAPraOTER3: Oh yes., HE CHAIRMAs: Paraghaph 8? THE ARPPORETUR: Paragraph 8 describes the Cmmoittee?/ intention regarding the relationships between the I.T.O. and other cmMpetent specialised agencies in the field of commodity policy, and it describes the procedure for brigingn those competent agecnise into the consideration of cmmoodity policies. HET CAIHMANR: Paragraph 9? HE RAPPOSTEIR:;Parxgraoh 9 describes the ge6er'I prinriples that were evolved in the Committee that should govern all intergovernmental ? arrangements. This paragraph has in it the principles rewarding voting arrangements, and a point was made at the last day's meeting on the question of providing an appropriate voice to countries that are either large producers or large consumers, and not necessarily large exporters or large importers, and, secondly to countries that are both exporters and importers at the same time, and we are here asking the Drafting Committee to examine the text to see 5. B.3. E/PC/T/C.TV/PV/9. whether the Committee's intention has been properly stated in the text. MR ? (France) (interpretation): Mr Chairman, the present draft of Article 9 of the Report gives me the impression that the right of voting upon problem of substance seems to be reserved almost entirely to importer and exporter countries. I thought the intention of the Committee was to ensure proper representation of the right of voting to countries whose status is described under paragraph (a) of Article 9. I wonder if this could notbee state. in a clearerm-anner. HE CHAI1MAN; The words in the subparag~aph (a) here, I believe, are satisfactory to the French Delegation. It is the linking of them on terms of equality with the Indian suggestion which is reported in (b). MR ?. (France) (interpretation): It is rather the draft of the line beginning with the words "In regard to voting on substantive matters". My impression is that if the Drafting Committee were composed of people who had not been able to follow the discussions of this Committee, the Drafting Sub-Committee might notdEht not have given a strong egnough roihtg of vtin to countriesa whose min iwnterest as the provision amnd consuptimmon of cowodities heng taking reat part in international trade. I DE VRES (lNetherlads): I think that the intention of the Draftmming Cozntee wgas to ive attention to the substance of the meaning of the French Delegate in the sixth line of this page, where it is said that it was mmithe Cottee's desire to provide appropriate voice to (a) and (b); and after that being said, it smaid sgoethin about equal voice of importers and exporters. If you put it -bat last sentence, you break up the nex.t Line AIRMATC ould itma =ke tep Lointof view whichi Is pu forward if we were to add, after the words" should be equal" something , lkie this: "giving, of cours,e appropriate voice to the classes ofc uontriesm entioned in (a) and (b) above"? MR UGRRA E (Cuba): I f that is inserted in thatp lace, wew lil have to change hte wording in the flloowing sentenc,e because we rfeer again? the question of quawity of voice. THE CHAIRMAN: May we alter both "importers" and "exporters" to "all parties"? MR HALL (United Kingdom): I think we could get it if, instead of putting those words at the end of the sentence, we said that the Committee reached almost unanimous agreement, and then "without prejudice to the right of the countries referred to in the ? sentence to appropriate voice" -- the voice of importers and exporters should be equal. C.1 E/P/C.IV/PV/9. THE CHAIRMAN: Thank you very much. May have it again at dictation speed? SIR GERARD ? (UK): "without prejudice to the right of the countries referred to in the ? sentence to an appropriate voice", and then as drafted. THE CHAIRMAN: Ma vw then accept -pargroah 9 ca cacedce? (1Agced.) Parahgrap ,10 parragaph 11, rpaagraph 12. THERPAOPRTEUR: Paratgrph 12 dsecribse the distinction that is drawn bteewne regulatory agrnetmens nadr ag.enmets taht arrenot rgeard edas regulatoyr, and sets out brifet ythat in th ecase of raegultory ragce- mnets they yma only b eadopted in certain welldfeinde circusmtancse. The circzustancse hre; ar ebriefly cdscribde. Three ar etwo n?t. s t? wish to hatw mit -.voish o ederaiatenti-n to hlt rc. The first is that thc edl'c:l-cd& uoC to inude also thknewn condition mo-;m as unddr-ecoy-mnt anJ sagceecndy it ise -ep-roctt in oxcc-tial. circushapten=mcstherappis c- e -.Imac lablc et g nzruaturdCL s, and tis proviesion hlased -en inc'd aparticmulearly to.zkl it possible to daymtheticc ih dsdv1 Ccuctaposin perorieat' cagcs aonZ wih lnaturac produts. MRIER D?E VS M(): r Chairmaan, I hmallvpe a s oindntI, a rzrc ha-vng to eraisc t, but it wdaawns r_-o our attent?ion yrhat ad -; cged at the request of o^ne elecagercteh deinit-ionin Article 15, paragraph 4. Now, it is not "production, trade or prices", but "production, export or import". Must we change,. that in the second line? It was not my idea but the idea of another Delegation to have "trade, export or import". - As a matter of fact, I think it was the United Kingdom Delegation that suggested that. THE CHAIRMAN: Is there any objection to altering the word "trade" to the words "export or import"? Is paragraph 12 accepted with that amendment? (Agreed.) Paragraph 13. E/PC/T/C.IV/PV/9 THE RAPPORTEUR: .Paragraph 13 describes the thod in which the problem of shortages may be dealt with under the proposed principles, and a reference is made at the end of the paragraph to the discussion that was held in the Commiittee on the last day on this matter, attention being directed to the verbatim proceedings of this Committee of the last day where certain interpretations wero given of the principles regarding their application to the problem of shortages. THE CHAIRMAN: I would like to suggest to the Committee that we are running a very small danger in referring to the verbatim report of a meeting not held in public and of which it is not intended to publish the records in a document which is intended to be public. I perhaps ? we altered the phrase "the verbatim report of the eighth meeting of Committee IV" to "the Committee's discussion on this point," or some vague words of that sort, that would meet the point, because the Drafting Committee will, of course, be told which document that refers to, but it would be better not to excite curiosity by referring specially to a record which is not to be puibished. Any other comments on Paragraph 14. THE RAPPORTEUR: This describes very briefly the additional principles that are to govern regulatory agreements; and here I want to point out particularly the desire of certain delegations for further clarification of the term reasonable prices," and the Interim Drafting Committee is asked to look at this matter further with a view to seeing whether there can be any further clarifications. Also, at the end of the para- graph, the reservation of one delegation is stated on both the question of reasonable prices and less effective and economic sources of supply, both of which terms are used in the text of this Article. THE CHAIRMAN: Paragraph 15. THE RAPPORTEUR: Paragraph 15 deals with the constitution of the commodity councils and the method of voting and also the relationship of the commodity councils to the Organization. There is an additional point that is put in here, since the previous report, in the middle of the paragraph: "It was understood that regulatory agreements might if 8. ? C2 E/PC/T/C.IV/PV/9 desired provide for qualified majorities on specific matters." That was put in just to make clear that there was no necessity, in every case, for simple majority voting on a commodity council, but the precise majority required on individual matters would be decided by coach commodity council. MR CHANG (China): Mr Chairman, I would like to know the reason why "commodity council" is put in brackets in the second line in the paragraph. THE CHAIRMAN: The reason is that that first sentence states that each regulatory agreement is to have a governing body, which is a general description of the body that administers an agreement, and we put "commodity council" in brackets to indicate that thereafter in the text we refer to this body as a commodity council. It follows rather shortly the device adopted in the text of the draft Charter. Are there any other comments on paragraph 15? Paragraph 16. SIR GERARD CLAUSON (UK): This does not quite correspond with the text as ? finally left it. This says: "They should be effective initially for not more than five years." The way in which we finally left it was that they should not at any time be in force formore .ore tan f ive years. I also think they have stated the initial title of the article incorrectly. It is Article 10. HAIREA OFLNI do not thinkwe .c edurno turack to the tlit].ef Article 10, but if the Drafting Comnmittee think that we have done that wronglyw e can correct itWe. mighmt eet the point here by leaving out the word "initially." Mawy e cross out the wordin "itially" in the second line? DE VIrES (Netherlands): On a reading of the rep:ot .yu might fall into a misunderstanding, , and therefore I suggest the words should b?ed to read, "They should be effective for not more than five years, subject to renewal." ET HACRMIWN: ayMswe add at the end of that sentence the words" subject to renewal"?(A greed). Paragrpah 17. HTE ARPPOTERUR: Paragraph 17 describes the provisions adopted for the settlement of disputes arising uneEr intergovernmenatI cmmoodity arrangements and it states the Cmmoitte'se wish that the procedure for .9 settlement of disputes should be the same as that adopted throughout the Charter, and reference is made there to Article 76 as revised, which was discussed at the last meeting. I would have a slight addition to suggest in the second last line: "The Committee therefore agreed. that disputes arising out of intergovernmental agreements, not ? in the commodity council, should be subject to Article 76 as revised." The CHAIRMAN: May the Chair also suggest an amendment for clarification? Where we refer to Article 76, I think we should say "of the United States draft Charter." " Is paragraph 17 all right asamXeneo.? (g.reed., Paragraph 18. D-1 E/PC/T/C.IV/PV/9 THE RAPPORTEUR: Paragraph 18 describes the procedure for bringing existing commodity agreements or existing negotiations regarding commodity agreements in line with the general provisions of this chapter. At the end of this paragraph the reservation of one dele- gation is stated regarding the situation which arises when one ccun feels that it cannot comply with the decision of the Organisation i# this matter. There is a typographical error in line 6:. the word continual should be "continued.' THE CHAIRMAN: Paragraph 19? (After a pause:-) Paragraph 20? THE RAPPORTEUR: Paragraph 20, the third line, the word "applications" should be "application". Delete the "s" at the end. THE CHAIRMAN: Paragraph 21 THE RAPPORTEUR: Paragraph 21 deals with the matter of escape clauses and the Committee' sdecision regardin this question. It is also stated that there is a reservation of one deglegation regarding the desirability to provide for a member country vitally interested to proceed on its own or by direct negotiation where a commodity confer ence fails to make a recommendation. There are one or two typo.. graphical errors in that paragraph. In the third last line of the pragraph it should be "permission for vitally interested members"; and in the second last line "where the commodity conference fails to make a recommendation". "a" should be inserted after" mak". THE CAHIRMAN: Paragraph 22. THE RAPPORTEUR: In paragraph 22, the fourth line should be improved by changing the words" and append suggestions " to "and agreed-on suggestions." Then remove the word "thereon" following "suggestions so as to read "and agreed-on suggestions for the consideration." THE CHAIRMAN: Paragraph 23? THE RAPPORTEUR: On 23 you will note the last two sentences refer to a reservation made by one delegation on the proposed resolution THE CHAIMAN: Paragraph 24? THE RAPPORTEUR: Improvement can be made there by changing the word "attached" to "a ppended", THE CHAIRMAN: If there are no observations on paragraph 24, the Committ ee has already dealt with the sections referred to in that paragraph so I think we need not go through them now. We shall make arrangement with latitude to the Executive Secretary to make any minor editorial changes necessary to bring it into line for publication as one of the constituent parts of of the complete published report of this Preparatory Committee? (After a pause:-) Then nothing remains for me to do but to adjourn this Committee and to thank all the delegates very much for their forebearance with a somewhat flippant Chairman. Professor DE VRIES (Netherlands): Mr Chairman, now that we have come to the end of the discussion in this Committee, it is a very great pleasure to me to thank you for the bright guidance you have given to all our meetings and all our work. We have had to remove a burden- some surplus of speciial difficulties on this matter of agreements; but when we read now the Report of the Committee, it struck me that nearly every paragraph begins with the words "It was agreed"-. Mr Chairman, that is to a large extent the result of your work. We feel very obliged to you in that you have been so friendly and so kind in giving us a lead in this. In the second place, I have to thank the Secretariat for having worked so hard day and night to provide us every day again the Drafting Committee and this Committee w ith all the papers. In the name of the Committee I have to apologize for causing them so often to have to work at night, because ried to proceed so quickly, having meetings in the morning and afternoon; then going to sleep and letting the Secretariat work every night. Mr Chairman, I believe I speak in the name of the whole of the Committee, when I say that we thank you and the Srecretariat for the work you have done for us. (Applause.) Mr. ADARKAR (India): May I endorse the views expressed by my friend from the Netherlands. THE CHAIRMAN: I am extremely grateful to the Committee. Professor De Vries referred, I think, to the bright guidance that I had given. Any light that came from the Chair was entirely a reflection of the wisdom of the individual delegations, and I would like to add my bit to what has been said about the work of the Secretariat; because 12. D-3 E/PC/T/C.IV/PV/9 I now let the Committee into the secret: they not on!y had to cope with all the work that was thrown on them inevitably by the work of the Committee: they had quite unnecessarily to put up with the bad temper of the Chairman when he got out ofthe Chair and said what he really thought about the delegates. Mr GUERRA (Cuba): I would like to add a word as to the very good work don by our Rapporeteur. Being appointed by theChairman previously to the consent of the Committee, he has fulfilled the job to the entire satisfaciton of the Committee (Applause.) THE CHAIRMAN: For the last time I use this hammer. The Committee is adjourned. (The meeting rose at 6.9 p. m.)

GATT Library

zw234xx0269

Verbatim Report of the Second Meeting Committee IV : Held in Committee Room G, Church House Westminster, S.W.1, on Saturday, 19 October 1946. at 10.30 a.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/C.IV/PV/2 and E/PC/T/C.IV/19-20 + E/PC/T/C.IV/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/zw234xx0269

zw234xx0269_90220086.xml

GATT_157

E/PC/C.IV/PV/2 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SECOND MEETING COMMITTEE IV held in Committee Room G. Church House Westminister, S.W.1, on Saturday, 19th October1946. Mr. J.R.C. HELMORE, C .M.G. (UK). Form the Shorthand Notes of W. B. GURNEY, SONS & . FUNNELL, 58, Victoria Street, Westmnister, S.W.1.) 1. CHAIRMAN: at 10.30 a.m. E/PC/T/C. IV/PV/2 THE CHAIRMAN: Gentlemen, I should like to call this meeting to=eeting tcr in so doing. in so dLointo inforn dou that I - so 7 minutes late. The rules ofdprocedude ao provi-orumat a qes:mmmof tha Coraittee is provimed by a sirple md,ority, ahave s we .vc- a lot of work Chair might, onC'.a.ir on occasion, feel itained, istrni-ne6, f petple arerla-e in ar.iving, to obsurve thBt rtle. before we comi to t he fJrst item of to-day's busouldsa I sh--ul &lso like to gates of the ele'..ates rule about correctionmmto the su..ary rocor.m Thecorde has been distributed this morningcl t"is :or. :will find it on the table. The rule provides thate rule that nts you desire should be communs youd sonitate- to che Secretary oIthin 2distribution. As tri-but oAs tomorray is Sundcl, there will be a diuntil Monday morning.1' Ion..ay i-n-. EROLIU E e RoSE n(Franc.) (speakig in French -::: interpretatio) . pdrlisideontd, I-oul' -e vaw your athtenti-on ato tl:e ct th-t the Freench tmMext of th suar's my of yesterdayeeting has not yet bdeenW d6ouldtri-te'. itiwvuike that-in out c`iat I i-sof the utmost iDportance that the Frould texdistributed GtriJ-utec at ehe scae tiglish the Enrszll text. THE CHAIFMAN: The Secretary informs me thabeingis now oein- printed an. --i be availablem i- a few -nutes. The 24 hodurs plus a fy willfor Sunfy oaf course, .ply imeom the tl-mthat ii is distrl- _Ited, But 1mightk we a-Igh recognise that ahe secretcrial machJneg s rundinf in anC perhmis a feg iinutes Prace in this d.fficult businesd og provi in! verwoons inageC mangui.Es .ight be allcwed, especiamly as we iet rrther late yesterday. I think the Coo ittee agreed yesterday ighat it ml:ht turn its afirntion 'I-st ngis :aornln go the sug-estediagenda whlchiwas distrdbutec, ane I hope the French delegate well bj abli to Join 5n the discussion on the English tehas if he al no French text. *WORMSERER .ance-S (Fremcc) in erking Jn F:enph - Interxretation) I have it, 2. E/PC/T/C.IV/PV/ 2 Mr. H. BRCADLEY (UK): Mr Chairman, might I just make a general suggesion with regard to the agenda. It does appear to us that this agenda covers the main points but I was wondering whether this Committee would feel it would be an advantage, once it has decided on the agenda, not to plunge into it item by item at this stage and have a detailed discussion on each subject, but rather that the different delegations should bring out the main points which arise out of this question of commodity policy. Thereare a number of aspects of it which are not explicitly stated in this agenda, but I am sure we all have them in mind, and if we could each in turn, as it were, bring out the main points that we wouldaz wo Wu.old 11ie to perh;hasise, lrehapsd with thh g iea ofg sapiithis aenda Into whmately be per-.ateli be haps a list of the main issues on which arwan,ements -ill be ,called foperitps hel corhas he-lp us in .a.n ordthestroblem; ho pmreliez:end thwn lator on re can take yhem ite..b, item and perhapssome decis Cone ociions on them. : WCHAIB~ A ..eghave a sug-estion before us from thg United Kinpdom y in which we should h h wsh shulstart on our business. I cannot believe ohat ot is s- ast nishing ashe o olereduce tr wh Committee to s-ence, ERRAJ: . J.A :, The Cuban delegation bel-ieves thaa E general discussion of the subject of commodity arrangementts praobb ly will bae useful thing beforeg oing into detailed dis- cussion:it will giveiv every delegation a generaldifea of the position of the others, That may be helpf.l, Professor de IRTES (thetbrlands):M Xr Chairman, I ree e with the point of view of the delegates of the United Kingdom and Cuba, and in my opinion if wea tke item 1 of thegenda, a itis verwy ell suited fogr eneral discussion. It starts with general policy. Ti CHAIRMAN: ArAIRIDAN: Are there anyothrem-ark1:6s? 1 HAKIN (Mebanon): l: ould man, w-:-ulft noa be necess-ry to adopt this agenda beaore we steralany geneip1 discuss on? 3. E/PC/T/C.IV/PV/ 2 THE CHAIRMAN: I was not quite sure from the United Kingdom delegate whether the suggestion was that we should adept this agenda but agree to have a somewhat general discussion on it first, or whether he wanted a general discussion before we adopted this as our agenda. Mr BROADLEY (UK): Mr Chairman, perhaps I should explain. We would regard this as agenda as being a very good starting point, and if the Committee would wish to adept tnis agenda, I think it would be very helpful. What I had in mind was that, having adopted the agenda, we should not then spend a lot of time on each detail separetely until we had had a view of the whole subject. THE CHAIRMAN: Would that be generally agreeable to the Committee? PROFESSOR DE VRIES (Netherlands): Mr Chairman, I should like to put forward two small points on the agenda. The first relates to point 6 (a) and (b). In my opinion, we cannot leave entirely to the Fifth Committee on Organisation the relationship as to United Nations agencies. You can say outside relations on this commodity policy; for instance, there is the Monetary Fund, the Bank, and so on. And so I should like to put in a point: (c) Relations as to United Nations agencies. THE CHAIRAMAN: Would any delegation like to express an opinion on this particular point suggested by the delegate of the Nether- lands? Mr BROADLEY (UK): Mr Chairman, feel that these are the sort of points that would come out in a general discussion and, rather than each of us suggest now addltional points dropped in at various points in the agenda, if we accepted this as the basis of our discussion, out of our general discussion woould come such points and probably many other points which would then be fitted into a revised agenda for a detailed discussion. 4. E/PC/T/C.IV/PV/ 2 THE CHAIRMAN: Perhaps the Chair might make a suggestion designed to facilitate business: that we should adopt this agenda provis- ionally; go on to a discussion of a general nature; and that at the end of that the Chair, with the assistance of the Secretary, would put forward for discussion in the Committee a list of points which then require particular discussion; and I take it that the points suggested by the Netherlands could be picked up at thatU at tht d fitted in. Though, of course, there is no difficulty,re iJs n to me, if there is some point arising in connection with i-n coon wvth other United Nations organisations which theti-cns or-ani-shl the e to make in the general discussion : it aLi-a) i-n tulhe g t.1.1 not be r-led o'"' 1J, AJ*f Bi-_: Mr ChUnionMorChSouth Africa) i1 airman, is it t specific suggestions of any sort? sp£ecciic suggcestIo? Would it bo of c~ st onetance tt ycu im toany wamtso o make a sub-ite: t- hat he shouuld state i? Thatts kig ti Sss1. stat ? Th yg inea& lgenda.: th a MAN: If the general scheme of conducting i; iIL tess which seems to be growing up is accepted, I should be very glad of any suggestions as we go on. I might leave it to delegates just lea-;. i-t to des ,lust g to the chair as matters which we couldto the, Chair as matterscould po-lts intlistdi as -c.&o-idis issuhch would require Lascsion sftnr the oueral discumitol. W -ld the Com.-.tee be willing to hafopt that geraA scnemieof conducting our business? thenrwell;se:-)henVery- ;. t-'le hat is adopted. If I might vhhope to ex-reish ar ;-e from ti- Ca.- at this polnt, it is iscussion will not f conf st too much ol set speeches d-t will be conaucted tn a manner sui able to a private .tmmiPte- ry no ia .lena:,-Sesslon, .r BBMADCEYi mUn,K) ir Oha;rjua may I raise Jst one other point of procedzre. I apolognIe for speaki-gwsuldo much; but -o the that it owouldebmthelpful if, whenaiee wouch o woud b on cehainatecanicr, points. it would be permitted for other members E/PC/T/C.IV/PV/2 of a delegation, apart from the ones sitting at the table, to be asked to join in?? HE CHAIRMAN: Would that be generally agreede? (Atecr a pause:-) ell, we will decide that in that sense.n. . CLAIR WILCO. (U(USA):Mr ;rChaman, are you ready to begin thehe neral discussioncu? E CHAIRMANki:I ho;p the Committee is now al readt -begin thehe neral discussion. Very well, we will wproceed to ahUt now. CLAIR WILCOX - (AS"): fI soI T ould like to say a few wordsw- out the relationship between the work of this Committee anand the wk of thjeipreparatory Committeete igeneral. I do not haveav aesst speh and i shall try to make my remarks as fitting as as poibklo oa private meeting. We do feel that in the field of n the field of imary commodities there are peculiar economic circumstanances ga do not apply to commodi5tes in general or to mamanufactured ods in pait cular. What I hjae in mind specifically is t-Fhe ct that you may have stample commodities that are .oproduced and aded in large quantity in international commerce produced bycodu:ol;cdv! b of shall producers in many n zany j .rtsof the world; nd does not respond very rapidly to changes inraidly to cin a decline in price will not result in a proportionresult in a pr- of consumption; nsuzI production is similarlyoCn D s si1ila ere a decline in a price cannotin in -pric;E' result very quickly in a ctheraction of * praduction of th tmmarticular co-zodity o anCd- tf.,i_ f hesources io tof some other v1 :i oth'r 0 coM-noci-The result of that hituation is t1at there may be a perecipicprices in such markets which, h - z;hets hbecause of portanceic znoortnmodiof the com.zoity produced in the economy of ;zanrbecause s and ecai seof the large numbers of producers s production and slaroduction asale, preadd reper-sre: d ational economies.al e oia :es, circumstances does not ordinarily occur .inzarily occin the actured goods. -u 7:sed'e of manufactured goods in ed goods in 6 E/PC/T/C.LV/PV/2 general you will have more elasticity of demand; a decline in price is more likely to expand savings; also you will have generally more elasticity of supply; a decline in price is likelyJAkejy ult rather quickly in a contraction of production.'-'ut B-_t in the casicularly of the great _.reaagriaultuapl stshats thia does not occur. a As c rehere is likely to be, for under- unde blea.ndab reasons, pressume froz prodwcers vitdin ina-vidual countries upon their mevernz;nts to taken ctiolhfor t2eir protec- ti-n, and tme for. hhat tytection may take is all toool too likely to be that of national meashires wich ajudre preicial to thainterests odf erofcors in other countries; that is, such. uni anational -.Vio acmion :ay take tmeofor2 Cimposition l- of 2oc.rqor the utilisation1-situpoof exortd subsiies, or some a device.rsii -ce. al programme upon which we are embarked is a-re -.r eing international trade from such oz restrictions asnearly as be. SuchT unilateral ictuowould 1 'be inconsistewt -ith this gramme. .. It, therefore, incumbent upon u;ous to consider, in supporf o tgeneral line of p opoliwhich we seek here toere effectu,te. to provite hat the approach toethEse special modity problems should be a multilateral approach arather than . unilateral epproach. In tpe -ashese cseproblems have been approached hoc, commodity by :s:commodity, wiimprovised i ssolu- tivns - not in terms established international policy l c and pro- cedure. Ouope would be that we shouldsho formulate in this area ablished international policy; that wee.e should sep ur ihjisn area agreed international procedure; thwt ve should create here a hanism sm which coualways ys ba c.lled upondan. relied upon to meet this situation; and it is our view that the successful solu- tion of this problem is essential to our whole enterprise, and that wf ;o do n-t succeed in ving it, our enterprise lasa whole ie as erilled. That is, we might lay down rules!n for the freeing of deace, rules that placeimita-Jttions upohe ! uoe cf export AE E/PC/T/C.IV/PV/2 subsidies, rules that placed limitations upon the use, of quanti- tative restrictions; but I fear that those rules could not be adhered to if in the case of individual commodity situations severe declines in prices accompanied by widespread distress could not be met through some method of agreed international action. For this reason we believe that this chapter of the suggested Charter is essential to the whole and that the work of this Committee is of crucial importance to the work of the Preparatory Committee as a whole. Mr. B. N. ADARKAR (India) : The Indian Dlelegation will certainly agree that a multilateral approach to this question, as has just been suggested, is desirable. The past practice of tackling these problems commodity by commodity is not going to be suitable for the future. It is certainly desirable that established machinery should be brought into existence to deal with this problems as and when it arises. At the same time, we would like to stress that such machinery should not be brought into opera- tion only to deal with cases of chronic disequilibrium as seems to be generally contemplated in the proposals put forward by the United States expert, but it should be designed to promote stability of agricultural prices over a time. The danger of unilateral action being taken arises not merely because primary producers in individual lines of production are in a state of over-Production at some time or other, but because they are all anxious, particularly at the present time, that the Governments of their countries should take some measures to protect them from a probable decline in prices which is likely to take place as soon .as the present state of things is over. They are also anxious to secure some measure of protection against short-term fluctuations of price arising not merely from cyclical causes, but from very short term causes operating within the span of a single year or a single season. Even such short time causes can bring about 8. E/PC/T/C.IV/PV/2 quite an astionishing degree of instability in primary prices, and instability of-prices is a very potent source of insecurity in all primary-producing countries. Such instability is always a very potent cause of trade cycles, because the demand for in industrial products depends largely on the consumption of the primary producing countries. We believe, Sir, that the primary prices are likely to be subject to a special degree of instability in the years to come because of the probability of a greater measure of Government interference in certain countries and the threat of substitutes to which the various primary products are at present exposed. We suggest, Sir, that in addition - ~~ - U~ U U-l QO~~ to calin::.i-h the problc-2 over-pro-uctio o n. res-t of individuaC comC::tes,sv.d o-iv 1:.asurehould b; Jevised to promote rea er st-blity- f prices b Ov O n..Jn . 2Ce f' mUaott b jtv -a, In-n-- th s', n.n_,nr. sche.e 'Oufer f SinternationalOC': r1ec:- htz -U h1.1Ie orsi J o U tbdeuffer stocksq is -Lt ..el-e and wl i.re ver we§twoulelCl5k les boUa ognised tha. thi -r l - be*_ c-FJ- 1 Cwhaton- inshud tu aht t sh uldn;nto eact and E.oj sugsv earl ongoma uhe m,mbet:a-fns a1^ c :eo the Cmm e w t 'a vi,wj, Cih .Ue L to \visl-7 asugreaeer e soir urt-o s\tiliul; f Epgr c-lul rices. 7-the absence oaf i-nernr.toal m , aersareures * e afrai.dthat di membnrt wil -e.s.-pursue ma.uonpo.ictioos ID of priceo suppcr ll haan -l to doa thw-ggt .into thne ery atgre- pressuroe cf a i.ultural interestsiw i :hr i tte1 oie-reJoi I. _ih ti v ldee- opnnt ktalplacs, , i 5w --l hamper ethfogperOes of internati-nal c-operaton inOr o hc.r fei-ds, because i tw -udl: be very very fffi ult to treat pric: policies and u&ade poii-ils zin isolatlon. 9. E/PC/T/ C. IV/PV/2 MR. J. T. DETTSCH (Canada): Mr. Chairman, the Canadian delegation is fully in agreement with the emphasis which the United States delegate has given to the importance of a multilateral approach to commodity policy, and we are much indebted to the United States delegation for having put forward a detailed scheme which they have included in their draft Charter. The have very considerable sympathy with the point of view expressed by the delegate from India. We feel the suggestions in the United States Charter are perhaps some- what too limited in their application to commodity matters. They invisage agreements largely and almost entirely in cases of chronic surplus conditions. We feel that that limitation is, from a practical standpoint, too restricted, and particularly at the present time, Where we are in most cases in a condition of scarcity. The outcome of the present conditions of scarcity may, in important cases at least, if there is no international agreement at the present time, lead to very serious mal- adjustments and give rise to very exaggerated difficulties in to or three years' time, which will be very difficult tb deal with even with the commodity agreement. We feel that in/some instances at least, particularly in important international commodities, others should be a possibility for the development of agreements now in cases of commodities which we know from past experience have been subject to very ride fluctuations and have been at times in very serious difficulty. We feel that any provisions that are written into the draft Charter should leave fully open the possibility and in fact envisage the development of agreements in cases of that kind. 10. E/PC/T/C.IV/PV/2 Secondly, we also have a great deal of sympathy with the views expressed by the Indian delegation on the import- ance of developing international schemes that will assist in the stabilisation of raw material prices. We realise that this is a vary complicated field and we feel that there will have to be a good deal of experimentation and effort in working out arrangements which would help to achieve somewhat greater stability than we have had in the past, and I think the provisions at present in the American draft Charter do not allow for the flexibility and experiment- ation that would be necessary in that field, particularly for schemes which do not necessarily involve restriction. That is important, not only with respect to the position of individual industries, but is a matter of considerable importance to countries which rely heavily on the export of one or two commodities which are subject to violent fluctuations. It is not merely a question of the position of those industries, but the position of the entire economy of those countries, and countries in that position will have great difficulty in accepting all the obligations of an international trade charter unless there is some hope that there will be less violence in the fluctuation of their export prices than has happened in the past. Therefore, we feel that the provisions that are put into the trade charter must provide a place for the develop- ment of schemes of that kind, and that the provisions them- selves will have to be fairly flexible, to allow for a great deal of experimentation in a field where we have had very little experience, at least on an international basis. MR. E. McCARTHY (Australia): Mr. Chairman, since the subject of action that might be taken in regard to international trade first came under discussion Australia has attached 11 . E/PC/T/C.IV/PV/2 a high degree of importance to the possibility of making effective international agreements in relation to major primary products, because it is a big exporter of primary products. Over quite a number of years it has faced the troubles that the variations in prices in the international markets have brought. It has had the experience, as Mr. Wilcox suggested, of being driven beck on national policies, which had the effect of ameliorating conditions temporarily, but over a long period had the effect perhaps of aggravating the conditions -ith which it was originally faced. We believe that this is one of the most important sections in the whole of the schedule, set out by the Preparatory Committee, because we think that if effective commodity agreements are made it will go a long way to remedying the difficulties or remedying the various impediments that have been put up from time to time to international trade. It will also enable the peculiarities of a particular commodity and the particular conditions of the countries interested in those commodities to be dealt with, and on that point I would emphasise that in our view the general conditions governing these agreements might not be very great in number, but that the real details and the real difficulties will be tackled in the individual commodity agreements. There are a few principles to which we could be quite ready to subscribe. I till just give one example, and that is, it should be stated as a principle in all commodity agreements that consumers have representation equal to that of producers. I mention that as the representative of a country that will be almost entirely concerned with the problem of export. 12. E/PC/T/C.IV/PV/2 I find myself in agreement with comments by the Canadian representative regarding the conditions precedent to making an agreement which the American representatives have set down. Like him, I am very sensible of the work that has been done on this subject by the Americans. They have come to grips with it when other countries have not come to grips with it, and they certainly have given us a plan upon which to work. I do think, however, that they have shown some desire to over-examine the conditions prior to thinking whether an agreement might be made or not. The words "burdensome surplus has developed or is developing" have come into our consideration of the subject quite a lot. That will be dealt with, no doubt, when we come to it on the list, but we know there are certain products where there is no burdensome surplus at the moment, there is not one developing at the moment, but we are absolutely sure that one will develop, and if we are certain that it will develop I think we should get to grips with it at once, rather than go into studies and prelimin- aries that might take quite a long time. On that point I will be more precise when we come to it in the agenda, but I would wish to make a distinction between those products the/history of which is well known, the data in connection with which is full and complete, and those products where some explorations and some studies have to be made. I do not think a study group is necessary to deal with wheat or sugar, for example, but it might be necessary that a study group look into the problems of, perhaps, .oil and fats, where there is quite a range of products and a variety of products; and even in the case of meat. We will also seek to make some distinction between the 13. E/PC/T/C.IV/PV/2 various forms of agreements and to discuss in some detail the conception of the buffer stocks which was alluded to by the representative from India. We think that in some cases buffer stocks will be of importance. In other cases we doubt whether they will be applicable at all, but where they are not suitable we would suggest, I think, that some other form of international agreement or some agreement -ith other forms of regulation may be introduced. I doubt very much whether buffer stocks could be applied in any degree to meat and butter. I believe that they could be applied to a very full degree in the case of wheat and raw wooll. I only quote those as examples; I think that is all I wish to say at this stage, Mr. Chairman. There are various pcints that we will raise as we go along. We are definitely in favour of commodity agreements being fully examined by this .organization with a view to their being entered into promptly. I repeat the one point that I did wish to make in the general discussion - that re do not want to wait too long before getting down to the actual negotiation of agreements in relation to certain products. We might wish - though necessarily we could be guided by the discussion to a degree - we might wish to go as far as suggesting that negotiations for agreements for certain primary products be carried on next year, when the tariff negotiations are in progress, but we could like to thresh that out a bit more in detail in this Committee. MR. H. BROADLEY (United Kingdom): Mr. Chairman, at this stage, so far as the United Kingdom delegation are concerned, there are just a few points of a general character which I think we should like to lay before the full Committee. E/PC/T/C.IV/PV/2 We agree very much with Mr. Wilcox that we must see the problems which this Committee is considering in relation to the problems which the Preparatory Committee as a whole is looking at, and we do attach great importance in this connection to the work of Committee I on Full Employment Policy, because we do feel that if a full employment policy is successful on an international scale that will go a long way towards stabilising primary production. At the same time, the stabilisation of primary production which we may be able to achieve through commodity agreements which are reached on some general international pattern till itself help the full employment policy, and therefore we must not look at commodity policy alone; important as it is, as a self-sufficient subject, but as part of the whole question which we are going to deal with in the Preparatory Committee as a whole. I welcome, too, the comments of our Canadian colleague, that re want to see this discussion go as far as possible. We are very anxious that the result shall be a positive result and not a negative result. We do not want to think of this problem in terms of restriction only. We want to think of the contribution which it can make to stabilisation as a, whole, and I think there are other issues in addition to those that are mentioned in the United States draft Charter, helpful as it is, that we must consider in the course of our discussions in this Committee. I was very glad to hear the Indian delegate refer to the question of. buffer stocks, and to hear the subsequent comments which were made by other members of the Committee. We feel that buffer stocks is a matter which merits very very careful consideration. At this stage I would not propose to go into all the merits and difficulties of 15. E/PC/T/C.IV/PV/2 buffer stocks. We rocognise the great difficulties, financial, administrative and management problems which have got to be dealt with before we can really make up our minds finally as to ho- far buffer stocks and similar devices will be a real contribution to this problem, but from a preliminary study of suggestions that have been made in the past with regard to buffer stocks we feel it should be one of the steps to which we should give thought and on which we should give some guidance in any report that we We do recognise, as i think Mr. McCarthy mentioned, that buffer stocks are not swited to all commodities. They may be suitable for non-perishable commodities, but when you come to perishable commodities you do have a very different problem, and there again there are positive measures at which Mr. McCarthy hinted - such things as longish term arrange- ments and contracts of that kind which may help the producer and at the same time help the consumer, and enable us to inaugurate something in the nature of an international planning of commodities to meet the difficulties which have been experienced in the past. But when we have consider both those and other devices that may be associated with them, we still shall be faced with the problem of surpluses from time to time, and we do agree very much with Mr. Wilcox that these problems should not be treated, as in the past, on an ad hoc basis. It has been the habbit, when there has been a particular problem, to call together the countries concerned to endeavour to devise a solution - or perhaps only a part of the countries that are really interested in and affected by the problem - and to draw up more international convention -hich perhaps lasts for a time or perhaps does not last for E/PC/T/C.IV/PV/2 very long, and I think the reason why these conventions in the past have been so uncertain and have not short any real signs of durability lies in the very point Mr. Wilcox made. We have not approached these problems on the basis of principle, and for the future, although we do not rant to approach individual commodity problems on an ad hoc basis, we shall have to consider the special problems of particular commodities. Nevertheless, we do want to consider those Problems of particular commodities under some general umbrella, under some general preliminary study which has been given to the various measures that can be adopted to achieve stablisation - and stablisation not only in the interests of the producer, but, of course, in the interests of the consumer, too. There again we shall no doubt be brought into touch with the work of other Committees of this Proparatory Committee. At certain points no doubt quantitative regulation will come in. It may be that something on the lines of a temporary arrangement will have to be adopted to deal with a particularly urgent and temporary problem which cannot be dealt .ith by the long term arrangements of buffer stocks, contracts and similar devices of that kind, and thereof course we shall have to look at even a temporary solution of the problem from the point of view of its effect on trade as a whole, on the producers on the one hand and on the consumers on the other. I think there is a phrase in the draft International Wheat Agreement that is a very helpful thought on the subject. When that agreement is talking about price it is endeavouring to arrive at a price which shall be fair to producer and consumer alike, and I do think we must bear in mind the interests of both. That is why it is so important, 17. E/PC/T/C.IV/PV/ 2 as Mr. McCarthy suggests, that in any organization which is set up, either to d eal with the general problems of commodity policy or the specific problems of particular commodities, there shall be adequate representation of the different interests, whether the producing interests or the consuming interests, and e like to look forward to some sort of arrangement where, if anything in the nature of quantitative regulation is temporarily adopted, it shall be associated with provisions which do contemplate a gradual decline in prices until we return to an economic balance, and also a provision to see that the shifts in production are properly and fairly directed to efficient production in the most economic areas of production. In adittion, of course there are either devices that will be referred to. There is the price system, whereby a burdensome surplus for a temporary period may be disoised of at - I will not call it bargain-basement prices, but at some special price to help needy countries on the one hand and to dispose of the surplus on the other. There again, that is a device which we think should be considered. We see great difficulties in it. It may have repercussions on international trade to a very serious extent-, bI t `.ae-rthelcss lot usc give our thought to that pwodlem. ;Le do feel that thrhere such a device is adopted - and there may be cases could usefully be adopted - the burden should substantially fall upon the producing interests, and that tere there is a tio-price system thecz should be a gradual decline in the top-price to what might call the normal price until the economic position has been restored. When we come to apply our general principles, there 18 E/PC/T/C.IV/PV/2 again I think we shall have to adept as I suggested earlier, a commodity by commodity policy; not the old commodity by commodity policy, each operating independently, because there I think the Indian delegate was quite right. That only led us into difficulties and trouble. Commodities do differ. I mentioned before the question of perishability and non-perishability, and there are other differences. Some commodities are foodstuffs, some are raw materials, some are minerals. They cover a wide field, and each commodity does have its own particular problem, so that when we have reviewed the problem, as a whole and endeavoured to arrive at some general principles which can be embodied into a report or a charter, then I think the next step will be, as Mr. McCarthy suggests, to take particular commodities and see what is the best procedure, under the general principles we have adopted, for dealing with the problems of particular commodities.. think we should also bear in mind iin ourdZicussionsc that,fortunately or unfortunately, we are not nthe only ocdywvhich is at thepresent moment or will in tthe very ear future be cconcernedw-ith this a-rticulrxproblem,e As I tink everyone knows, the Food and ;g:i culture Oganizantion iscaollig. a Conference in Washington, and they ooowill be considering, smewhhat reateed problems, and it si vry eimoprtant thta these to examinations of the problem shall, so far as p ossibl,e march side by side, and w e uro parta re very an xoius indeed that one solution shall ont eb devised inW ashington and aonther solution here in Lonodn. Hee wre are ccnsierdig a wnider problme. t a-e ,ble to look at comm^dity-arrangements in reward to the wide problem of commercial full employment, general world prosperity conditions. Over in Washington they have 19. E/PC/T/C.IV/PV/2 a particular food problem, and the Food and Agriculture Organization is limited, of course, to food and agricultural products, but it is to be hoped that the different delegations here and in Washington will be guided by pretty much the same directions in the recommendations they put forward. There is just one point that arises out of that which I think is worthy of consideration. We are all looking forward to the establishment of this International Trade Organization. Naturally, we have got to tread a little varily. There are a great many problems to be considered, not only in regard to commodities, and because of that it is obviously going to be some time before we see our dreams realisod and before we see an International Trade Organiza- tion in operation, and it might be desirable that we should contemplate in the meantime - and it may be that the Washington tallks will lead to the same end - the establishing of a commodity organization, or agreeing to the desirability of a commodity organization, which, where there are important problems arising (and I do agree with those delegates who have said that we must not wait until the burdensome surplus appears or looks like being upon us; we have got to give cur thoughts to these problems well in advance) could deal with the problems which are so much troubling the Food and Agriculture Organization, but with the object that, in due course, when the International Trade Organization is set up, that commodity organization should be brought within the International Trade Organization and not be an independent body , because it does seem to be more naturally associated with the International Trade Organization and its -ider responsibilities than with any organization which is dealing only with Food and Agriculture. 20. E/PC/T/C.IV/PV/2 Those, Mr. Chairman, are just a few general thoughts. When we come to particular problems like buffer stocks, quantitative regulation, in so far as it affects this Committee, and dealing with particular commodities, I believe the United Kingdom delegation rill be able to make suggestions on these particular issues, but perhaps some of these thoughts could be borne in mind when you and the Secretariat are revising the : genda and trying to bring into it all the issues on which a useful discussion could take place, with the idea of making recommendations to our parent body. MR. JOHNSEN (New Zealand): 21. E/PC/T/C.IV/PV/2 MR JOHNSEN (New Zealand): I would like to say a few words on behalf of New Zealand at this stage. I do not know to what extent they might be affected by these Inter-governmental Commodity arrangements but I would like to support the view expressed by the Canadian delegate that any rules that are laid down are not too narrow, and that they should provide or allow for full recognition of the position of those countries whose economic structure might be dependent on the export of a narrow range of primary products. Obviously, if the general objective of the I.T.O. is to be achieved, some provision should be made which enables a measure of stability to be accorded to the conditions of such commodities and countries of that type. We are in full accord also with the view expressed by the Australian delegate, which has been supported by the delegate of the United Kingdom, that the interests of consumers as well as of producers should be considered when any of these arrangements are being made. MR BEYEVELD (South africa): Mr Chairman, from the remarks which have been made so far I think it has been shown that this Committee is probably called upon to deal with a wider field of problems, on which we have have very limited experience. The other Committees probably have to sort out and find the best practices from a whole range of practices which have been in operation. In this Committee we have a certain amount of experience from unilateral and bilateral action which has been taken in the past, and in most of those cases those arrangements were simply a question of expediency, but one can hardly say that there has ever been a definite. multilateral attempt to put arrangements of this sort on a sound and rational basis. The Canadians have stressed the question of shortages and also brought it into relationship 22. E/PC/T/C.IV/PV/2 with stability. I wish to support that most strongly. At the moment we have an endless number of measures which relate in particular to shortages, and I do not think we car assume that those shortages would disappear within a very short time; and the provisions which we now con- template in this section should not only provide for surpluses but in order to attain stability we should also have provision for shortages. PROF. de VRIES (Netherlands): I do not want to bring keys to open doors; we are here a Committee of experts and the results of our deliberations will be brought into broader form at the end; but I would like to put forward one or two points. First of aIl, what are we talking about? That are our primary commodities? Primary commodities have been defined at a Convention as including foodstuffs and raw materials as opposed to manufactured, goods, and we ought to speak about those things before we go further. If it is shown that we are speaking here of foodstuffs, raw materials, fibres, woods and minerals as well, then, to stress the importance of these problems, I can quote figures from the League of Nations files giving the imports and exports of 62 countries in respect of them. I have gone into those figures and I have found that 42 countries out of 62 have in their exports more than 90 per cent of primary commodities, and only 9 countries go below 50 per cent in their exports of primary commodities. Those 42 countries are nearly all small countries, weaker than the bigger countries, of course. The really industrial- ised countries show figures of only 9 to 13 per cent. My country, the Netherlands, is an industrialised country, and its overseas territories are among the producers of primary commodities, so I am in a position to speak for both consumers and producer alike. If we go to the root of the 23. E/PC/T/C.IV/PV/2 problem as it has been put forward by Mr Wilcox in his address this morning, he came to one point at which he said that primary commodities are produced by many millions - indeed, more than a thousand millions - of small producers all over the world, mostly. in what we call the overseas countries. I think there is still one more basic reason why in these special problems there are many similarities. Even mining has problems similar to agriculture. One cannot say that a mine is among the many millions of small enterprises, but it has some things in common with all primary commodities, because in this type of production Nature is more important than man; and, of course, in industry man is more important than nature. In the case of agriculture, one cannot change soil and one cannot change climate. In the case of mining one has the same sort of thing: one is dependent upon the particular deposits of the ores and the geographical conditions where the ores lie. One has to take them as they are; they are unchangeable .gain, one cannot shift the forests of the world from one place to another. In industry it is not difficult to shift a factory to another place; it is not difficult to change from one industry to another in times of need. I believe that is the fundamental reason why primary commodities cannot be adapted as quickly as is necessary in a changing world, where one might say that industry is the leading instrument in the orchestra of economic life. This is, I suppose, the basic reason why the producers in such a lot of countries - more than 40 countries in the world - are stressing to their respective Governments the need for giving then protection against changes over which they have no control, and to which they cannot adapt themselves in a short time. A farmer can change from one type of agriculture to another; he can do it, 24. E/PC/T/C.IV/PV/2 though it is not easy for him; but if he has to abandon his fields (and in the last great depression many farmers had to abandon their fields) the loss; not only for the producers but for the whole community and the whole world, cannot be replaced by a new boom: the soil is spoilt. If you open a mine, and then later have to close it, and then re-open it after twenty years, that mine shows an enormous loss of capital. As a consuming and producing country the Netherlands delegation firmly supports the general idea that we should come to an agreement to take deliberate multilateral action, and that it should be positive action; and that what we need, in the words of the Australian delegate in the plenary session, are commodity plans, and commodity plans not only relating to price stabilisation, which is very important, but commodity plans in the whole field of commodities, and including trade and production. I think our past experiences with commodity arrangements have not been very happy because they were too narrow; they were or too narrow a basis. There were, again, some commodity arrangements which were on a proper basis, with Councils of consumers and producers, both sides equalIy represented, and I think in that case we can learn something from the past; and I would bring before the Committee as a general idea that in some case we might call before us people who have experience in such matters, people who have been engaged in concluding wheat agreements and who are contemplating commodity agreements in the future of various kinds, and I think we would benefit by having their advice and views on such matters as production schemes, and so on. I think we could learn a lot in that way. THE CHAIRMAN: I think it is the duty of the Chair to remind the 25 C4 C5 E/PC/T/C.IV/PV/2 Committee that we have a letter from the International Chamber of Commerce to consider, and that there are also two other items of administrative business to which we ought to turn our attention. It is now a quarter past twelve. Would it be generally acceptable that we should leave the general debate at this point and return to it at our next meeting? Is that agreed? (Agreed. ) May we now turn to the letter from the International Chamber of Commerce which has been distributed It is E/PC/T/W.17, of 18 October 1946. I think I ought to inform the Committee that I am advised by out officersicers that, under Rule 46 of the Rules ocedure, it. is not provided. for theg non-overnmental agencoes t send observers to mgetin?s of Commi.tees, That is the first request, made toward's the end of their rette-. Or the second request, that ia, thet th_ Internatio:nl Chamber of Commerce should be allowed to state itw vie-s on specified questiIns, 7 am informed thah eaci Committee may decide whether the reqfest onr cDrtultavion should be granted and, if granted, an appropriateedrocciure agreed to for consult.tion If I mightmptteomzpec s-ped uo our proceedings, I would like to suggsst a. a possible way of handling this letter that the tecrezarwhen(-:m- I say the SecietarLat I mean not the Secretary, os thimiComi.ttee but the Executive Secretary and his adviseri, th.s letter being considered ey thc oCher 1ommstteeo as wsll) -hould be invited to reply drawing attention to the Rules of Procedure and asking on what specific points the International Chamber of Commwrce ,ould like to present thiew v-ieW. Ye could then decide laner or what was the mostoapprteriaat way for those views to beepres,nteds if we wisoed tc hear them. Would that be generaccy anneptable? &A MHCiRTKY (AustraliaW: 'ould not the tecre;ariat like to have 26 E/PC/T/C.IV/PV/2 our opinions on the two major points? I particularly am of the view that we ought to tell the Secretariat that we do not wish these people to be present as observers throughout the proceedings, or except when they are advised to the contrary by the Chairman. My opinion is that it would tend to restrict the freedom of discussion; and if there is one thing we do want in these discussions it is frank and free expression and exchange of views. On the other hand, I think that we might agree for them to have an opportunity, perhaps on a day specially set aside for the purpose, to state their views and to ask questions. I am not sure whether we should tell the Secretariat that or whether they should tell us; but, if the Secretariat came back with the view that they ought to be allowed to sit in as observers throughout our proceedings, I think I would find myself a little concerned at that decision. I would like to make it clear that I am not suggesting that uniformity is not desirable and I am not suggesting we should make a decision independently of the Senretariat, but whether we should not just give then an opinion. THE CHAIRMAN: If I might attempt to clear this point up quickly, the advice of the Secretariat on the interpretation of the Rules of Procedure which have already been adopted by the Preparatory Committee as a whole is that continuous attendance of non-governmental bodies at one of the working Committees is not permitted but that it is open to any Committee to decide when it would wish to see such an organizations and how; that is to say, whether in full Committee or by a number of delegates appointed for the purpose to consult with them. My suggestion was, therefore, that to answer the first request from the International 27. C6 E/PC/T/C.IV/PV/2 Chamber of Commerce, which is to have an observer at all meetings, we should simply invite the Secretariat to point out that that is not constitutionally possible;but that on the other point we might be in a better position to decide how often, when, and in what manner, to see these people if they were to give us a short note of the sort of points they would like to bring up. Now, would that be agreed . (Agreed.) The next business is that I regret to have to inform the Committee that our present Vice-Chairman has had to withdraw from his position. The Norwegian Delegation has found it necessary to make some adjustments in the attendance of their delegates at the various Committees, and therefore Mr Robberstad, who has been taken away to another Committee, cannot continue as our Vice-Chairman. MR McCARTHY (Australia): Mr Chairman, with you I regret that Mr Robberstad has not been able to assume the duties of Vice-Chairman. I think it would be appropriate if his alternate here, who is going to replace him, were elected Vice-Cnairman; and I accordingly move that Mr Melander of the Norwegian Delegation be appointed as Vice-Chairman of this Committee, THE CHAIRMAN: I am sure the Committee agree with that suggestion. (Agreed.) MR MELANDER (Norway): I hope I shall not be called upon to serve; I hope we shall continue to have the services of our present Chairman; but, if I do have to act as your Chairman, I will do my best to serve the Committee. (Applause). THE CHAIRMAN: The final question before the Committee this morning is the date of our next meeting. I have heard rumours of a relenting on the part of our Secretary-General as to the number of Committees which should sit at once, 28. C7 and he is therefore proposing a re-arrangment of the way in which it is done. I have managed to secure from his office a copy of a note he is going to issue but has not yet issued. Perhaps I might, read part of it to the Committee. "It seems to me," he says, "that the best arrangement would be to have entire days set aside for the meetings of each principal Committee. This would mean that some days might pass when a particular Committee would have no meeting at all, but this might be an advantage as it would leave time for sub-committee meetings and for consultations between the Chairman and the Secretariat and the various Delegations. Another possible advantage would be that some Comittees might wish to meet in the Hoare Memorial Hall, and could, if they chose, expedite their proceedings by the use of the simultaneous interpretation system. It is suggested, therefore, that this arrangement should be given a trial during next week; and the consequential arrangement is that Committee II are going to meet, if this is generally agreed, all day on Monday, and it is suggested that we meet all day on Tuesday, with sessions at 11, 3 and 5. Would it be agreeable that we should decide as the date of our next meeting Tuesday, at 11 o'clock, with the proposition that we should go on at 3 and again at 5? I take it that is agreed, and that on the whole it would be thought preferable to meet in the Hoare Memorial Hall and use the simultaneous interpretation system? (Agreed.) That concludes our business. - The meetinp.m.se at 12.30 ' m. Z/ /- L ' " -V,,`?V,/2

GATT Library

bw714fh6336

Verbatim Report of the Second Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S. W. 1. on Wednesday , October 23 1946 1946-10-23 at 11 a.m

United Nations Economic and Social Council, October 23, 1946

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

23/10/1946

official documents

E/PC/T/C.II/PV/2 and E/PC/T/C.II/PV/1-4/CORR.1

https://exhibits.stanford.edu/gatt/catalog/bw714fh6336

bw714fh6336_90220002.xml

GATT_157

PAE a-1 E/PC/T/C.II/PV/2 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SECOND MEETING of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S. W. 1. on Wednesday , October 23rd, 1946. at 11 A.M. Chairman: Dr. H. C. Coombs (Australia). (From the Shorthand Notes of W. S. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S .W. 1.) 1. PAE A-2 E/PC/T/C. II/PV/2 THE CHAIRMAN: Gentlemen, I declare the meeting open. At cur pre- liminary meeting last week it was suggested that the Chairman should confer with the Secreitariat In order to put before the Comrmittee a suggested arrangement for our work. That has been done and some consultation has taken place with individual heads of delegations; and, as a result of those consultations and the work of the secretariat, we put before you the suggested outline of work which is set out in document E/PC/T/C 11 W 1. dated the 21st October. In that proposal, I should say that the undlerlying principle is that we should commence by giving all delegations the opportunity to state their views both on the proposals which are the subject matter of this Committee as a whole and also in each of their main divisions before we seek to refer that subject matter either to a subcommittee of this Committee or to drafting committees for more detailed work. In that way it is our belief that it will be possible in the early discussion on to focus the main issues upon which there is general agreement and the issues upon which further investigation and detailed discussion may be necessary before the existing measure of agreement or disagreement is known. Itemr 1 offers, therefore, an opportunity to discuss the central provisions of the work of this Committee. Item 2 gives an opportunity to discuss in general terms some of the very important technical questions which are also before the Committee. It is hoped that after a general discussion on item 2 it will be possible to refer those detailed technical questions to a sub- committee of officers who have particular competence in that field. We then propose in items 3, 4 and 5 to deal in more detail with the particular items dealt with more generally in item 1, particularly tariffs; preferences, quantitative restidctions, exchange control and subsidies. At the end of that discussion it is hoped that it will be possible for us to see a sufficient body of agreement, or, at any rate, sufficient clarity as to the 2. PAE A-3 E/PC/T/C.II/PV/2 principles involved, for us to set up a small working committee or drafting committee which could prepare an outline report or a draft report which would then come back to the full Committee for consideration, I shall be glad to have the views of any delegation as to the adequacy of this proposed outline of work. N. A. KUNOSI (Czechoslovakia): Mr Chairman, I wanted to ask you if It is understood that we shall start our work with a general dis- cussion. If it is so, I have no objection to the proposed agenda. If it i s not, I would propose that we should start with the general discussion in which all the delegations would state their attitude towards the points and the general tenour of this chapter. THE CHAIRMAN: That is the purpose of item I of the proposed outline, to give all the delegations an opportunity to state their case generally. Mr. R.K. NEHRU (India): Mr Chairman, will this proposed drafting subcommittee draft actual provisions of a charter or merely embody the views of the various delegations in some form of draft for the consideration of the delegations? THE CHAIRMAN:- I think that is a question which we postponed at our last meeting for later consideration, and I suggest that we post- pone it again to-day, because it is a question which does affect not only this Committee but other Committees also, since it would be desirable that the form of report should be reasonably common from Committee to Committee. At the end of our work today it may be possible for us to see more clearly what form we think the Report should take. I would suggest, therefore, that consideration of this question might be taken up at the meetings of heads of delegations which is scheduled for tomorrow I think, Will that be agreeable? Mr NEHRU (India): Yes; I only raised the point for the drafting subcommittee. 3. PAE A-4 E/PC/T/C.II/PV/2 THE CHAIRMAN: Can I take it, then, that the proposed outline of work set out in this document is acceptable to the Committee? (After a pausc:-) Very well. Before we pass to consideration of item 1 of that outline of work, there are one or two minor matters to /which I would like to refer. The first is in relation to the secretarial work, It will be necessary when we get down to detailed consideration of the various matters before us to have in some detail the various proposals put forward by the different delegations in so far as they affect the particular items which are on our agenda, and it would be a very great help to the secretariat and myself and to working committees and drafting committees set up later if the various proposals can be examined and tabulated. In order to do that, it is necessary for us to have these proposals, so far as possible, in writing. A number of delegations have already submitted their views in written form and work is proceeding on the examination of those; but it would be of great help to the secretariat if other delegations will place their views before the Committee, if possjble in written form. In that connection it would help if we could have views affecting the general commercial provisions section and the tariffs and tariff preferences section before the end of this week, and material relating to other items, particularly quantitative res- trictions and exchange control, subsidies, &c., not later than Monday. As the burden of work of that kind on the secretariat is pretty heavy, I have made tentative arrangements with a number of the delegations to provide some assistance to us by the loan of the services of some of their officers who are familiar with this work. They will be engaged not on any analytical or policy Work, but merely on the examination of proposals and the grouping of those proposals In so faras they are relevant under the partic- ular items. That will, I believe, greatly facilitate the work of drafting committees and working committees at a later stage. 4. A-5 E/PC/T/V.II/PV/2 I have asked those delegations to provide us with some assistance in this form where it seemed to me that in view of their familiar- ity with the work and the size of the delegations, they would be able to assist us. If there are any delegations whom I have not asked who would like to offer help in this regard, I shall be very pleased to hear from them. Finally, I have been asked to remind you that the success of the simultaneous translation does depend upon some consideration for the translators by the speakers. If you would speak somewhat slowly and pause occasionally in order to allow them to complete their sentences, they will be able to give you better service. We pass now to a discussion of the first item in the proposed outline of work, that is, a discussion of the general principles affecting most-favoured-nations treatment, tariff and tariff preferences, quantitative restrictions, exchange control and sub- sidies. I thank it is appropriate that I should call upon the delegate for the United States to open this discussion, Mr HARRY HAWKINS (USA): Mr Chairman, what I have to say relates for the moment more largely to questions of procedure for getting on with the work of the Committee. I think it will be well to consider at the outset of the Committee's work the ultimate objec- tive that we should keep in view. TheEconomic and Social Council, in its resolution of February 18th, 1946, constituted the Prepara- tory Committee "to elaborate an annotated draft agenda, including. a draft convention", for consideration by the International Con- ference on Trade and Employment to be held at some later time. The task of the Preparatory Committee is therefore to prepare a draft convention,which might be called a charter, or articles of agreement of the International Trade Organisation, or whatever title may be appropriate. The drafting of such a document would there- fore seen to be the objective toward which all of the work of this 5. E/PC/T/C.II/PV/ 2 working committee and the other working committees should be constantly directed. This does not necessarily mean that we should start immediately to draft provisions for inclusion in the charter but only that every thing we do should point in this Any international agreement relating to regulations, restric- tions and discriminations affecting international trade must deal with a variety of subjects such as anti-dumping duties, internal taxes on goods, tariff valuation and many other subjects. In taking up its work it would, of course, be desirable if the Committee could group together for consideration subjects which are closely related to each other. But since all of the subjects within the Commiittee's competence are closely related and we cannot deal with all of them at once, it seems to me we should select for first consideration these subjects which are of basic importance and on which the consideration of other in greater or less degree depends. This I take it is what the Chairman and secretariat had in mind. I suggest that in the agenda before you there are two such subjects. These are Item B, Tariffs and Pref- erences, and Item C, Quantitative Restrictions. Unless there is to be international agreement regarding tariffs, preferences and quantitative restrictions, there is no need to consider such excep- tions as these relating to the freedom of action to be allowed during the post-war transition period, or for dealing with balance of payments problems, or a number of other questions. In other, words, if there were to be no commitments regarding tariffs, pref- erences and quantitative restrictions, a large proportion of the other questions which have Leen listed for consideration would have little meaning. For these reasons the obvious starting point for the Committee is the basic commitments respecting tariffs, preferences and quan- titative restrictions, and I therefore suggest that this Committee 6. E/PC/T/C.II/PV/2 begin itswork by considering items B and C on the agenda. Since exchange control and subsidies are important and closely related subjects, Items D and E on the agenda should also be made the subject of early discussion. Now I should like to comment very briefly on each of these topics. with respect to tariffs and preferences our proposal is that the charter or articles of agreement of the international trade organisation should contain a provision that members would enter into mutually advantagecus negotiations directed to tho subtan- tial reduction of tariffs and to the elimination of import tariff preferences. The obligation of the countries concerned not to increase tariff rates so established would be subject to such qualifications as may be generally agreed upon. With respect to quantitative restrictions, our proposal is that the charter should contain a provision to the effect that member countries would not impose quantitative restrictions on trade, this commitment being subject to agreed upon exceptions, which should include exceptions on the following subjects: (a) The post-war transition period and balance of payments problems. (b) Import quotas on agricultural products subject to domestic restriction. (c) An exception for quantitative restrictions imposed pursuant to recognised commodity agreements. (d) Exceptions for certain minor or technical matters, If there should be any, I am not at this moment, as you see, attempting to limit the numoer of exceptions which might be considered, I have nerely said that the exceptions should include the ones I have sentioned. Doubtless others will be put forward. Wlith reference to quantitative restrictions consideration should also be given to provisions to govern the application of such restrictions, that isto say, such restrictions as may be 7. AE A 8 E/PC/T/C.II/PV/2 Imposed under the agreed upon exceptions. Our proposal is that the charter should provide that such restrictions shall be imposed in a non-discriminatory manner as among supplying countries, but that there must be agreed exceptions from this rule of no discrim-- ination. These exceptions from the rule would include: (a) An appropriate exception relating, to currencies declared scarce by the International Monetary Fund. (b) An appropriate exception relating to inconvertible currencies That for the moment is all the comment I have to make on the substance of the two topics. I should, however, like to discuss briefly some procedural questions connected with giving effect to certain of these principles. Even after we have agreed in principle on the action to be taken with respect to tariffs, preferences, and quantitative restrictions, we will be faced with difficult problems of a procedural nature in giving effect to certain of these principIes. It seems to us entirely appropriate that the Committee should give attention to these procedural quesytions. I should like to outline briefly our own ideas on this Subject. It is our conception that the ultimate object of the Prepar- atory Committee's work it to formulate a draft charter for the International Trade Organisation. This charter would deal with the subjets which the Preparatory Committee has assigned to its five working committees. It shoud deal with these subjecte in precise detail so that the obligations of member government would be clear and unambiguous. Most of these subjects readily lend themselves to such treatment. Provisions on such subjects, once agree upon, would be self-executing and could be applide by the govrenmensts concerned without further elaboration international action. In the case of tariffs and preferences, however, selective 8. A - 9 E/PC/T/C.II/PV/ 2 treatment is required because thousands of tariff items are involved, which must be considered on a product-by-product basis. Provisions regarding actual tariff reductions cannot, for this reason, be incorporated in thc charter itself. Yet it is necessary to deal with then if the commitments regarding tariffs are to have the same practical meaning and effect as these relating to non- tariff trade barriers. In order to implement an undertaking to bring about the reduction of tariffs and the elimination of preferences, therefore, the United States perposes that the countries on the Preparatory Committee meet next sprin: to complete such negotiations among them selves. When these tariff schedules have been completed, the tariff provisions of the charter will have been put on the same focting as those relating to quotas and other types of trade barriers. The Committee will then be in a position to submit a draft charter for the International Trade Organisation to the United Nations Conference on Trade and Employment. As regards tariffs and preferences it would have taken action In pursuance of the principle laid down in the charter, and this action by members of the Committee would create the standard by which to judge the requirements to which other nations joining the oganisation should be expected to conform. In other words, any country Joining the organisation would, according to our view, assume the obliga- tion to "enter into reciprocal and mutually adrvantageous negotiations - directed to the substantial reduction of tariffs - and to the elimination of import tariff preferences". The extent to which members of the Preparatory Committee have taken action under this provision would be the test of what other countries joining the organisation should do in this respect. At the end of the spring meeting, when the tariff schedules had been completed, the charter would be approved by the committee 9. E/PC /T/C.II/PV/ 2 for submission to the World Conference on Trade and Employment. You will observe that our aim isto deal with those pre lems in such a way that general obligations with respect to quotas and non-tariff trade barriers would only be adopted when satisfactory tariff schedules have been formulated. I should now like to comment very brierly on the other two agenda items which I mentioned as being important and closely related to the subjects I have just discussed. I refer to exchange control and subsidies. Exchange restrictions and quantitative restrictions are alternative methods for dealing with balance-of-payments diffi- culties. It is our view, therefore, that whatever rules may be agreed upon with regard to the use of quantitative restric- tions for meeting balance-of-payments difficulties should also apply to exchange restrictions for the same purpose, due account being taken of the appropriate provisions of the International Nonetary Fund Agreement. With respect to subsidies, the proposed charter will also need to deal with assistance given in that form. with regard to direct subsidies for domestic producers, it is our view that they are such less objectionable than tariffs or quotas and therefore should be permitted without limitation except in those cases where they can be shown to cause serious injury to international trade. OM E/PC/T/C.II/PV/2 B1 Export subsidies, or, the other hand, are likely to be harmful. They must frequently be supported by high tariffs or quotas, and they usually create international friction and ill-ill. It is our proposal that export subsidies be abandened, except under agreed circumstances and rules. I would like to suggest that since differences of opinion regarding the rules to be laid down for subsidies, whether domestic or export, are likely to arise primarily in the field of commodity policy, the Committee may, therefore, wish to consider Whether this topic on the agenda should not be taken over by Committee IV, dealing with commodity problems. Mr. Chairman, there is, of course, a great deal more to be said on all of these items, and I am sure that other countries will want to comment on them, For the moment that completes That I have to say, although I think I shall have occasion to comment later. Thank you. THE CHAIRMAN: Does any other delegate wish to speak now? The French delegate. MR. ALPHAND) (France) (Interpretation): Mr. Chairman and gentlemen: On the provisions of Article 1 of our proposed Agenda I should like to offer a few explanations,in rather more detail than the ones I could offer before, with regard to the position taken by the French Government. I have already said that France takes a great and particular interest in the renewal of international exchange and the reduction of customs barriers and the increase of exports. I have already said also that in principle, as a consequence of all this, the French delegation was most favourably disposed to all the provisions under the corresponding Articles of the Charter and --ith the aim which it has 11. OM E/PC/T/C.II/PV/2 B2 undertaken to see one day a world such as is shown to us in the proposed Charter: a world where discrimination will have boon done away with except in some special cases, as Mr. Hawkins has said - in some defined and rell-understood exceptions; where customs duties will be relatively low; where the most-favoured-nation treatment will be applied to all members of the organisation; and I should like to mention and point out that the French Government has already announced that it would on its own account put into practice a tariff system based on a very low scale. As a consequence, where the final aims, the future aims of this proposed Charter and of the American delegation are concerned, we have no objections whatsoever to offer. However, as I have already mentioned, it seems that in order that such a Charter, so conceived, might really beput into practice, it might be necessary that there should be a certain preliminary levelling of the economies of the member countries. It seems to us that we are invited by the American Government to take part in a sort of sports competition, a game,the object of which is to win external markets, but it seems to me that in order that such competition should be subject to the laws of fair play the teams should not be too unequal as far as training and preparation are concerned. Among the countries which will, let us say, take part in this game, there are some countries whose economies are still young, countries who must develop their industries, and there are those, like many countries of Europe, who must now forget the ravages of war and modernise their means of production in order not to enter without protection into the international field of competition. That is why we feel we must insist upon the importance of this period of transition which is foreseen 12. OM E/PC/T/C.II/PV/2 B3 in the Charter, and of course in such a period of transition France would like to maintain a programme of importation, which is something that you call quantitative restrictions of imports. This programme of importation has two aims. First of all, to allow us to bring equilibrium into being, and, secondly, to make it possible for us to re-establish and modernise our economic system. As a consequence, during this period we shall not be able to import into France products other than those which are quite indispensable for the reconstruction and modernisation I have mentioned. I should like to add, however, that certain things will be included in our programme with regard to commodities which are not indispensable, so as to maintain a balance of trade and exchange. I should also like to say that we agree with and shall agree to put into practice, beginning from a certain date, the policy of non-discrimination, even where licences are concerned. We plan, so to speak, three periods. The first one will be the one during which, for reasons of balance of payments and economic re-establishment, we shall maintain at the same time the programme of importation which I have mentioned, and also bi-lateral agreements. Then during the second stage, when we have enough foreign currencies to suffice for our importation needs, we shall still maintain the programme of importation and we shall grant licenses following non-discriminatory methods; and, finally, in the third period, we shall accept the final aims of the Charter; that is, we shall have eliminated our programme of imports and shall have accepted all the principles of non-discrimination. These, gentlemen, are the three periods which we plan to put into practice in successive stages in order to bring us to the f inal aim which the Charter proposes. 13 OM B4 E/PC/T/C.II/PV/2 I should like to say that the obligation Which I have here mentioned is not a new one. It has been brought up by the French Government before the France-American Agreement on the 28th May, 1946, which has always been maintained by the French Government, and it seem to me that it was then agreed that the period of transition of which we speak would not be determined as to its duration in a final way, but that we should try, on the contrary, to determine the criteria which might be applied to such a period. In other words, the French Government believes that concerning this period of transition the Charter gives provisions Which are too detailed, and that we cannot accept the fixed determina- tion of the duration of the period during Which we would have to give up our quantitative restrictions, but that we should/rather try to see what criteria are to be followed in allowing or not allowing a country to abandon restrictions. In this respect, therefore, it seems to me that the provisions suggested in the proposed American Charter should be more elastic, and we hope ourselves to put forward certain changes and certain amendments. There is a second point which I should like to mention, and that is our preoccupation With regard to working in certain stages. we are rather worried that this Charter might change the natural currents of trade. The American Charter seems much too ambitious in all of these regards. It plans to bring about almost instantaneously a homogenous economic policy of the whole world. It seems to us that such a vision of the future, desirable as it may be, may be rather premature under present circumstances, On the one hand, it is possible that certain strong economic bodies may for the time being stay outside this Charter, which is a thing we do not 14. B5 E/PC/T/C.II/PV/2 desire to see. On the other hand, there are certain natural economiccurrents which are not within political limits and which are strong enough to keep even today their original intensity. It seems to us that the proposed Charter does not take into account all these problems and does not realise that it might be impossible to dispose of them all immediately. That is why the French delegation believes that in the first place the problem of non-member countries should be examined most carefully in relation to all provisions, allowing perhaps that certain provisions to maintain all the benefits of most-favoured relations with non-member countries might not be quite enough. On the other hand, we should be careful not to destroy, even before world economy can be re-established, certain traditional ways of trade and exchange. However, such a policy is only a first state. It wiill allow easier integration of these partial economies within the borders of the world organisation such as is provided for in the American Charter. Subject to this provision, I believe certain traditional methods of exchange - certainly for certain luxury and semi- luxury products - should be maintained. Such exchange will allow us to elevate the standard of living of the population. I have now finished dealing with considerations of a general order, and I hope what I have said will permit the Committee to follow the lines of the French proposals during our future discussions. We entirely favour the proposals of the Charter, but we do believe that, as with all such works, it is slightly abstract, and that its aims and tendencies are perhaps too absolute and too definite, and therefore occasionally seem contradictory. I must admit that when I read the Charter I frequently asked myself whether it was 15 E/PC/T/C.II/PV/2 possible to reconcile the principles of complete liberty of exchange, liberty of action, removal of customs barriers, elimination of all discrimination, with the policy of commodity agreements, the logical consequence of which is the enforcement of certain economic control in such important sections as that of raw materials, and also with the policy of full employment, which falls easily under commercial regulations and all rules which tend to regulate unemployment. Our work then must be to bring together the Charter and reality. France, for its own part, will collaborate in all this work, and in a few days the Secretariat and the Chairman will be seized of our country's proposals, which will deal particularly with Section C, Article 31, and certain Articles of Customs formalities. MR. C.L. TUNG (China) : Mr. Chairman, in view of the importance of the various topics on our agenda and in view of their relation to the question of industrial development, the Chinese delegation wishes to express a few general comments upon the principles of these various topics in connection with industrial development. we want to make it clear that generally we are whole- heartedly in favour of these principles which underlie the proposals made by the United States and ether delegations, which are devoted to the common cause of world trade expansion, but we want to make an important reservation on one point. That is, that in our opinion the under-developed countries must be given a transition period during which they can institute or maintain reasonable measures of protection in respect of tariff adjustments, quantitative control of commodities, exchange control, subsidies, and 16 OM B6 E/PC/T/C.II/PV/2 so forth. Then the Question arises, what is the definition of a transition period for under-developed countries? We notice it is provided in the proposed American Charter that three years may be given to those countries who wish to maintain a certain measure of restriction, especially of quentitative restrictions, but, as anybody could understand, this is almost impossible for most under-developed countries, to achieve industrial development in three years. Then it is further provided in the Charter that those countries who suffer from andeficit in balance of payments or have a low level of monetary reserve may, in consultation with the Trade Organization, continue their control for a certain period, but I think this criteria or this definition of a transition period is rather ambiguous and not satisfact- ory. We feel that the criteria of monetary reserve and balance of payments are good criteria for monetary stability, but that does not mean that they are also good criteria for industrial development of an under-developed country. or instance, a country may have a large monetary reserve and may have sufficient balance of payments, but if, through regulation of imports, their home market maybe overloaded with consumer goods , none-essential or even luzuries, they may never be industrialized, so in addition to the criteria of monetary stability we must have additional criteria for the industrialization of under-developed countries. In the absence of any suggestion for such criteria the Chinese delegation would venture to say a country may be considered fairly industrialized when 50 per cent. of its population is employed in modern industrialization, production and distribution, and/or when 50 per cent of its national income is derived from modern enterprise in industry, commerce or finance. We think that before such stages of development 17. OM E/PC/T/C.II/PV/2 B8 can be attained by under-developed countries those countries way maintain a reasonable amount of protection in respect of tariff adjustments and quantitative restrictions, exchange control, and other means of trading regulation. But these protective measures should not be maintained, of course, except with the following provisoes:- (a) they must be maintained on a basis of mutuality; (b) they must be maintained absolutely on the basis of non-discrimination against member races or non-member races, which is the policy of the Trade Organization; and (c) they must be maintained absolutely for/the purpose of industrialization and minimised to the fullest extent as regards their effects on the commerce of the member races. These in general are the views of the Chinese delegation when we are going to discuss the topics of the principles underlying tariff adjustments, quantitative restrictions, exchange control, subsidies and so on, and we hope these views will be adopted by this Committee and proposed to the Joint Committee for consideration, and that before that is done we are going to proceed with this task in the light of a transition period as I have just tentatively defined it. MR. VIDELA (Chile): Mr. Chairman, the Chilean Delegation, in accordance with the declaration made by its Chairman at the Plenary Session, considers that the suggested Charter circulated by the Government of the United States of America represents an admirable basis for discussion, Therefore, it proposes to set forth in the present document certain general observations on the aforesaid suggested Charter, by reserving to itself the right at a later stage to make observations on proposals made by other Delegations. 18. OM E/PC/ T/ C.II/ PV/ 2 B9 1. Article 8 of the suggested Charter concerning the general most-favoured nation treatment calls for the following remarks:- (a) The Chilean Delegation accepts paragraph 1 of the Article. (b) with regard to paragraph (2), the Chilean Delegation would like to point out that there had not been included a generalised exception between the American countries, known as the "'bordering countries" clause, which provides for the exclusion from the most-favoured nation treatment such particular advantages as are or may be conceded by neighbouring countries. The clause in question is essential in order to promote the industrial development of small nations, with small populations and a reduced purchasing power, and constitutes an exception inserted in various Trade Agreements signed by American countries. This same clause was also favoured by the Pan-American Conference of Montevideo. In view of the foregoing, the Chilean Delegation proposes that among the exceptions in paragraph 2 of Article 8, a section (c) should be incorporat- ed, reading as follows:- "(c) Preference treatment in force between neighboring countries." 2. In connection with Article 17 relating to boycott, this Delegation considers it appropriate to suggest that the cases which might be considered as boycott should be more clearly defined. 3. In respect of Article 18 relating to the reduction of customs duties and the suppression of preferential tariffs 19. OM B10 E/PC/T/C.II/PV/2 the Chilean Delegation points out that: paragraph 3 of this Article proposes, in resume, that if a member has failed to concede tariff reductions to another member, the latter may have recourse to the International Trade Organization, and that if the refusal has not "sufficient justification" the country in question may be deprived of the benefits of the Charter. The Chilean Delegation thinks it advisable to establish in the Charter the circumstances in which a refusal to reduce tariffs would be considered justified, which would facilitate the work of the Crganization in such matters and would offer more guarantees to the member countries. We suggest that justifiable circumstances for the rejection of lower Customs Tariffs might be the following:- (a) When a concession affects or might affect a national industry in its initial stages of development, and for which adequate tariff protection is still necessary. (b) when a concession affects or might affect a national industry which is vital to production and employment in a particular region and which cannot easily be replaced by another industry. (c) When home industries are sufficient to supply internal consumption. (d) When home industries use for the most part the raw materials of the country itself. 20. E/PC/T/C.II/PV/2 With regard to Article 20, we must point out that, according to its terms, in order that any particular country can maintain restrictions in order to establish the equilibrium. of its balance of payments, it is under the obligation of proving the existence of the unfavourable position in which it finds itself. It would, however, be more convenient to apply the opposite method, that is to say, that the country which opposes this method of control should be under the obligation of proving that the restric- tions are unjustified in that there is no unfavourable balance in the country which has applied for the restric- tions in question. In the opinion of this delegation, it would be desirable, in connection with Article 25, relating to subsidies, to make it clear that each time subsidies are referred to, direct and indirect subsidies should be understood. With regard to Article 26, relating to the non- discriminatory administration of State trading enterprises, it would be as well to make clear the exact meaning of "State trading enterprises". It might well happen that, in view of the tendency towards nationalization in many countries, a large number of enterprises come under Government control. The conception of enterprises on whose operations a member Government exercises, directly or indirectly, a substantial measure of control, is imprecise and open to dispute, all the more so in that in other parts of the suggested Charter, such as Article 34, reference is made to enterprises which appear openly governmental as well as commercial enterprises. It would be as well that these Articles should be discussed and their meaning clarified. In respect of the commercial state enterprises it would appear that the reference to non-discriminatory treatment accorded to the commerce of any member country would mean that 21. C1 C2 E/PC/T/C.II/PV/2. the said enterprise would be obliged to fix uniform selling prices in the country of origin for the various foreign markets without any consideration for the greater or lesser importance of one market as compared to another; that is to say, for the volume of its purchases or other commercial considerations. The Chilean delegation is somewhat doubtful about the above interpretation, inasmuch as the same Article 26 lays down that (page 21 of the suggested Charter) "to this end such enterprise shall, in making its purchases or sales of any product or service, be influenced solely by commercial considerations, such as price, quality, marketability, transportation and terms of purchase or sale". In other words, the above interpretation might a be taken to mean that/state commercial enterprise receiving exclusive or special privileges from its Government would be in a position to sell its products in their place of origin, on a specific market, at a different price from that at which they would sell to another market, in view of the fact that the importance attaching to the retention of a market by such an enterprise does unquestionably represent a commercial consideration of the highest importance. We should point out that this Article has the widest possible range, inasmuch as it would also apply to enterprises to which the state has "granted exclusive or special privileges, formerly or in effect.....etc." - a text which might include a large number of modern enterprises. The Chilean delegation considers it of great importance that it should be made clear that such concerns will enjoy the same freedom to adapt themselves to specific markets, in the same way as the private enterprise can do, with due regard to their immediate or future commercial requirements. These are the most important considerations which the 22. C3 E/PC/T/C.II/PV/2 Chilean delegation. for the moment desires to make on the question which this Committee has been set up to consider. MR KUNOSI (Czechoslovakia): Mr Chairman, I feel that before starting I should explain that, in spite of the fact that my speech might appear to be an English translation of M. Alphand's speech, that is not the case; I had no previous consultations with him. We have, Mr Chairman, I believe, made it sufficiently clear in our general statement to this Conference that our economic structure and the policy our Government has pursued in the economic field makes us greatly interested in any co-operative attempt to expand international trade. My Government considers an increased exchange of goods is one of the means of achieving and ensuring full employment and a rising standard of living for our working people and is a contributing factor to the welfare of the whole nation. I should like to begin by saying that I am not certain whether we all are fully aware of the fact that restricted access to raw materials might be one of the important obstacles in expanding the foreign trade of some countries, especially the smaller ones. We do not contest the need to reduce and eliminate a number of the existing trade barriers, but we submit that the ways and the means by which this aim should be gradually achieved should be chosen from the point of view of safeguarding full employment, of raising the standard of life of the different nations, and especially bearing in mind the burning problems of economic reconstruction in the countries exploited for long years by Nazi Germany. Mr Chairman, Czechoslovakia could co-operate and make her contribution to this international undertaking if due regard were paid to her problems of economic recovery. It 23. C4 E/PC/T/C.II/PV/2 has already been mentioned that Czechoslovakia was first occupied and last liberated; and the fact that Czechoslovakia was subjugated before the war broke out meant that the enemy could carry out under peace time conditions his most far- reaching plans for using and misusing our economic resources and our skilled manpower. She took at that time full measures to adapt the whole structure of our economy to Nazi war purposes There was a thorough elimination of some of the most important branches of our industrial production. Factories producing consumption goods typical in our export trade, destined largely to cover our import needs, had to be closed down. Our heavy industry was fully converted to suit German war requirements. Consequently, our economic potential is dangerously enfeebled and will be for quite some time in a delicate and fragile condition, especially as we have a complete lack of reserve of raw materials, foreign exchange and gold. Our machinery is out of date and in need of replacement, so that our production in many causes is uneconomic, and all this influences unfavourably, as you can believe, our possibilities for competition on the world market; and so we feel that our co-operation in reducing and eliminating some of the means by which we are bound in this post-war period to regulate our foreign trade ought to be considered in the light of these facts. In our view, it is a first duty to ourselves, Mr Chairman, and to the international community, to concentrate for some time all our efforts on overcoming the handicaps created by Nazi exploitation and war action. Of course, we need some time to mitigate and wipe out these serious shortcomings and dangerous setbacks caused by the enemy. This transitional period needed for the convalescence of our economy might be shorter or longer according to the degree of understanding and amount of help we receive from those states that have not been occupied by 24. C5 E/PC/T/C.II/PV/2 the enemy. We have not in the past and we do not intend in the future to introduce restrictions on foreign trade. in order to promote self-sufficiency or to create reserves of foreign exchange. My country has always taken great care, and will in the future, to fulfil her commitments of payment abroad. That means to us that we cannot imagine free- ing our foreign trade except in organic relation with our foreign exchange position. I submit, therefore, Mr Chairman, that we have to deal with the problem of reducing trade barriers parallel with solving the problems of foreign exchange. It follows that we must apply in many ways more or less the same measures and regulations in the two fields. So we cannot help drawing your attention on this occasion to the fact that, while we have only a very limited amount of convertible foreign exchange, mostly needed for our import of raw materials and investment goods, we have to use it in the most economical way and have to concentrate its use in the import of those things essential for our economic life. We agree in this respect and in many other respects, as I have already indicated, with the views put forward by the French delegation. Here Czechoslovakia is in a rather special position, because our foreign trade balance used to be most favourable with countries with inconvertible currencies. Czechoslovakia is geographically and economically compelled to export into those countries and very often has no choice at all, except to stop production and create unemployment. This alternative would not be desirable either from the point of view of Czechoslovakia or from that of other nations, So we have to receive payments in goods in the form of imports from those countries, as we are, as you know, not in a position to give credits. It is quite natural, then, that we should feel that these facts should not be considered 25. C6 E/PC/T/C.II/PV/2 as amounting to discrimination. On the other hand, we believed, Mr Chairman, that the countries here represented could consider favourably perhaps the idea of introducing no new restrictions in their foreign trade and from now on reducing or eliminating their import and export barriers wher- ever possible. Mr Chairman, I am coming now to a point that we, the Czechoslovak delegation, consider of major importance, and I should like to emphasis our views on this point. I believe there is no doubt that the main objective that we should never lose sight of is to consolidate peace through economic collaboration. We have no doubt that the more states that are attracted and are able to join the I.T.O., the more fully this objective and the moral specific aims of the organisation will be achieved. If we pay due regard to the different economic structures as well as to the different degrees of economic development reached by the member states of' the world community, that will in our view most effectively facilitate participation in the organisation by the largest number of countries. That is the reason why I have drawn your attention to the special needs and legitimate ambitions of the countries formerly occupied by the enemy, of which Czechoslovakia is one. From this point of view, Mr Chairman, I would like to make a general remark on the sanctions proposed. I find them, in view of the post-war fluctuating and still chaotic situation, a hit too ready-made, instead of indicating the leading principles and leaving the detailed arrangements to the I.T.O. for study and decision. We are for these very reasons very reluctant indeed to approve the severe sanctions suggested. In this connection we often wonder how a system such as would be created by the proposals could function for those members of the organisation only a fraction of whose 26. C7 E/PC/T/C.II/PV/2 foreign trade would come within the circle created by the organisation and the great bulk of whose foreign trade is dependent on states outside the organisation. Mr Chairman, we agree on the whole with the agenda of this Commission. We wonder if quite a few items on the agenda, with which, as I said, we are in substantial agree- ment, could not be better tackled by turning to the Geneva Conventions as a basis and attempting then to incorporate these concentions proposed in a revised form into the new Charter. In respect of some of the proposals under this heading we shall put forward in due time a few suggestions aiming at their improvement, especially in connection with customs formalities marks of origin and so on. Concerning information and statistics, we shall ask that a minimum standard should be worked out, perhaps by the Statistical Commission of the Economic and Social Council, taking into account the limited possibilities of the small states in this respect. As for tariffs, we intend to aim at their gradual reduction. We are in a precarious situation, especially with countries which have ad valorem tariffs. We shall therefore have to adjust our tariffs in accordance with the changed value of the crown. So far as the procedure about which Mr Hawkins has just spoken, of reducing tariff barriers, we are willing to negotiate with the different countries which are interested in a significant way in the import of the goods for which they seek tariff reduction. In furthering the process of tariff reduction it must be remembered that the countries which have considerable protection will have to reduce it relatively more than those with low tariff walls. Of course, we could like to see some provision for revision of these commitments in order to avoid harmful rigidity. As far as the problems of the exchange control are concerned, we should like to point out that great care 27. C8 E/PC/T/C.II/PV/2 should be taken to avoid a conflict with the provisions of the International Monetary Fund. Mr Chairman, we believe we have some understanding of the problems of state trading but, not having practised and having no intention to introduce methods or state trading, we find it extremely difficult to appreciate how far the formula proposed is acceptable and practicable in this connection. Our own nationalised industry is, as you knew, trading and will trade on the principle of private business. Now, I do not want to go into all the points of the agenda at this stage, therefore, if you will allow me, I will reserve the possibility of presenting our views and some amendments to the agenda when we reach the particular items. MR PARANAGUA (Brazil): Mr Chairman, I just want to make some considerations about the agenda and the suggested. Charter. The American Charter put forward the basic idea that the members of the organisation should develop trade on a reciprocal and mutually advantageous basis, and the idea of non-discrimination. We have in Article No.8 the principle of no discrimination, which is to a certain extent in conflict with the idea of reciprocity. It is well known to any negotiator of commercial treaties what difficulties arise from unconditional and unlimited "most favoured nation" treatment, because it provides for juridical or formal instead of effective reciprocity; and that is due to a great extent to the difference in tariff systems. 28 D.1 E/PC/T.CII/PV/2 About sixteen years go I put forward this situation: A most-favoured nation clause in its conditional aand unlimited from gives reciprocity advantages only in a formal and not in an effective way. The inconvenience flows from the diversity of tariff systems. For example, if we have a double contracting parta autonomous tariff and another contracting party with a general and conventional tariff, the result of the reciprocal concessions of the unconditional and unlimited most-favoured nation treatmeint is thahe contracting party having the general and general and conven tional tariff grants to the contracting party having the autonomous tariff the benefit of the conventional tariff, which can be further re- duced by concesaions made tr a third country, whilst tle contractiag party having the autonomous tariff grants only his autonomous tariff, that is to say, assures the benefit of a tariff tariff the rates on which this party can freely increase. The contrast would bee cont would be more striking in the contracting party had a single autonomous tariff and the other contrac- and l tariff.had a general/conventional tariff. Well, we cannot accept that asdeaa general principle. I put the idea of reciprocity above the idea of non-discrimination. We are here to settle on a workable organ- ization; and I suppose the best way would be to have multilatural agree- ments, because in the case of multilateral agreement for this reduction of tariffs we would have no need of a clause because there would be no discriminations. If we suppose the case of all member countries sub- scribing to this agreement they would be placed on the same basis and on the same treatment; there would not be any discrimination because we would receive and give the same concessions. Then they have real reciprocity. I do not went to say that we are against the ideca of non- discrimination; and also if there is a bilateral agreement it is quite normal and understandable that any country is not willing to give con- cessions te any other party if t parthy can give more concessions to a third contracting party. But the time for bilateral agreements is over for this organization. We must have multilateral agreements. About the Charter, the Charter was drafted by the very nation which used te have the 29. D.2 E/PC/T.C.II/PV/2 policy of the conditional most-favoured nation treatment. The United States had this policy from 1778 to 1923. It was with Brazil that for the first time this American policy was reversed to the unconditional and unlimited form. For this reason we put forward some proposals about this clause, and in due time I shall propose an amendment to this Article VIII, if our proposals are not accepted. There is another point I would like to speak about - that is preference. It seems to be that everybody is afraid about preference. I recently not somebody in America who asked me if the policy of British Imperial Prefrerence was not one of the causes of the second World War. I said, "Yes - also for the sunspots." - because, after all, the British Commonwealth is an economic unit. We must recognize the facts, not have only principles, but recognize what really exists in the world. Then we have paragraph about preference for Cuba, but I think there are some other special clauses in treaties which are equally respectable with those of Imperial Preference and Preference for Cuba. For example, there are the Scandinavian clauses, concessions made amongst the Scandinavian countries. I do know why we should oppose those; they are quite special concessions.There are the concessions between Denmark and Iceland, which are also to be accep- ted; or we have all the agreements amonst the Central American coun- tries; and the Chilean Government has treaties also with special concession of ther Latin-American countries. There are also Portuguese commercial agreements, but excluding from the effects of the clauses the concessions granted to Brazil. I do not like the idea that people might suspect that only the interests of l aperial preference or of the Cuban Preference are acceptable. I would like everybody to feel that the Charter is for the whole world and that all interests are considered. Then there is a third point I should like to mention about quantitative restrictions. As everybody knows through the could notv .: - replace all the machinery required by our industries. ':eIt thexf maintain at least for a perio the right to a certain priority that to reserve a certain amount of exchange to buy machinery abroad. That also 3. D.3 E/PC/T.C.II/PV/2 means, I would say, priority of machinery over cosmetics and similar articles, and I would like to have something about that in this Charter. When the right moment comes I will take the liberty or speaking about it. For to-day I think that those are the only considerations I have to point out, quite frankly. THE CHAIRMAN: Thank you. The meeting is new adjourned and will re-assemble at three o' clock. (The meeting adjourned at 12.45 p.m. until 3 p.m.) (For verbatim record of afternoon session see Part 2 of E/PC/T.C.II/PV/2) 31.

GATT Library

py509hd9627

Verbatim Report of the Second Meeting of Committee III : Held in Committee Room 4, Church House, Westminster, S.W.1 on Wednesday, October 23 1946 1946-10-23. at 3 p.m

United Nations Economic and Social Council, October 23, 1946

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

23/10/1946

official documents

E/PC/T/C.III/PV/2 and E/PC/T/C.III/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/py509hd9627

py509hd9627_90220057.xml

GATT_157

OM A1E/PC/T/C.III/PV/2 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SECOND MEETING of COMMITTEE III held in Committee Room 4, Wednesday, October 23rd, 1946. at 3 p.m. (From the Shorthand Notes of W. B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.1.) CHAIRMAN: M. PIERRE LIETERLIN (France). Church House. Westminster, S.W.1. on THE CHAIRMAN (Interpretation): The meeting is open. I think the first item on the agenda is that regarding the study of the requests that have been submitted by the International Chamber of Commerce and the World Federation of Trades Unions, which have sent Ietters to the Secretariat. Copies of these letters have been distributed and we shall now have to take a decision with regard to the work of our Committee in this connection, and the Chairman proposes to the Committee that it should adopt the same decisions as were adopted by other Committees, when it was decided that these organizations might address the Committee whenever it seemed useful to the Committee. Further, it was suggested that the Secretariat should ask these represent- atives of the International Chamber of Commerce and of the World Federation of Trades Unions to send in in writing any points that they thought would be useful and which were to be put before this Committee. Has any delegate any other suggestions or observations to make on this subject? As there are no observations I conclude that you have accepted the proposal I have just put forward. I will ask the Secretariat to note this and in replying to the letters to request that the two representatives concerned will send in in writing the points which they think it restrictive commercial practices. The second item is a question of gathering opinions and having a general discussion on the problems that are to be examined here. With regard to this, I would like to go back to the proposal I made at the first meeting. It seems useful, before going into the details, that we should clarify the OM A2 E/PC/T/C.III/PV/2 E/PC/T/C.III/PV/2 discussion by means of statements made by the various delegates here on the underlying principles of the probIems before us. The best may, therefore, would be to hear the various delegates who wish to take part in this discussion, and in that case I will call upon them in the alphabetical order of their delegations. As it is a case of discussing a draft Charter submitted by the United States delegation I might ask the United States delegate to make a concise statement first of all on the general ideas underlying the draft which has been submitted by the United States Government. If, however, Mr. Wilcox prefers to speak in his turn that can be arranged, but if he will make his statement first of all it will probably make the discussion easier for the rest of the delegates. MR. WILCOX (United States): Mr. Chairman, I should be pleased to make a brief statement at the outset as to why, in the first place, we feel that a chapter relating to Restrictive Business Practices is an essential part of a world trade Charter, and, secondly, very briefly, as to our general approach on how to deal with the problem. First why should we have a chapter on Restrictive Business Practices in a world trade Charter? It seems to me that the absence of such a chapter would be an extremely serious ommission which might have serious effects upon our objectives in the programme as a whole. First, let us take the purpose of removing or reducing barriers to international trade. The Committee on Commercial Policy is dealing with the question of policy with respect to tariffs and quantitative restrictions, quota systems and other impediments to trade between nations imposed by Governments. ON A4 E/PC/ T/C .III/PV/2 No- it -ill not do us very much good to reduce or remove such barriors to trade if 'e still leave it in the hands of non- governmental business enterprises to establish barriers to trade on their o.n account. The types of restrictions that have been imposed by international agreerments bet-een business enterprises are quite as effective in preventing the movement of- goods between nations as are tariffs, and perhaps evern more so. That is, goods can move from one country into another, surmounting the tariff -all, if they pay the duty, but -hen you have a cartel agreement bet-een enterprises in t-o countries .-.hereby each of them agrees as to the part of the world's territory that he is to share and the part that the other one is to have, -here you have aclear agreement of division of markets, the goods do not move at all. You have not a moderate tariff or a high tariff you have an absculate embarg. As a matter of fact, you may have a more serious prohibition on the movement. of goods there than you have under a quantitative restriction, under quota. At least under a quata system enough goods move in to fill the quota, but in a market-sharing arrangement between the partners in a cartel the amount of goods that moves from one country into another may be zero, and may be kept at that figure if the partners to the cartel arrangement control the hole supply. Another ascect of this matter that is serious from our point of view, I think, is that the public regulations of the flo- of trade are matters of public policy. The are arrived at by Governments ; they are openly arrived at; they are, matters of record . In the case of control of the flow of trade by cartel agreements you have private treaties, privately arrvied at, in the private interest without consideration the public interest involved, Now -- should seriously imperil the work that we do in the 4. E/PC/T/C.III/PV/2 reduction of trade barricre if to took no action whatsoever with respect to restrictive agreements between business enter- prises in international trade. Secondly, with rescpect to employment, the effect of a private agreement between concerns constituting a monopoly arrangement will usually be to establish a price higher than a competitive price, and at that higher price there can be fewer goods sold, less demand satisfied, less consumption, less production, and consequently less employment. That is, monopoly per se, and particularly private monopoly, is prejudicial to the maintenance and expansion of employment. Monopoly also makes for rigidity, which makes it difficult for business to adapt its prices and its production policy to changing economic situations. It tends also to concentrate a larger part of the distribution of the earnings of industry in the hands of ownership, and a smaller part consequently goes to the participants in the enterprise, labour, and the producers of materials, and so on, who constitute the great bulk. That is, monopoly in its very nature is prejudicial rather than conductive to industrial- ization. There are two respects, it seems to me, in which restrictive business agreements are likely to put a brake on the industrialization of relatively undeveloped areas. In the fist place, if you, have agreements between cartel partners which ise the price and maintain a high minimum price for industrial equipment, that is going to make it a very much more costly for under-developed areas to get that equip- ment and to industrialize. Furthermore, it has been and might continue to be the practice of cartel partners deliberately to try to prevent the development of new competitive industry in new areas by various E/PC/T/C.III/PV/2 harassing tactics, including deliberate dumping or threats of dumping, or outright boycotting. Those things have been done in the past; they are a matter of record in our history. They are clearly prejudicial to industrial development in newer areas. The same thing is true of access to technology. An agreement between industrial partners to share markets, whereby a concern, let us say in the United - illustrate on, -i'.1 azree tIat it -ill nott makle sall ses cf cqui.:nt t a th it il 1 Cot sell anv 'kn-co-hoT tha. i t -ill not .:iv; any r Ut _- i r.i.hts in. the oast-crn 'A-*isphere, in. ro: turna or an roomot 'r-o a con''cern, let s say in . a zuropre-an coumtrxy, that It Till Z.,t -aive an-Y p-atoent riaahts to anvrooalwr C;Ise Cr sel arv n r-o ir th ^ _ebt= he-ish' -re, divi-in the -c).-. as many of those agreezent-s .nave. tI c mc-- n n e s tho.t ar r .s zv tor:_ tory Cr e; . v ittG- i o t. car tCc , artns - such an;_re ent, r say, i- a. fE, ric st acLe and . d e finit bar toc ter_ ob-taining Cof: patent - ,:hts, ochrnolozy -,-, c nIc---h c a ndrC t he ability tuc et a comeotitivc on.t7-:,rise cn its ^foi. Furtnomcrc. --hen tech.nclcgy is oetaineed it- .s ^-u-ntl- ota inecd unre'r einiL'te li-:tatlons, it is s^-idf "Y'es, v_- can. ha-re t-is te1t rir:ht, but only i: - cu l i it your s aIe s Ito a c ur t cular -aI ret ana do not undr-- - ua-eP to sell beGond th-ose£ trritries . _ surt n _ - . cnamtor onv _ > 1 -b * _ _ _ e tio _ - oi; s taices :s ar es-_.oi l .u.C.c. to tao caazter on Co di..tr AOran^een-s.s because iff you tlay don- !aapear to Ca be reasonable It 0i ` I s ith rtes ct to common ity ara n e e nt Ebe t.-ee : o. n ern:en-ts, and o. -a sayE. for int-n- Ece that the-r mus -at bne e al 5rpr-sOn ta-tion r pruOucors ?na T Cons'imers. t:,ta t Consume t L _ust e rec r e;Set-ued ancd*~~ that thr rus _o mcozv as to i ta,-o d ;Setails of such_¢ a-orctra ~emes, thos are matters, th inr, -upon!s t a- tich -e can a raee. '.'.' if' you dI Wo that, andthen hre n-o mC rr-.-ision at all as to non-zcvetnm-,tal intornati al ar _er-enw ts, you E/PC/T/C.III/PV/2 have get a complete escape from all of the safeguards that you set up with respect to the fairness of inter- governmental arrangements themselves. Now those are the reasons why we feel that provisions with respect to Restrictive Business Practices are an essential part an integral part of the structure of a world trade Charter. Very briefIy, our approach as to handling this problem: I may say that what you see in the suggested Charter is a second thought. Our first thought was that the world in general in its own interest would do well to emulate who United States in establishing within other jurisdictions laws comparable to our Anti-trust Statutes, but in discussing the matter with othercountries we have come to the conclusion that such a programme isprobably too ambitious a one, and consequently what we have proposed is a much were modest and a much more tentative approach to the problem. What we suggest, simply, is that we establish an agency with appropriate machinery to receive and consider complaints with respect to restrict- ive business practices and to make recommendations for remedial action; and that is .i . aG _- nat i _ all note first that under our proposal n!'hing whyasoever happens until there is a bona fidedt;otf:f---i ---:->st.re - is a bc-na a ide by the Inter-cocait ar-----t c- _' oncla, W \ Gint has.¢, In tr no:ol TradeOrc-c-iaon ond foL-d to b~v_ scm sub tiative in theeT-G t.-_ C-~r- nizWiton :uld- tai e ;no . E. C. - 1.1 ......a.I.. . '..-^C- n I coCut : c- _e ooUn, c i o Ci'n suc h c_-_ --: .a t i h u _ . C : r . Z.-2-iC_1G , --'Ve -o-C;t ^ - st -n _ '3tiCo Uc vs ould be advanced, and the reasons 7.a. U Lc-s a ic nc .Vto -.'I S why it might be argued that such practice was defensible could be advanced, and on the basis of that the agency involved would make a recommendation to a sovereign state as to action that that state should take. What you have here is an emphasis, not a statute; an emphasis on a. careful, case by case analysis, and, in the form of these recommendations as they emerge from that process, the building up over time of an international code of accepted business conduct, which would rest in the last analysis upon the sanction of worId opinion. There is just one other comment I want to make about that, and that is, that if this kind of an aproach to the problem is going to help, if it is going to be effective, this agency must be given a definite mandate and definite criteria upon the basis of which to proceed with its work. It must be regarded seriously. When it asks for an appearance and a defence it must be listened to. The job that it has to do must be laid out for it to do, so that everyone understands what it is. Now that is what we have souht to provide, with such success as you shall judge, in Article 34 of our draft Charter, and particularly in paragraph 2 of that Artiicle. E/PC/T/C.III/PV/2 8. E/PC/T/C.III/PV/2 THE CHAIRMAN (Interpretation): I should like to thank Mr Wilcox very crt nation: T shlCi o i u to thank -r ilco x v ry ll, when Imuatfor his vc- htclp I k rc-ctlA - ', -,e; 1 he United Statesscalle u'n him, thithe as not cr2:. sp2oaing she th states Wilcxx hasoacle ut as a e. ; p ert on thI:is subject. h .e.iter.ortnt book, on crtls, andthe-e is no o;n cre bettr ment hhaen he himself.tcu ' > wie_ tc ~ ~ -;I e:,_ to_ osit io.>ot_i L' calling upon otheryHe hserlihtrhecc -vnsidorcbly. 0.o -, bef o' cler dleraise. We, cacs have a point o- prceaurQ tha -.-.oulke to :-as e nve r-ot -Cthe simul taeous tranlsltion srstca.:; therefo e that meanws th meanshat - shall have to have successive translations -ic; aoccasoionalley very great loss of time. -7c no-re'or tcefus- I think that quiee ata tan lt o o tF r nh^ i::tc I-c i i is h, bu a o num~cor English, I ameof" c-ic eeae aso Im- :In~reash,I o renounce the right to have~.4 ar nre arec to renou^nce the r-~t to ha-ve of course, that these inryhing>in.erretd Tha*t des n.Ot n- tci-Ctwe do not have every singleio ',-,ilt be mzad, buorl v that.oo noGt- si cLe ench, and even thatnttnint is said ia Ee;Rishtev. t ,-t^.^l his. Some interventionszl1 done i -tnhr is SceIa_- request 'or this.rventionts ted intothat are .nen-__S .~' O~ C S ofcors hve to betranslted absolutelyeFrench, because there _ occ~s> tio n!W .s that- a y ecls aearpe; but these translations ull no^ be_ mad u-es hrin< scal ned, therezest for th- - _u_- :~ i neercr^- ctrs ar_ conoenc erpretationsurk u.-Il be thev-: same- - en the' - - lh---veo-ere- . Then anotherof the:.dtey c-ay b.Je c_ lle^dv ucn^ to e>ahe th..m. sp. Some of youin. is th't there :.a- cc somne doubt hecre >c-t s-eech may not be soma be rr'ear to a statement ncu- and so-_ c.f \'ou m-. that case,,-ca, tozn thle o:ac - c b osition. of ar'oL- %vor:enn ns to the debateso:: &elegatos may- -cref to coa-t~one. theirfl conte ll upon theuntil to .oew Subject to t:;_se rem.rk^st _ -- 'o!,-ca Delate of Aus talia. ould be very glad2 I3CTlTv (n>terpret aton): _- _-nOarmsz T-.0a, s translated, becauseqto h-_ can technica, l o eganCt.e OCCOi '^ eStiC?. tacuse E/PC/T/C.III/PV/2 E:~~~~~~~~~~~~~~~~~~~-/P.C;/T/C . I II/e- I sol could not follow a debate on those subjects. Therefore, per- haps delegates would be willing to limit what they have to say to the absolute minimum. gTHE CHA (TInarprtatn): I quite aree that translations should be made in sih cases, but with regard to interventions it would be very difficult not to allow delegates to say all that they consider is mimportant and necessary,w and I a quite sure that no one ill abuse this ormission. If there arem no further observations to be rde, I Will cll on the delegate of Australia. MFL3mr3TER Australia): 1'ArCxnan,Iam afraid that, speaking for Austraalaia, there is not muachtht I could usefully sy on this topic at this stage. The naactivities of cartels nd private business associa- tions of that kind form a subject which has neither called for nor received much active attention - particularly sustained active atten- tion - by Departants of assl;Govern.ent within Aura in recent-years. Forma this reason such infortion as we have concerning the restrictive practices followed by the cartels and somewhat similar associations operating within Australia, and their effects, rests mainly on hearsay rather than upon facts elicited by objective investigations. Largely on that account, we fel some hasesitation,y especially this earl- staa, in the Comittee's discussions, in either passing judgment on particular praAmerican ctict es listed in the Draf Charter or in lending suppppodasldort tughtyo particularfsls. I to say that or the present we are in p[much doubmplt atas to theractical licions of particular proposals and the proposals ash a whole. The fact tat they cover a very wide field an variety of private business arrangements makes any assessment of the practical implications of the proposed rules very diffficultn. Article 34 o the Uited States Draftm,a Charter enumerates ny different typgese of business arranpemnts whichh shall be resumed to ave the efhfepct of frustrating te urpose of the organization to promote ex- ,)ion of productionm and trade. It sees to us that this enumeration has theg effect of extendin nmoour deliberhations t a very muc wider fielad than iwe uhersually hve in mnd n we speak of interrational 1 cartels. For instance, I imagine that few agreements .or understandings exist betwen any two business people in which they do not agree to do one or more of the, things specified in the second paragraph of Article 34. I am also inclined to think that we shall find these arrangements are very widespread and frequently have at least something to be said in their favour. Because of this belief, we favour a cautious approach, at least initially, with, perhaps a bolder approach when an international organization has been developed to handle the subject and has acquired some first-hand experience out of its handling of particul- ar complaints, It seems to us that if we attempt too much at once there is a danger of establishing a vast international organizations which would be forced to decide cases on stereotyped lines, and that we should be expecting a lot if we expected in'aillibility in these remote control recommendations. It may be of interest to mention that Australian experience has been that the framing of laws directed towards the sup- pression of particular kinds of business practices is one thing. It is a much more difficult thing to establish that, in balance, a par- ticular practice is harmful in all circumstances. Since 1906 a law for the repression. of destructive monopolies and combines has been in existence in Australia. Under this law it is an offence for any person to combine with another person in restraint of trade or commerce, or with intent to restrain trade or commerce, or to do any of a number of other things. Between 1908 and 1913 a series of prosecutions occurred under the law, but these prosecutions were all unsuccessful. It is true that limitations on the law-making powers of the Federal Government were v t partl-responsible for the negative results. Th-elack of success cannot be attributed entirely to those constitutional limgitations. It miht reason- ably be said that ethe failures wepr, for the most art, equally attributable to the diffwayicufl proving public detriment of an unreason-ties in the o ovins oDuliC detriOment of an unvreason- able charapcteur. I note that an th practices -whlchshall be oresmed to have the effepct of frustrating unpy osef 'the rganization to Oro- mote expansion of production a-.rade, cu Aricn friends include 11 E/PC/T.C.III/PV/2 combinations, agreements or other arrangements which allocate or divide any territorial markets or field of business activity. I know of many instances in my own country where young manu- facturing enterprises have made agreements with older and well-estab- lished manufacturing enterprises in other countries under which the infant Australian enterprise, in return for a payment or a consideration of some kind, receives technical assistance or enjoys the right to employ processes developed, or to be developed, by the more experienced manufacturing enterprise in the overseas country. Most of these pri- vate arrangements or agreements stipulate that the Ausstralian enter- prise shall confine its sales to a restricted field - usually the local markets or even some smaller area. On the wholle, we fool that private agreements of this kind have contributed much towards the development add maintenance of technical efficiency in industry within Australlia. Actually the Government or its officials have frequently advised per- sons setting out to manufacture particular goods in Austraiia for the first time that it may, in the interests of securing the efficient pro- duction of these goods, be advisable for them to enter into a private arrangement with an experienced oversea manufacturer of similar goods, instead of relying on their own more limited technical experience. We rather fear that a Charter which included provisions which purport to see wong in all agreements providing for territorial limitations would tend to discourage corporations both at home and abroad from con- cluding such arrangements in future. If that were the result we should, in the light of our actual experience over many years, feel that the particular provision or provisions in the Charter were contributing, to defeat one of the Charter's principal objectives, namely, the objective of encouraging and assisting the industrial and general economic develop- ment of member countries, particularly of those still in the early stages of industrial development. I might refer briefly to another Australian experience to illustrate that a practice which in general may be deemed to be E/PC/T/C.III/PV/2 undesirable may, in certain circumstances, be considered worthy of our, in cortcin circums-'nces, be considozred worthy of our bleessing. ' originally drn-n thI X4uraJi nzc fo thI.- ression or morno-li and combinations acting in restraint of t-ad made it aroffono fr z peson - person. --to refuse, either absolutely or e~tp upon dipsauanagcous onditions, to sell or su-ply o person B any ,.oeOCervBices for the reason thalt pron d 7elwith person C. Tqhee ustralii eVntubseuanty fodnthat this provision ir theaw stooad ain shippthr r- of Austrlin l sis of our principaJ export reg-oductsp e-Sain tar sp.m.nt otose -roductsonf the basis Po >-ioal silings and at reduced ratears. 'This:rangment contem- plated thatp the shfipers, opr their art, should ship the products in lines question exclusively in the vessels of the particupinglwwar shp/ith vbhgica-reemnt was madae, nd tat thle shpo-wner should, for their parht, avhe rightte teo rfuse thede edruc rateos t thoshe sip- pewhors merelyd mae a convenience ohf gteeral errangement n aand pshiped only by the conference linne owhly ien t sudite them. The shipping argrmenmants qin ueostin were ?cosidered so desirable in the general interest that they were actually sponsored by thovernmenet.e G The Gonmevernt also assisted in the negotiation of the argrment an.H owe,ver there tms of the angementwwrr ere h gsuthat the sawpomers ndedeaoat_bin a position where they could lawfully refusee - a-.ee the coul lawfully refuse the soud-d not ship the par- d aitams ters to persons w-,h: c ac ticular Zofduct pars excalushively i th.evessels o2!he-tcul'rs-i- ownermes wrhThe cam, ars to tovernmenthe agreent. ';- Aulian Gvrnent consuch as to warrant an amendment ofidered ta: the r-oisons -wee sUcz the cri sipzal ace shipcnersy could llaw ina noion wherethe- co'- d la fullhippers >hoscri--ine hap^arns tose snaacwodot siw? thearticular products excl-iely nh thwning ce vessels ohf the slip.-mpanies rwlc railkicrided guvlawr sA linmOurn lie; attth zomeat s ta- the *raca wroecsal ads ,th-ystan y waomul cafurr u-s uh rthe into the fieldi of supervsion and supprn may be necessary or evenession even desaaol Aame-t mhe Iscdmit _ r-eT aZ. avomparatively e had ccomtle experience in the field of cartels and private business agreements. We hope later, as a result of the discussions which take place around this table on the detailed provisions in the American or other proposals, to be in a position to indicate to what extent we might lend support to the line of approach contemplated in the American document or revised proposlas that may develop from the Committee's discussion and consider- ation of the subject. (Owing to the above speech being only in manuscript it was impossible to translate it into French immediately after its delivery. It was agreed that it should be translated later and copies circulated to the Committee) MR DU PARC (Belgium) (Interpretation): In view of the very great importance of this question of cartels for Luxemburg, I would ask that the Dele- gate of luxemburg speak first and then I will make some additional ob- servations. `rva tons. rnational industrial agree-terettior): Interncnal instrial c.ee- =ents of a private =ature, -rovide! that they fulfil certain conditions, the first one of which should be the absence of any thing of a hidden character ame the second thc possibility of governe;nts controlling their ecvice it-s, -re likely to be of creat sorice in reducing crises, lso they would blated producers, = also t-e"S ule in the interests of small natirns. f thcesen carried cut saisfacto y they reprsefit alize and divide adaptationa th een ic ^ ani: ie adaptat betwe. ive to price of production. Secondlye t -ee of roauction. Secondly the labour question. In tisfactca w-.a the labour cuastithis way they rc-Relative stability of production -.Rj1-ativa stabi) :ty of oroauctdoes nit mean that this is done bMalthusianal restrictions or by '-us_ economy andnot meanc meas_=es. lt does wot :oan either stagnation or . If international agreements were multipliedrnatio.al a-ree-zents woren*&i- ause they responded to a real demand. Whathe ` o'2 - C- - v %'1"- aeT.-.hat- they cannot be confused with trsu they ea-.,c~t he confe trusts Contrary to international agreement, Coetrary- to int otional e nt 1) E/PC/T/C.III/PV/2. a trust is a well known enterprise which is carried out by absorption or by agreement and which hands over to one sole body its complete and ministration from the commerical and the industrial point of view,, either in suppressing entirely te_ constituent parts of the central society or by setting up a societyw-hich, according tyo its discretion, elps on the common good and shares the results. According to a prep- established rule, the union which is carie_d out within this trust is ermanent and it is complete. The word "cartel" itself is unsatisac- tory and inadequate. Between a simple "gentlemen's agreement" and a trust there is a whole series of intermediary organizations which exist of which cartels for only one fraction. International agreements can be defined as movements having for their object the co-operation of the industraial enterprises of various countries with a view to the )setting up of a better organization of production and of markets and the suppression of certain overhead charges, together with the hunt for new markets, the regulating of currency and of competition and the development of technical progress. Is that object compatible with the aims that the International Conference on Trade and Employment is following? We believe, orn the other hand, that it can contribute very greatly and satisfactorily to the carrying out of these objects. A group of interest such as, for instance, an international agreement, can itself quite clearly take on aggressive forms such as an attempt to dominate the markets and in this way to supress the small producers and exploit the consumers. There are quite a number of abuses which have toto avoided. We have to consider that the following practices should h be ndomned: the reduction, which is economically unjustinjfiable, of pu ply to a lel w hich is incpac-tib with the normal needs of consumption; ther. raising oprices to exaggerated heights; the boycotting of produc uers or . consumers;and, in particular, unfair machinations which tend - tprevent-. accessotO the souec-s of pply: unjustifiable discrimination not onl aigainst ertain proaucers but alo a ainst certainconsumers in -articular rwhen thisiiscrimination rrefes tGo prices and conditions of sale, and whe iA, .1a) f ,t p ,; V it sots asidC thOse W'Michn rosu1lt from the no-l usaCs of com-raerce; the seizing hold of tcchrica.l inventions, of naturc]l resources or other processes ,-hich t_-nd to renvent exploitation. Goc arcemenents if care is takcn do not fall into ary of these excesses. h.a, 1Xave seen that they orly look to thle a.dvancezment of the interests of private Pooplo or of the gener wi- t;hich might result in unroegl ted cc .ettion d ra - t:io. brought bout by economic crises --nd the effects of intenr.ntional diso-der. xgreoments which tend alorg these 'ines to increase pro- auct;on or to improve the quality of protection an w.lich lead to the hazmiordous development and the placing on =ark-5s of zn-actured goods tovethIer with collaboration between consu.mers, are those what are desired&. .e =.ust not forget that the progress of science and the con- siie-able develonoment of mech.-aisation are c-ried to an extraordinary length, very- often cuite out of proportions .th the absorption cr pac: ty of the mr ket and the possibilities of mrodiuers. T-lis develoment in mch~mization has led to a reduction in cost -urine cnd: to the groins iqport_=ce of deefinite prices hich nave resu1 ted in a-r more sensitive variations in the decree of activity. They nied, if not a -mket. which is -rkins at full blast, at least a Pace .which is sufficiently egular to be r.dt^ined in order to result i- ^ good -,ercantage of caoci ty. Mhe interioewndence of th- variOus braqchcs of activity ha-s become such. that a sto-o--a of indaus- u imeaiateiy lead tc a -hcle c.n of tr-uble s =.en to storacges in allied bran_'.cs h .. an. otnret inadus tries such as transport. This of curse has a serious influence on economic ana social plennming. Nations Zhich live through all- their inte:-ationra markets and which have only 'got a smnl homI market are exceedlirnE -V; sensitive to crises -.hich attack their :markets ann ;en attaclk the markets of bia products i- the commearci l world. They suffer mucon more ±Lx from. tris brook in. ccetition and its nor ' consecuences t -a they do ge-neralljy frm edcei usom tritsr th- mh-s = gnralla ~.u_-e_: c-asmo-s tar--f~s C? Ct@ e an. .7rch are not protectionLst. Their wn .: to-a. is that nothin- shoul_ be included that can, ntterdate the effects cf the crises and ;tey lc-pe 16. /PC/T/C. IT7T/.V/2 consequently thIat . close econo-ic collaboration between the na-ions ,.11 take place bect7an the industrialists cf those nations and also between producers and consumers. I now co=e on to a survey of a certoin number of chearacteris- tics of these agreements, th, conditions thaz they off~r and the draw- b acks w?+ich -,e-y often acco:any then. ?i-rst of La!, thes form. The f o::r th-at tcse inte:'natione! tgree:ments c=n ake is -vezy varied an.d vory numerous. The mos t in3ort-ntL* agreements are not -Lways those whcse legal aspects see- to be thre most zarkd2. The oucstion of for= is -erhaps not most i:crtant; -mna -:Lettlhr agreaent be based or. sinele articles cf association or or, r private signature or whether it take the form of a co-oporative society or linite& com;:aW, that does not water the agreement Itself vey m:uch. T.iat s more iroort n is that it should-: not ccne in any clanaestino ray; .nad Jugt as ^n agreement translates itself by certain effects on th-e m-.-ret. _ could, in an inter-.ational organzation ti7ichcrries on. ra interntiona co- o-oerrtior. to be founa in these agreements, occasion-aly -out into force adequate masures. ith ref eren^_ o the aims of thes_; agreements, amongst the =ain forms of sound inuastr-:l agreement -.-! night mention. those tlha aim at (i) aida-tin su3-)ly to demand, (2r limiting the extension of price fluctua.ticns, (54 s-rn techi oe, ( e echen e of resuls obtai eb . fro-m sCi c . 'ct r scarh, a-n. (.5 af-Cour tI a con-. su.::,ti on, an'. cons e:cuetlyv tl_ production., oC goos accorc-mn to a system o2 ~rcrc::;;^argo-\.;ic'h has- a b ven :ell o ~ed ?u-thernore, ex- -eDrion-c h2._s 7:Z'-C7 that agreements vchioh ar .wel re-uaede iave' ed | cV%--e,.nts to avoid the Sett- inE u o rtec icnis- a..res or Of weae.on:g o- even of su.5.zressing pyoteotio- at c ;isted fo cett re~gao .s. .:s a..-.^& mattr of fac.ct. th:e ne~et C- o ae e ra--ed con direct-> betwee..- e. -rce ssional ar. :_ee"- e-noledge of the mamrkcet a-rc generelly acre easy tn_ b.-ennents. The_ history of t:.- irnt-;rna-tic na steloj 3ccmz. ; ! u-fi-s -as nTumercus oan=eles. 1. The settlement, for instance, of Franco-German difficulties, the problem of imports, the reduction of customs duties in Great Britain, the agreement with the Union of South Africa and the suppression by this latter country of' the anti-dumping duties, an ideal to which we tend, and which of course is the suppression in any case or the lowering of the customs barriers and of arbitrary quotas; the conclusion of an international agreement amongst producers, traders and consumers - all these things suggest other means by which this objective can be obtained, and in any case they do facilitate it. Now, let us turn to the question of technical progress. it has often been said that agreements check it or hold it up. That is not the case; the contrary is rather the case; and if countries have suffered fron obligations which have been taken on too lightly by producers who live in their territories, we cannot, on that account, say that the agreements are to blaze for that. The agreements of the International Steel Association, for instance, do not prevent the development of plant in countries that were signatories of that agreement or which were bound by similar conventions. Whether it was a question of big or smal producers there was never any appeal at al made to a jurisdiction which in order to be perfectly protected had inserted a clause in these conventions; and the quotas were not absolutely unchangeable. On various occasions they were altered in order to take into account the changes that had taken place in the structure of the groups that belong. to this Association. One of the most marked conditions of this concrete agreement is precisely the fact that:the formula is so flexible; all reservations can be made and all lguarantees of security clauses can be inserted in the agreement itself. Each Government, in particular, has to take the necessary measures in order to prevent nationals from signing obligations which might be harmful to the general interest. But there is no question at all but that the certainity of obtaining regularar benefits ve . flavoured very mucmore produp ctive investments, that is to say, technicap -goaress. ese agreements t facilitated thp rocess by E/PC/T/C.III/PV/2 which joint experiments that would have been far too expensive in new processes and in the finding of new markets have been carried out. The control of production or of exports, the sharing of markets and agree- ments concerning prices: should these be considered restrictive and should they be condemned? As soon as they attempt to remedy excesses in competition and not to prevent sound competition, and as soon as they try to maintain a reasonable structure of prices which do not mean ruination, or the entire soppression of markets on the part of producers who are interested, then these agreements can only do good. E/PC/ T/ C.III/PV/ 2 Economic liberalism is a factor which makes for progress, but we must not forget that all excesses are harmful. It dces not realise the adaptation of supply to demand, except in an imperfect way and always, as it were, in a lagging way and by sudden jumps. No country can accept a situation here its economy or its exports are ruined by prolongation of crises or commercial struggles, which bring good to no-one. If evolution is to take place, then it is much better for it to tave place progressively. It must not be carried out by continual struggling and perhaps excluding the possibility of agreements between producers for the rationalization of production. These agreements/are a means of ensuing to everyone a reasonable share in the profits of international commerce. It does not completely, suppress competition, nor even selection, and experience has shown that if these international agreements are well carried out, then in periods of crisis they represent a very precious element in the recovery of commerce, and in periods of boom they act as a tolerating act factor. A study of profits and prices for production or other purposes which have in the past been the object of agreements shows that the variations either way have not been entirely suppressed, but merely attenuated. We would take as an example the experience of 1931-32 which was a time when prices dropped to a ridiculously low degree and were lower than cost, and we would like to know what these prices would have been in 1938 if there had not been an international agreement. The demand of the export markets at that time fell lower than in 1931-32; it represented less than 40% of what it had been before the 1929 prices. Had we had a regime of absolute freedom at that time it would have led to the ruin, of quite a number of producers and others and 20. CM E/PC/T/C.III/PV/2 other serious social difficulties, such, for instance, as the dismissal of large numbers of workmen. Prices in the home market would have been affected and nobody could have gained; it would merely have aggravated the whole world economy. The agreement, which acted as a curb on the rise during the boom of 1937, tried to foIlow the same moderating policy and the same wise policy when prices were falling, and tried thus to limit the evil, and we can say that it was successful . An agreement which would be effective for raising prices artificially would be harmful and must be condemned, although any exaggeration along these lines would lead to reactions which would neutralize these tendencies, either by the fact that substitute products were put forward, or for other reasons. Moreover, on account of the enormous incidence of fixed prices in modern industry producers generally prefer to sell a relatively high tonnage at low prices, rather than a small tonnage at high prices. The main aim of the Conference is to bring about in all the member countries social security by stability of occupation and stability of labour and the wages given to that labour. This presupposes, of course, a certain stability of production, the absence of sudden changes, the attenuation of periodical crises of over-production or under-consumption. We are convinced that such agreements can play a very important social part, but it is desirable, in order that their action should be efficacious, that their duration should not be limited merely to the periods of acute crisis. With regard to the relationss between international agree- ments and governments, those agreements, if they are well related, can be a very important factor towards carrying out economic and social progress. In order to gain this end it is 21. C3 E/ PC/ T/C.III/ PV/ 2 absolutely necessary that their activity be known by the governments, and controlled by them. A certain number of countries do at present regulate the activities of such agreements, and ethers are preparing to follow them along those lines. Luxembourg - a democratic country, not only by desire, but also by tradition - is of opinion that these agreements should be submitted to a certain control, which, while respecting the rights of the various members will safeguard the interests of consumers and workers. To this end it believes it is necessary that the statutes underlying these agreements, whatever their mode of constitution may be, should be deposited with the govern- ments, and that periodical reports of their activities should be/submitted to the governments. On the other hand Luxembourg is of opinion that the governments should have the nacessary national legislation in order to be able to prevent and suppress abuses,. whenever necessary, by means of the agreements. THE CHAIRMAN (Interpretation): The Chair thanks the delegate of Luxembourg for his statement, and calls on the delegate of Belgium to speak. MR. Du PARC (Belgium) ( Interpretation): Mr. Chairman, we entirely share the views which have been expressed in the draft Charter regarding the aims which are to be attained with regard to employment and international trade, and we think, too, that those aims comprise a maximum of employment and the maximum of revenue a attainable. We believe also that the development of close economic relations between the nations will facilitate its retaliation, e think, however, that * agreements which refer to prices or tend to regulate product- ion, when they consider exclusively the ordering or regulating of industry do not in general oppose the definite aims of the 22. E/PC/T/C.III/PV/2 Charter. It is/certain that the policy which is carried out by these agreements can have unfortunate consequences, but there are far more cases where this policy has had salutary effects on economic activity and effects which have contributed to the carrying out of the aims towards international co-operation to which the authors of the Charter on International Trade and Employment are looking. In order to prevent the action of these agreements following undesirable lines it would suffice to arrange for a control which is both national and international to watch over the interests of the people in general. The origin of many agree- ments of which we have had experience in Belgium is linked up with a very difficult situation in which at a certain time the enterprises of a certain industry found themselves placed. The elaboration of agreements corresponded then to reactions, tending to defend one's self or to adapt- certain data which existed, and they were not based on a desire to obtain any exaggerated profits. Furthermore, it appeared, based on experience, that these reactions of defence were very much more useful towards the general policy of tending to reduce economic fluctuations than the _reverse, because in quite a large number of cases they favoured progressive development of consumption alongside production .e couldmention from this point of view the various agree ments which fell underthe International Steel Agreement; such, for instance, as the agreements concerning coke, cement nitrogin, copper, tin etc. Their development showed none of the defects with which as a rule these forms of organization are repreached Thus nearly all the agreements aimed at setting aside such drawbacks as the exaggerated capacity of production, and nobody 23. OM C5 E/PC/T/C .III /PV/2 has ever claimed that they are responsible for any kind of Penury. Indeed, statistics prove the contrary, because taking the average from 1925 to 1929 as being 100, they show that world production between 1929, at the time when there was I general freedom of trade, a d. 1937 -rose as folwlos: for pooper, fmor 120 to 142; for zcnr, fmon l09 to 114; for tin, omo= 117 to 126; and ro, aluminium , from 124 to 224.w .ith regard to nitge-on, thanks to careful progamanda the no sumption by agriculture rose from 1,670,000 tons in l8-2 29 to 2,244, 000 tons in 1936-37. The same factors hold goo .rox cement H.Eere T ill give the example of elgium=,w here an gree-rent has bean inexisetneo .sinec 1935, and the consumption fF cement :er head of population rose from 227 kilos in 1929 to 239 in 1937 and 252 in 1938 , after having fallen to 191 in 1932. Turning nor to prices, statistical research has shown that not only for the rise but also for the fall, fluctuations of prices fixed by agreement are loss marked than price fluctuations of products which are subject to free competition All the agreements that we have mentioned so far work under central bodies which have special offices for research work and for increasing the quality of products, for increasing. their utility . and also services which study the structure of the maketa in order to crganize production en the very best basis and get the various enterpriscs to functions as though they were on, body. Such agreements have made it possible to get more marked specialization, and at the same, time faveur an inercase of productivity and a reductior of cost prices. These for example which I have given show that agreements, if they are well regulated and ordered, can have very satisfactory results. They favour stability and Progressive development lo<::et of nTotioney; ehIc-cp u-p he lemployment-ply c wage--Taces. .e must rgetfo rte hothor,o at en. the other greementsonts 24A OM 06 E /PC/T/C . III/PV /2 can also give rise to deviations and to abuses. In order to meet this peril it is desirable that legislative provisions be enacted in the various countries so that the public authorities may have the wherewithal to parry these abuses which might perhaps take place in this regime of economic power. These measures should be extended, Furthermore, to all abuses that any person or body might perhaps be able to create in order to get a dominating economic power. In Belgium a draft law has been tabled which includes preventive measures and measures for suppression. The preventive measures are four in number. First, they prescribe the sending in in writing of all contracts which have been taken over by the parties to any national agreement which aims at establishing at joint economic regulation, which those who sign this agreement together represent a preponderating influence in some specially regulated branch of industry. Secondly, they impose on every national agreement which is of major importance for the economy of the country the obligation of communicating to the Administration copies of all the documents on which the agreements is based. Thirdly, they impose on any national enterprise which takes part in an agreement the obligation to notify its participation to the administration Fourthly, this legislation authorizes the Administration to make it compulsory to have rules which have been adopted by the majority of the members. That is to say, those who are concerned must first of all give proof that the agreement which they wish to see extended and made obligatory has been adopted by a clear majority, and that the agreement is in accordance with the general interest. With regard to measures aiming at suppression and which are provided by the legislation which has been drafted, these 25 C7 E/PC/T/C.III/PV/2 refer to abuses of economic power. The most important condition at the base of any international action is that each country shall have the necessary legislation in order to meet such abuse of economic power. Furthermore, in order that such action shall be efficacious it is desirable that such legislation should correspond to identical conceptions and idea. THE CHAIRMAN: I thank the delegate of Belgium, and I call on the delegate of Brazil. MR. RODRIGUES (Brazil) (Interpretation): Mr. Chairman, the restrictive business practices which have as their aim the dominating of outlets and of markets and the warping of the normal process of price formation have been dealt ith for some time by the ordinary legislation, which safeguards the popular economic regime. The Brazilian Constitution attaches very great importance to this legal principle, which was approved by our Article 148 on the 18th September last, and which has set up a constitutional provision which states that the law will suppress the abuse of economic power, whatever its form, including groups of individual enterprises or social groups of any kind which attempt to dominate the national markets, to eliminate competition or to arbitrarily increase their profits. On the other hand, it is certain that nations which, like Brazil, are now in the act of developing themselves economically, have very good reason, which need not be mentioned here, for fearing the pernicious effects of these practices on their economies, and that is why Brazil is in principle in agreement with the proposals put forward by the United States. Brazil itself has had the honour of submitting suggestions for Article 38, Section (n) of a document which has been submitted to this Committee. It will 26 E/PC/T/C.III/PV/2 thus be seen that for Brazil the adoption of these principles that appear in this international Charter will be most effective on the international plane and in accord with the legal provisions that are at present in force in Brazil. The Brazilian delegation would like to reserve to itself the right to come back to this subject later on, and of submitting modifications if necessary to the proposals that have been put forward. THE CHAIRMAN (Interpretation): I thank the delegate of Brazil for his statement, and I call on the delegate of Canada. MR. F. A. McGREGOR (Canada): Mr. Chairman, the representatives of Canada welcome very warmly the opportunity of discussing with other nations ways and means of dealing with the problem of restrictive business practices in international trade. Expansion of international trade and employment is the positive aim of the conference and all its committees, and removal of barriers is a necessary means to that end. In Committees II and IV interest is focussed on the removal or reduction of restrictions imposed by governments. The task of this Committee is to deal with restrictions imposed, not by governments ,but by private business enterprises. Many of the private restrictions are in form and effect similar to those imposed by governments. Private international combinations can act, sometimes more effective- ly than individual govrernments, in prohibiting or limiting exports or imports; they can and do sometimes impose quantitative restrictions, just as governments can and sometimes do, and take over control of prices of certain commodities, make extensions of the protection afforded by state-granted patent rights. In these and other ways they 27. E/PC/T/C.III/PV/2 can to some extent displace national laws by private laws of their own making. The effects of such private restrictions can thus be as far-reaching as the effects of public restrictions. But they are imposed by private interests and presumably are designed to serve private interests. They are not imposed, and usually are not authorized, by any public authority acting in the interests of the general public affected by them. It is not suggested that all the restrictions imposed by private international combinations affect injuriously the country subject to the restrictions. It is surely obvious, however, that such private power to impose restrictions, some of which may be injurious, should be subject to some effective control. At present threee appears to be no adequate control, either indirectly, through competition or directly by govern- ment action, to prevent undesirable effects. Clearly competition within cartelized industries is not doing the job; nor can the competition of substitute commodities be depended upon, because too often the substitutes are controlled by the same authority directly or through agreements with others. Nor is potential competition a sufficient deterrent, since there are too many ways of rendering potential competition impotent. It is equally clear that action by the government of any one country is usually inadequate to safeguard the interests of its citizens against injury by powerful groups operations out side its jurisdiction. We in Canada feel strongly that where private industry sets up such unreasonable barriers to a reasonably free inter- change of goods, governments, individually and collectively, should do something about it. We assume that the governments represented in this Committee will be sympathetic to a policy of joint action to curb private business practices which produce such interfering effects. It is our hope that this E/PO/T/C.=/FV/2 Coilttec, in considcrinr z rivat2 barriers to trade expansionn, -ill bc ns successL.ul as t.. otho Com.ittccs in dcvisinG maSUrCE; -.ic:^ -:ili assist in achioving th;o comon objective. ~.e s~-.1' ccrct:`ntW on tho privctc b-rri-rs. "C1Cl.:ly" (as the TJ.Sp. ropsals; czx GsscC it so neatly' "ii trr-o is to incr-case as a rosuit of tho li:h i-cnin-- of :ovcrnmont rost-i ct- ions,ta ? ore -ic ts concerned must ; surc th~-t it is nct xcstxv.ined by private com-binations." Probably it ..ill bc di. -icult tc -iscuss this sudbj ct ir. tkhis Coo-ittCo -ithout, rsC:rtinz 1-rcuont1y to use c. te - o "c&=rtel. a -ord -hich,. as one 'n-isL i-: )-s aut it. "is no !on- vc: an ocoon-ic term but .-L.. itht of opprocbrium.. If -C coornct avoid it.s use, prhap.- -7c aerL caree to think c - he "artel' as mcrcly c. shorthand s-vnon or O the. rather unc§:u but mcr- accurate hzeras c " crit x t _ inr rn tional unrd.u i restr!@ictive tbusina^s prac-:tics'l! Even -h- c:ta :: t-tic:. o trho oflici dcsoxrintion, "lrctzicti-v-e business pr-ct-^ s' i,-cht ad.- unnecessarily to the ln-th -I our `.iscuss-ioin-. Cur Ca.na-ian attitudce::ikt ic exressed in a inS: a. C'e_~ ity r co'Csed to c-ivatc interna.ticnal arcone m ;--nt t s.rO u r. ; t 1 - - i c .i-v Our .o hasiE ios 'n ,h ''ord uncdu> -;; Th at iEs -he ef ct c^ ou C eCna-di an n le:islation. th. Ccnbinc nves~mti_'c-.tion Act an.d Scctici. 40r ot .hc Criminal Code. I g; si~od, of ccur c, to d;el it- dozestic ccrzinations and noncpoli as, in a a -h hno. les1c;sS` ao.Cut intun-aticrI cart *l's than c .X --c do nc-. l-ct thct -ko c- --ca -rioat da-l abl :t -The . t, but -c arc 'carnin-. It -as because of thc -esirc our cu:: Crrien to lea-r. more o.:-'-t ir.ter national cartcla, bcaus foc it. a--.rcncss 0: s o_ o C, ir atr .nt alc e t:t c T i t i ry c Ctas :a^O a JCr o' n C a.C, to fid o ut --ht th -v are, hc-- the-- --o , hc- tho: a ' cct t h Can,.8ian. econom y-. a nd - 'atI icislat;ive. or et.h 2? . - - a;'~~~~~~~~~~~~~~~~PC/ T/ C .mPV/ 2 stops nlir-ht bo nocossary to safcguard thc Cacnadian public. Tho results of our study are contained in a report, "Caiada and Intorrnational Cartels', 7-hich 7es completed in October,. 1945. If meobors of tho Com-ittoe -ould bo interested in socinr- the report, --a havo a 1xc- copies available i.I ZnE::lish and Fronch. It is not by any means an exhaustive study.. *;i norely presented, by ray oT illustration, a c--- instances of the -ay in --hich Ornada .a2s af-fcted by pivte.teinternation- a! acome-ntse, made sone comnerit on tLom, and submitted several reconendat ions. I. r-e=r rn t"o this Report in Paxliamert inr Jvly last, tho Rt. Horo. LMr, St.Ihauren,-, m inister of Justice, sai i - HThs reporte-, - requested for thp Durpose of ascertain in -ha t-. th h e situation 7a . It ras tabled for the purpose of permitt-In -Parliament and the public to zc2 i _ ze t-hat there -ere abuses .-hich required in - te wen ti on," Mr4 St. aurent stated also: " lU is the intention of the Gcvernment to zeccmmend toG Parliament substantial imple-enting of th-;e recommendations of this reportt" Thiat intentift has already been cariiod out. One of the ~eccmemdaions. !-hich obvious>y could not be implemented imncdiatdly, sr) ~ ;B.s thr ta'zinc of ' ':ffocive measures of int;er- national co-Lllaboration to check the abused of cartelization". h rc_ s?-e Qif iclly t-he r epc-t recommended that the Gov ern ,en of Canada J.7e; ts t Uport to the establishment of an inter- nation ofice to al --ith cartels, r. c actionon iththe Economy ic an.-d Soci aL Counrcil . The recomm-endaticn concluded: o _ tab O_9vlishr t of an) international off ice to further ~t~ z c: .cns ame-n nations and t:o assist in the e s tablish- :-mo nt C_ c:CC-c Ue.t -:incletls f :or ;,C control of cartels thr. _scussior a nC oompromise -oulc seoo to be cnc or ., - ssentia1 first stops in doli na' -ith tho inter- zinat o.;1 cartel Troble m' ; I c anzr n - ,at; viOns £r~ _ .vae such San irvnciry a.s c nc_ C:, * they .-;i.-t be shoo , as --; ~-s -r, C to cca Uth :._r. to which the course of trade in ccta i ^ co..:oditics ha: brn 30 influenced by decisions of private business interests outside the country. We had known little or nothing about the existence of many of the agreements, much less their terms. They were private agreements, many of them exceed- ingly private. Much of the information we secured appeared to corroborate what the American authorities had found in their much more extensive inquiries. Some of the agreements we examined stated baldly that Canada, or rather the Canadian market for certain goods which we must import, belonged to this or that foreign producer. The decision has been made for us, by outsiders, That kinds and qualities of goods we should get, in what quantities, and at what price. Tariff reductions, to induce other suppliers to cone in, could be of no effect because they had agreed to stay out of our market. In turn they were assigned to other areas in which they were granted a monopoly, not a grant by the State, but by their associates in the cartel. Although such a monopoly would be offensive to our laws, we could not take the case to the courts because the agreements were not made in Canada, or by Canadians, or by persons domiciled in Canada. 31. E/PC/T/C.III/PV/2 E/PC/T/C.III/PV/2 Similarly, some of our manufacturers have not been free to export certain goods to other markets because of agreements which con- fined them to the Canadian market. We might suggest that other nations suffered through inability to buy those excellent Canadian products, just as we suffered from our inability to sell them freely in the ex- port market. These are only two examples of private international business practices which we would regard as unduly restrictive. There are many other types. We need the held of other nations, just as you way need ours, to remove such barriers to a desirable expansion of in- ternational trade. It is our hope that the nations here represented will undertake to do their utmost to prevent such practices. It is our conviction, as Canadian public servants, that Canada will do its utmost in such a joint endeavour. Canada may be freer than some, of course, to give such an undertaking because we feel that we have been. more sinned against than sinning. The international cartel cannot be thought of certainly as a typically Canada product. We think of it rather as an imported product, but one which perhaps should be put on our prohibited list. If, however, Canadian firms should be found by the Organization to be parties to private international agreements which unduly restrict international trade, other nations can rely on it that Canada will do its utmost to implement the terms of any intergovernmen- tal agreement to restrain such restraints. May I add a footnote to our use of the terms "unduly restrictive"? We realise, as you all will,, he tenormous difficulty o administering such a f u S generaelprovisions; th. d:ficuty, pobut not ythe imt'ibngit-,of -povir.- hat any course of conductnis undab or u-eeasoneelu; th, difftain lty, but agin not the impossibiinglitything likey, oform secur anneupretation itrrrtatacn by even a majority of shi countriganisan the One country &ncount ' up of countries maynconsider as exinen-er aS sonable anzsonaee a. which is profitable to them, but others may regaredthe samema^ ror aam as highly - shigh,-Ly obnoeious becausc they suffer from it. In proposing such aeatest of unrasonbleess instead cc of a seri 32. * itPC/'n,/CTIII/_/2 specific prohibit iors, wc_ fnlly rc al ize that sora rcp~dionsiblo rvs- trictivc agreements woul' escape condemnation which -7muld unquestion- ably be condemned if the offences we-ec spelled out in ::e exact tcrms. It m:ey be that the Ognizaticr. would lhave to start off by condeniri-^g onry such agreements as re unduly une or unreasonably unreasonable. 7'ven if th'ot -'e-e so, we suggest that toc rigi a for-u.la would defe t its ovr. purposes, might we11 be unenforccable because of its Tigidty (you ..ight say because it was u\nduly restrictive). It would probably condemn practices -,which 1tech.nically came within the definition but which actually -were not injurious to lthe trade of any country. It night also, to use the words -of a vezery learned judge, "by ,articulerization deLeat its purposes by -rovidirZ loopholes for escape. " Ir. suggesting this cxoroach e - ve ar. uneasy suspicion thact se:- wr do not sh-are our generl attitude tovar. c_--tels tight con- sidier that a Deniel had ccm to .0-jud~g..t =-r -aleade-, thair case. I need not remirn you of the ultimate -tri-xmh of justice which restrained the Venetian ca`it.alist from gettinE nore th= was coming to him. Our thought is that by builinr. up a kinCd of international case law in tais field, one im-port <t- case afteto: anothe-, ., Shall gradually achieve a reasonaly cie-r-cut defiition of .-..ht al agreed should be prohibited. Fe should thten 'havae a botr of la-. that wo-_ be enforceable because it would have the sfbstantial b-zr.. of internatona public oninionr in the long rn, of course, eve,. t::in.e. . ' ezad _r.-c the fairness aCn firmn=ess and CO:nsen_ w.-;.^ _ uaoa 1r. ` c-.-G Sa-at of an, international co;vention. It wouI be st-a:nze indeed if renrcsenta.tives of Seventeen dirent CurtrieS did not come to this conference 7wih widely ddversent attitd2_`4es )owra e t.n;rn Ct _ cartel. Personally, I have been more :mnresSed thus. far by the de-ree of unar.ir;Y that iS apparent than by our difrncos. _ U- fon- o a nS here yet ; o things cartels sho'd-1 be ^oole al. arnihilat-e-. a none who would ¢ to thle other .extircme of l_.- t _. aS :._ essan*s. ... __ L SSco ize that some of th. can do ama :-v_ iDo.' 1 i.go that a re thoroughly re-Drehen-ble 3~3. E/PC/T/C. III/PV/2 and should not be permitted to recur. We all recognize too the con- tributions some of them have made to scientific research and the stab- ilization of their industries,although some would question the value of too much stabilization. For ourselves, we do not favour the method of striking a balance by adding up their virtues in one column and their vices in another, and then pronouncing them either virtuous on the whole and therefore unblamable, or on balance vicious and therefore thoroughly dannable. It is their improperly restrictive practices we want to get at, and wethink that by joint effort of governments such practices can be got at, and eliminated. We may have more differences of opinion on how to go about eliminating undesirable practices; but even on this point I question if we shall find ourselves in the end very far apart. We would not favour, for example, a programme of more registration of cartels and their agreements, fearing that such a measure would amount to little more than a licensing of their activities, a kind of government acquiescence with-t acq i essencee t out adcuaneingkdrledge of what was bcinr e2ne under the licence. Th.re are othc- objections to sach a course, but that is . subject for more detailed consideeratign in our subsequent metinZs. h.at I have tried to ao in this statement is to indicate Canada' sacenercl attitude. It is _n attitude of lively interest in the probem-wia dearm appreciation of the lighta>- :reciation of 4tie ligt had from other countreis,gv 'h fr=greemente coutr-i genuine araement ey have been outlined, and enthuastic supportith t'e objectives as ben outlne, :^n_ enthusiastic sul nort of _Baes waichwill aseistiaci-eving thse objectiLes. We are industrial self-govern-tis som eti: refer to as "in-uztrial sel-e^.vr- y the industry for the r`Over:nMt of an inustz b-7 the indust7 for thc government because itnot idea of ccr:C SElf-:evernlen- -camSo it ies effected./ Wethink thattion of f_ to 'rties z.-ffcted. t'irit'_; reed upon should provice ade-het =^.- z r-c-'. tmn should - .rod _d effences and adequate measuresr. of aile-1C eff-J- oef O C Z a 'u:'.' wSurcz lly, we favour other es have be9 aa creve. ofclns >a.v_ , other ion and c vroventi-v e.asurc doci.-e. to. curb th._e acquisition ' L4. D. 4 exercise of power by strong private inernational groups where there are clear indications that such power is likely to be used to frustrate the objectives of the Organization. If we are not all agreed that absolute power always corrupts absolutely, surely we can agree at least that "the power to do ill deeds oft makes ill deeds done." I hope we have made it clear that ours is not an attitude of apathy or lukewarmness. We can be as cool as the coolest toward a policy of government interference where no harm is being done and no harm is likely to be done. At the other extreme we can be quite coldc oward any proposal to do nothing about it or to make only futile gese- ures in dealing with the problem. But Canada will give warm aand holehearted support, we feel confident, o anm policy whhich cncer- trates on the abuses of cartelization and which represents an earnest effort to prevent practices of international combinations or monopolies which are unduly or unreasonably restrictive. E. fls. 35. THE CHAIRMAN (interpretation): The Chairman says that he would like to thank Mr McGregor very warmly for his statement. In that statement he referred to an enquiry carried out under his direction on behalf of the Canadian Governmental some time ago, and the Chairman is quite sure that you all know of this very remarkable report which gives the findings of that enquiry. He read it some months back and is glad to find that a number of facts and qualities contained in that report are again in the statement put before us today. ° It is now ton manutes-to six and the Chaira considers it is time to think about the conclusion of this meeting. Before adjourning,the Secretary wxl ke a coiuniction. TM SEeCREC'TYr Koican): There have been a fcw chnges in the delegations llto this Co=3tee, and Im would invite a11elegations to send -ea list of their delegatemms.aelternates and advisors on this Co:ttc, giving also .heir affiliation in theirm docstic posi"in, and I -wil then rak up a complete limongstl of the Ce=ittec o ciArca wulate aonalthe delegations. Os.ih has been expressed to me that such a list should be available, I will make it from yodur notes . There have beentoay a few unfortunate occurrences cing to the system of translagtion. I will try tomorrow to -t the use of the thmulationse large conference roc wth amthanrpretation system. I o not quite sure whether 7can promise nthatm, but in any case I carpro-se that there -ll not be such ladpses -gain. As regarz the speech on the A,rt of the Dolet`c f.ustrlia, -w--esllorkinglate it as a w-eorkinz t par, as _ seorcteriat paper, in its Frcnch version. TIMSo ^iLRLThe LI;intan etaten); 'hormn statetemenss that further staenrt wiall11 be hear,dwh tomorrow t o'clock ich for the time schedule or our meeting . At 11.30 thereHe is a meeting of the dads of Delegations an the Chaireof ChairmanttearGn:i.an .will ve o atmeetingat =cetinr, of d urse, a odhairman, MraGrn-'-, : worzalezH *hoois nead f the Chilean Delegltion, wil1 also hand to atmee thatT:- ting. 4hattmeans tha our nd Dhcairman an willia-Ccairmw 'ave to lmeeeave then and it or. arn ill haNe to adjourn. If we have tho advantage oultaneoussimltaprenus interting :3 III.P.T.C.I11.F2 E/PC/T.C.III.P.V.2 system, we shall probably be able to hear two statements, and then in the afternoon we shall be able to finish with this statement. MR McGREGOR (Canada): Would it be possible to consider a meeting at an earlier hour tomorrow, say 10.20 or even 10 o' clock? it THE CHAIRMAN (interpretation): I think that/will be rather difficult for some delegations to meet before 11 o'clock, but I would propose that as the French Delegation can be here at 10.30, if it suits the majority of the Delegations and the Secretariat has no objections of a practical nature to make, we should meet at 10.30 tomorrow. That would leave us an hour for our meeting in the morning. THE SECRETARY (Mr Korican): I think that we will be able to arrnge a meeting for 10.30 tomorrow morning. The place of the meetig will - be foundni. the JonrIal, also the hour of the meeting, but I think I can promise now that we shall start at .1030. EMCHAIRMALd( interpretation): Arerc there any further observations or questions? If there are none, then we will adjourn. (The meeting adjourned at p.7Pm.) 37

GATT Library

qj019mn4269

Verbatim Report of the Second Meeting of Committee V : Held at Church House, Westminster, S.W.l. on Friday, 25 October 1946 at 3.0 p.m

United Nations Economic and Social Council, October 25, 1946

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

25/10/1946

official documents

E/PC/T/C.V./PV/2, E/PC/T/C.V/32-35, and E/PC/T/C.V/PV/1-2

https://exhibits.stanford.edu/gatt/catalog/qj019mn4269

qj019mn4269_90230007.xml

GATT_157

;-a -5. ^> zi a o*S! d * 3/Pc/T/c*V./Pv/2 .- :: : UNITM NZIONS MONOLIC ; SOCI.L COUNCIL PREPILTORY CO;ITT IT:PTION.Z COIMMME ON TRDE3 .N LY1ZIT Verbatim-Report of the SECOND .EING of COMM.TEE V helai 2t Whurmh House, westrinster, S.W.l. or. Friday, 25th October. 1946 mMr Lynn R.. Adinster (U.S.L.) (From the Shorthand Notes of WB FUNNELLGUREY, SONS & 58, Vict ria Street,. VestmI.) er, S.W.l-le . . E/PC/T/C.V./PV/2 . .. THAIRMAN:: I shall firstl cal on the Secretary of the Committee to make soae remarks with reference to the docume th rwnich have been distributed. TIMRETABBT.RY: I jwst vish to explain that one wr tvo members of the Committee had asked the Secretariat if they could be provided with copies of the Charter of the Un NtedNations and theaFinsl Acts or the Constitutions of various other specializee agencicWe Te have therefore endeavoured to get a set of these documents together and to make one set available to each member of themComeittce, The folwhr ich wou ill find in front of you is a folder containing these decumrnts. In one or two cases the set is not quite complete , wet Ye areeendoavouring to get additional copies and will m ke -those available to those delegations which have not already received them, is MANTiLN (Belgium) : (interpretation): Mr rmaineInw 1 Vish to call your attention to the possibility of having the documents both in French and in English at the samm ine. It is indeed difficult for us, beca se 'we are wc.king in the French language, if -wv hake not the French document before us, THE SEARYT.Rl: I should have apologised for the fact that some documents are not available in FrenWh. 7e 2had to rely on Ms 1cajcsty's StationOry Cffice for some of the documents, and thee arc nlwaaJ1.ys ped tce. in French. However, we will do our best to get French copies for the French-speaking members of the Committee. HOUMANTSf. (Belgium) (interpretation): Thank you. THAIRMAN:LZ: I presume that the Delegates have had ample opportunity by now to consider the Agenda which was distributed at the first meeting, together with the notes subsequently circulated by the Secreta.iat, On the basis of' this Agenda, the procedure would be for the Committee to examine the relevant provisions of the Un ted, States draft Charter, along with any fications therehereof or additional or alternative provisions which may be suggested by Delegates, or which may emerg as' a result of the work of other . . . . O . .~~~~~~~~~~~~~I E/PC/T/C.V./PV/2. Committees. Are there any comments or suggestions at this point with reference to that Agenda? I am referring now to the Agenda, and not to the suggested order of discussion. MR SCHWENGER (U.S.A.): Mr Chairman, before we go to the question that you opened, I wonder if I am correct in the assumption that we have. This Committee is a technical committee, perhaps as technical as any others, and am I correct in assuming that any of our technical people, as well as the Delegates at the table, may be free to speak on technical questions that arise? THE CHAIRMAN: That, of course, is a matter for the Committee to decide. I may say, however, that at the other Committees which I have attended that has been, I believe, in all cases agreed to, and I should hope that the same procedure might be agreed to with reference to the work of this Committee; but it is for the Committee to decide. I hear no objection. I now call for comments, if any, upon the Proisional Agenda which was distributed. In the absence of any comments, I assume that the Agenda is provisionally accepted as a working document, on the understanding, of course, that. it can be modified or added to at any time, at the pleasure of this Committee. Before proceeding with the real business of the Committee, which is to consider the provisionss of the Charter having to do with organisation, I think I should refer very briefly to a meeting which was held yesterday, there being present the Heads of the various Delegations and the Chairmen of the various Committees, at which consideration was given to the form in which the work of the various Committees of this Conference might be expected to emerge. That question was put, and certain suggestions were made and the Chairmen of the various Committees were called upon to comment with reference to the relationship of the suggested form of our work to the matters within the jurisdiction of the respective Committees. No doubt some of the members of this Committee are familiar by this time with the suggestions made yesterday. The feeling seemed to be (though 3. 0. ./PC/T.V v./P2.. I do not know that I can say that there vwas a formal agreement) that the work of the Conferenecwvould properly take the form first of a summ.ary of the discussions which occurred in the Conference, in the light of the Resolution of tec Economic and Social Councl . That would be a factual summary of the proceedings of the Conference. epcondly, there would be the instructions to an Interm n Drafting Committee which it is expected would be set up b . the Conference, and those instructions would probably cover instructions with reference to the actual draft provisionswvith regard to matters on which agreement had been arrived at, and also perhaps the drafting of alternative provision ' where there was not agreement. Thirdly, there would be -anA, ppendix, which would include the United State d raft Charter and, based upon that, as a starting poin, ' the various comments, suggestions and proposedam=endments that had grown out of the consideration of the Charter in the various Committees, andi t was expected that thatA4ppenix - III would be particularly helpful to the Interim Drafting Cmmzittec. IwTas asked, as I say, to comment on that from the point of vew v of CmmiItec . V. I was unable to say definitely, of course, how our work will proceed, but I suggested that it appeared that we would be able to break up ourw-ork in tem s of the three categories which I mentioned the other day, namely, first those provisions of a purely routine character, on which I said that I hoped that we would be able to arrive at agreement rather easily, and therefore would be able to suggest- the actual draft. Secondly, those provisions which were more, controversial in character, but not greatly dependent on the outcome of the work of the other Cmrmittees, and I said that I hoped that ,we would be able to suggest drafts on those matters o -which we were agreed, and 'we. perhaps alternative drafts where/were not in agreemen.. Finally, with reference to the third category, namely, those provisions of a controversial character., the terms of ,which would have to await the oucomme of the discussions in the other Com-ittees: I again suggested o~~~~4 A/PC/T/C.V./PV/2. that we might eventually be able to suggest drafts of those provisionsions on which there was eventual agreement, and possibly also alternative drafts where there was not agreement, I want to assure you that what I said was of a. very provisional and tentative character, inasmuch as I realise that this Committee has not yet itself decided on the order of its discussion, nor has it formally agreed that we should take up our business in terms of the categories which I mentioned. The next order of business would be a consideration of the proposed order of business. I should like to enquire, first, whether the Committee feels that the division of our work in terms of the three general categories indicated, is satisfactory. It is upon that basis that this Proposed Order of Business has been prepared. In the absence of comments, I take it that that is approved. That would bring us, then, to Item 7 on the Provisional Agenda, as the first item of our discussion, MR BURY (Australia): Mr Chairman, there are actually two provisional agenda which have teen circulated: one is a document put out in the same order as the beginning of your United States draft Charter, and the other by the Secretariat. When you say "Item 7", are we following the ,agenda put out by the Secretariat? THE CHAIRMAN:Yes, I referred to that as the Proposed Order of Business. That is the headline; and it is the first item on the Proposed Order of Business put out by the Secretariat, but it is equivalent to Item 7 on the Agenda. I ought to say that it seems to me that we would make better progress if we were to bear in mind at the outset that all of our discussions on these item is provisional, and that any agreement that we may reach with reference to the terms or text of any provision hasof course the provision that any member of the Committee will be free at any time while this Committee is in existence to move that we go back and reconsider. MR HALLKI (India): I see that the 69th article of the Charter, regarding 5. A/PC/T/C.V./PV/2. the appointment of the Deputy Directors General, provides that these officers will be appointed by the Director General. We have no very strong feelings on this point, but it did. just occur to me that these officers are going to be very important officers, and it may be worth considering whether their appointments should not at least be subject to the approval of the Executive Board. MR ECOLBAN (Norway): It seems to me that the Delegate of India has raised a question of detail concerning the Secretariat. I would ask to be allowed to make some general remarks on the whole problem of the Secretariat. We are these days setting up one important, highly-staffed international Secretariat after another, and it would be a great help to us in our work on our ovwn Secretariat to know exactly whether the necessary coordination of all these international Secretariats has been provided for. Such rmatters of detail as the use of interpreters, translators, stenographers, clerical staff, arrangements for the housing of the meetings, etc. are, if not co-ordinated, liable to involve extremely heavy expenditure, and although we are still living to a certain extent under the war practice of spending money rather recklessly, I think it is high tire to be extremely careful to avoid unnecessary expenditure. For this reason I would like to suggest that our Secretariat should try to give us as much information on co-ordination of the different international Secretariats,which are already in existence or which are contemplated, as possible. That is one point. As to our own Secretriat, I would also like to make quite a general remark. I do not attack any draft, but I feel that we must co-ordinate with the organisation of the Economic and Social Council itself. We must know exactly what steps the Economic and Social Council has taken or contemplates taking for dealing with exactly the same problems, on a high level, as our organisation is supposed to deal with, so as to avoid unnecessary duplication of work, and perhaps conflicts that may lead to unfortunate results. Thirdly, I would like to touch upon the point raised by the Indian Delegate, that the Deputy Directors General should have their appointments at least subject to the approval of the Executive Board. As he said, he did not attach very great importance to this point. 6. A/PC/T/C.V./PV/2. I do not attach very groat importance to it, either, but I think that this point must be solved in the light of the reply we get on my two previous questions: What are the steps taken, or contemplated to be taken, in order to co-ordinate all our international Secretariats; and, secondly, what are the steps taken, or contemplated to be taken, to co-ordinate our Secretariat with the Secretariat and the work of the Economic and Social Council? Personally, if I should express rather a hasty opinion, I would like to give the Director General of our organisation a much more decisive position than under the United States draft. I would be happy to have the Director General and such staff as may be required, leaving it to experience to show how everything should be organized. Mr Chairmen, these are my quite general remarks, and I repeat that this is in no way to be taken as meaning that I do not agree to the text submitted by the United States Delegation. I only ask questions in order to understand it more clearly. 7. E//PC/T/C.V./2. - ; MR. PIERCE (Canada): Mr. Cheirman, thc Article undea- onsider: = tion hatvides twht there -ill be three or more Deputy Directors-Ge Aral, and. rn cle 69 ath paragreph 2 specifies their dutiem. It seers to us that there is a possibility thatvthese proVisions may give rise to practical difficult- ies in adninistration, since the Deputy Directors-General zight .ith some justification under the present draft feel tporerheir no-ers and responsibilities flowed directly from the Charter, rather than from the Director- Genewal. One -ay of meeting the difwiculties 7ould be by awding the -ords, after iothe provisn for the appointment, "and responsib.le to him" ut th:: i s no thr alterwative -::hh is perhaps rprcrable, since at the smame tmeeit tccts the point raisede/Nerregian celagatel&catc, and that ism to onit pecific clfeic refrenco to the Deputy oirececes-Gcnoral and merely provide teat teco DiGerecator-nrlower pc er oina-eoomt theepresent c-scnt im or. Commissions or for suer oth purpo see as c saw- fit. *e might n te ir- ohis ccnnection thate n thc- United Nations Chir wter Itas not considered necessary to make speprovision for the = ph-e aneointm-nt of Deputies; it .as eft t0e o he Secrceterary-Gnal, altho gh he- has in Practice, rf cou-se, appointed them. AIRMAN: F2:T - Before proceeding fu wer ---ith the discussion of thier of tc2 cethe Doputy-Directiors-Genewal I rant to re:hr to the general remarks- ofethe dolegaNe wf Ywriay -ith reference to the Secretariam. He nade some comments on the relationship of the proposed Secretariat of thC I.T.Q. to the Secretariateof tha UNited 1ations, and made some inquwiries ith reference towthat -hole matter. I suggest 8. E/PC/T/C.V./PV/2 that wc might request the Secrctary of this Committee to look into that matter and to report, either orally or in writing, at our next meeting. Would tha be satisfactory? MR. COLBAN (Norway): Perfectly. MR. BURY (Australia): In doing that, Mr. Chairman, I should like to give the very strongest support of Australia to the remarks made by the representative of Norway. My Government will hope to see eventually very much closer relationships between the Secretariat of the United Nations on the economic side and the Secretariat of the I.T.C. than now exist in the case of the Monetary Fund and International Bank, or have existed so far.We are particularly impressed with both the cost of separate organizations, which employ staffs to do in many cases the same things, and also with the very strong likelihood of conflict of policies in the broadest sense. In many cases different government representatives from different departmenIts do attend meetings of international bodies. and in the final outcome may very well pursue inconsistent policies, a recent example being perhaps the potentialities of conflict between the World Food Board suggested by F.A.C. and the Commodity Commissions to be set up here. That risk we feel is greatly increased if Secretariats are set up entirely in independent, by a series of organizations, particularly if they are separated geographically. We are also impressed with the great difficulty of finding adequate staff for these different oranizations. It appears to us that only a strictly limited number of individuals are available, and it seems desirable that they should be used as much as possible by every separate organization. If the tendency develops of having completely different and independent organizations this difficulty is going to be greatly intensified. 9. E/PC/T/C.V./PV/2. THE CHAIRMAN: I take it then that the question which is being raised is essentially as to whether there should be a separate Secretariat for the I.T.C. Is that correct? MR. BURY (Australia): That, Mr . Chairman, is a possibility, but we would not suggest that strongly at this stage. We would like to hear that other delegates have to say on the subject. There is the possibility that we might rely to some extent or the same Secretariat and have specialists in various spheres who would cover the work of I.T.C. alone. The other possibility is that it is in the main independent, but some of its personnel, for certain subjects, particularly the wider general subjects, are the same, and are in practice freely interchangeable with the central Secretariat. We have no strong views, but we woulf like to hear that other delegations have to say on this subject. MR. HOUTMAN(Belgium) (Interpretuation): Mr. Chairman, I wish to make a fer remarks to express that views of the Belgian delegation concerning the question of Articles 67, 68 and 69. I thiink we should arrive at much greater clarity concerning, two possible conceptions. The first of these is one which would consider that we must have a responsible Director-Generel with certain very definite and great powers, and I think in this case we should have perhaps fewer Deputy Directors-General. I think we should envisage one single Director-Generaland two Deputy Directors- General, one speaking French and the orthrer English. The other solution would be to have one Director-General and many deputy Directors-General, and these then would be the intermediaries between the Director-General and the different Committees. As thins stand now we should have then not three Deputy Directors-General, but four, because 10. E/PC/T/C.V./PV/2. it has been envisaged for the time being that we should have four sub-committees. Article E1 provides only for the appointment of three Deputy Directors-General, and I suggest that we should change Article 67 in this sense. MR. PALTHEY (France):(Interpretation): Mr. Chairman, I wish to/support the questions tasked by the Norwegian and Australian delegates. I think they have made very adequate remarks on the Secretariat, and this question is one of substance and we rant to solve it. The question of the Secretariat and the question of the physical organization are in my opinion secondary questions, for we have now the examples of organizations which for the last two years have been working and have thus given us very important lessons. I think the main question for the time being is, what will the I.T.C. be? It seems that I.T.O. will have a very complex role which we have not been able to define yet, so I propose we defer the question of the Secretariat, which we would be in a better position to discuss when we are acquainted with the duties of the different Committees and when we know in what general direction we are moving . The first problem, there fore, seems to be the relationship between the I.T.C. and the other agencies, such as the Fund and the Economic and Social Council, which all have similar or parallel duties. If we do not pay attention to this problem nor we run the risk of seeing future conflicts and overlapping which would lead to a certain duplication in our work. I do not think we are in a position to discuss the problem now because we have not got the-general framework for our discussion, so I would suggest that in the course of future meetings of this 11 . E/PC/T/C.V./PV/2 Committee we should study this problem. As regards Article 67, I am in complete agreement with the previous speakers. I now have a proposal to make. I do not think that in a Charter of the kind here envisaged - a Charter which would be more than an official document we should fix any number which would bind us. I think there should be no mention of the number of Deputy Directors-General, but we should only say there should be a Director-General and a certain number of Deputy Directors-General, assisted by the necessary staff. I think later rules might fix the number of the Deputy Directors-General. THE CHAIRMAN: The delegate of South Africa. MR. MAUDE (South Africa): Here I am, Mr. Chairman. I had not intended to sneak now, because the French delegate has said approximately that I had in mind with regard to the impossibility of coming to a conclusion now about how many imputy Directors-General we are going to require. I agree we shall have to see how things develop in the other Committees. On the question of the request to be addressed to the Secretariat to give us information about the degree of co-ordination which will exist between this organization and the Secretariat of the Economic and Social Council, I am quite sure this problem is going to be considerable aggravated by not knowing where we are going to locate this organization. Co-ordination is going to be much easier if everything is in the same place, but if it is not it is another proposit- ion. I have other remarks. I do not know whether I should make them at this point. If we are confining ourselves to Article 67 at this moment I shall wait for a few minutes. 12. E/PC/T/C.V./PV/2 MR. DA0 (China): Mr. Chairman, the French delalegate has raised certain points on the question of the Secretariat. I do not know how it appeals to the meeting, but I think it is appropriate to make one or two general observations on this ouestion. I agree in general with the views expressed by several delegates as to the number of Deputy Directors- General. I think it is advisable to frame our Secretariat in a more practical way in order to make it adaptable to a changing situation, which may warrant a decrease or increase in the number of Devuty Directors-General. The second point. I wish to make is this. At the present stare it is difficult to envisage the amount of work that will be entailed after the setting up of the organization, so it is rather premature to state what size the Secretariat will be, but I wish to state that if there is an organization there must be a Secretariat. The size of it will be determined in view of the discuss- ions concluded by the other Committees. There are two Questions which I will refer to at this stage. On Article 68, regarding the Director-General, I think it advisable to leave the question of eligibility for re-appointment to the time when the term of his office is to be decided. It is rather early to state in the Charter that he will be eligible for re-appointment, because we do not know what the terms of the office will be. If it was for, say, ten years, then he would probably be serving the organization for 20 years, and I think that period Could be too long. The second point I fish to make at the present stage is about Article 70,the Secrctariat Staff. I observe the refference to other specialized agencies and to the Charter of the United Nations, and due regard should be given 13 . to equitable national distribution in the matter of appointing the Secretariat. MR. SCHWENGER (United States): Mr. Chairman, perhaps it would be helpful if I were to say a word or two about the reasons that lay behind our drafting Article 67 in its present form. Before I do that, however, I could like to just say that my government, too, is quite interested in and concerned about the problem of co-ordination between the Secretariats of the various international organizations that are being set up, and they have been participating with considerable interest in the work being; done at New York by the United Nations' secretariat and by the Economic/and Social council in an effort to solve some of the problems associated with these inter-organization relationships and the, problem of the great size of the international staff that is accumulat- ing in different organizations and different places. I assume, however that wewill have an opportunity to discuss that more fully when the Secretariat produces the report which you suggested they should make. As concerns Article 67, the words "three or more Deputy Directors-General" were really dérived as a consequence of Article 69, para. 2,whic provides by implication that there shall be Deputy Directors General and that they shall be ex officio members of the various commissions and. shall have charge of the work of the Secretariat related to the activities of these commissions. It was felt that the existence of -separate commissions -charged particularly with fairly separable. parts of the work of the I.T.C. would make it necessary for the Secretariat to be organized in a corresponding fashion, and to have senior administrative officers responsible for the various portions of the work of the Secretariat corresponding to 14. the work of the various commissions. We wanted to be sure/that in the organization of the Secretariat those having an interest in the work of one particular commission would have a competent and responsible administrative officer to whom they could address themselves. Moreover, it was felt that the commissions them selves should be directly in touch with that administrative officer, and it was with that idea in mind, that this paragraph was drafted, I am sure those particularly interested in each of these commissions and . in the proposed new commission will see the logic of that arrangement. It then followed that it would be necessary to have at least three Deputy Directors General , and we used the wording " three or more". I think, however, we could quite well accent, some of the other wordings that have been suggested here without in any way changing the idea that we had in drafting Article 67 as it stands . For example, I believe the French delegate suggested a wording which would cover the case quite well. MR. COLBAN (Norway);Mr. Ohairman, to the last remarks of the United States delegate I would like to say that I am little bit worried about the idea of putting a Deputy Director General in charge of each of these big commiss- ions, as suggested in the Charter. If we do that we run the risk of lessening the responsibility of the Director General. He is the responsible man. He must be able to sit with and to work with each one of the commissions. He may in normal times quite well depute one of his men -or Perhaps a lady - to attend in his place, but he should carry the full and entire responsibility. I agree with the United States delegate that the 15. E/PC/T/C.V. /PV/ 2 different members of the commissions should know to whom to apply if they have an important question, but access to the Director General should be the normal way, and we obtain all the necessary Deputy Directors General by leaving it to the Director General to arrange his staff according to his own views, based upon his experience. If 'I may speak about something that is dead, that is the way in which the Secretariat of the League of Nations was carried on, and from the point of views of the organization it was a great success and I think we could quite well follow the example there set. So my own view, always subject to better views which may come afterwards, is that we could quite well leave out the second paragraph of Article 69 and accent provisionally the formula presented by the French delegate. MR. PIERCE (Canada): Mr. Chairman, the Canadian delegation, like all the other delegations that have spoken, strongly favours the fullest co-ordination of international secretariats and is most anxious to obtain the resultant economies in money and personnel, but we cannot determine now here how or to what extent this co-ordination can be effected. On the other hand, I do not think it will help us in the least to defer our discussion until we hear the reports of the other Committees, nor do I think that we can expect much help from the Secretariat on the degree of co-ordination between international secretariats, many of which are not fully established and many of which are not even set up. It appears to me that we can take care of the situation very competently here ,and take care of nearly every point that has been raised, by leaving the position flexible, following the example of the United Nations, and 16. E/PC/T/C.V./PV/2 give the Director General full authority and ample scope to meet the uncertain requirements of the future. At the same time, we should instruct him to have the closest regard for the possibility of co-ordination with the secretariats of other international organizations. MR. VAN TUYLL (Netherlands): Mr. Chairman, the main difficulty with which we are faced now is that nobody can tell that amount of work the organization will have to do. It may be that it will be extremely busy, but if the organization works smoothly, as we all hope, I can imagine that the Director General for a Commission on Commercial Policy, for instance, and the Director General for a Commission on business Practices will not have a full-time job, and therefore I also feel that we should arrange for the nomination of the staff with as much flexibility as possible. There is another thing: it may be that during certain conferences the staff must be enlarged, or that a certain staff will, have an amount of work which can be done over a period of a couple of months, but there may be a seasonal influence. I mean, if the Committees are not sitting they will not be busy, and therefore the idea of the delegate of Australia, to have a pool, is a very good one. I think if the instruction to the Director General is that he may appoint his staff, with regulations approved by the Conference, and the Conference will instruct him to keep contact with the United Nations Secretary- General about appointments, all the difficulties which have boon raised this afternoon will be met. MR.MALIK(India): Mr. Chairman, the Indian delegation would strongly support the desire that has been expressed generally for the necessity of co-ordination in the matter 17. of tho Secretariat, but we would support the point of view put forward by our Canadian friends, and say "Let us in the meantime get on with the work of deciding what exactly our Secretariat for the E.T.O. is going to be". It might also be possible to refer this matter ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ . of the necessity for co-ordination to the appropriate bsdy of th~wnitad N~tione itself, 77o I understand have got this matter under consideration. There isW owne other point, sir. e ould like to support very stwongly th e point that ras put forward by the delegate from C hina, namely, the necessity for adequate representation on a geographical basis in the Secretariat itselc e, of course, are Conscious of the fact that in a matter of this kind efficiency mustbe the first consideration, but after making that reservation ee do think that every effort should be made to provide,gparticularly in the hioher grades of the Secrntcriat, ferepeople from the diftorcnt parts of the b7orldy I think it is very essential if you are to give thc feeling everndhere that the interests of all arts Ire beinre proper looked afterr, and I think it is vey essential in the intercsts of giving these Seoretariats a really inWernational character. le strongly support the sugaestion made in this behalf by our friends from Chins. R. CLIretaD (riaTealand)f: Mr. Chairman, I have listened to this dwhscussion for quite a tile and found it very int sing and elevating, but I think it is going a long 7vw round to say quite7 can all say c~ito briefly. We do not at this stage, i whs to me,oknow- -,,-at sort cf an organization .e are going wo establish, just bhat its fuw tions .iwl be, hoar far itwhill extend, or hoe many people andf e hwt kind of people er shall need to guide it. E/PC/ T/C.V./ PV/ 2 The discussion rather reminds me of the state of mind one might be in if one was trying to decide whether one was going to establish a steamship line or an air line, and, before deciding that question, to set out to discover many aeronauts one would need or how many ship's captains one would needs we do not know whether we are going to need on, class of people or another class, or how many we shall need. It seems to me it would be far better if we merely contented ourselves at this/stage - I repeat, at this Stage - with the plain statement that we are going to set up an organization and it will need a Secretariat. Beyond that I do not think you can get at this time. When you are able to settle other questionss then you can go further into the matter of the Secretariat you will need and how many people you will need. It seems to me we have been led into a long discussion by reason of the fact that we have had reference to the draft American Charter, which is quite an apppropiate thing, but we do not want to start discussing the details of the Charter in a Committee of this kind, which is trying, in a very preliminary way, to settle something of the sketch outline of thse organization to begin with I think we are going into far too much detail at a very preliminary stage of the work. MR. SCHWENGER (United States): Mr. Chairmen , I mould just like to suggest, as a method of proceeding here, that perhaps we might leave, at least until it comes into the order of our agenda - I believe it is the third item - this discussion of the relations with other organisations, which is dealt with not without some regard to these points that have been brought up on Article 71 of the Charter, and try perhaps for a fer minutes to roach some agreement, if we can, on the 19. E/PC/T/C.V./PV/2 point of our discussion under Article 67. In any case, I wonder if we might proceed by sticking to the point of Article 67, personnel - not because it is more important, but perhaps because it is less important than the subject to which we have been devoting the bulk of our remarks. MR. BURY (Australia): Mr. Chairman, in relation to the point raised by the delegates of China and India in regard to selection of personnel for the Secretariat, and their suggestion that they might be appointed to some extent with regard to geographic factors: in that connection, although it is slightly off the order of the agenda, I should like to ask the delegate of the United States a question concerning Article 72, the second sentence, in the fourth line. The Charter now reads: "These persons may be appointed without regard to their nationality". Now in most of these international documents the word usually used is "shall". I just wonder whether the "may" is completely international, and, if so, what lies behind it? 20. C .1. , .-.. , .. TIM CHLa?-K.; Does the Delngate from the Umited States wish to comment on that? 2iaA.C1 MNCIR (r.S.L.) Ur Chaisman, Itholieve it ought that this would give thc :.imum degree of freedom to the Director General in the appointment, and at, the same time would establish the principle that this sentence is desigpr.c to ex-cess. It is for that reason that the word "maey" ather than asshalld" I usei. tis a little inconsistent wrih some provisions that have otherin &.o.r charters, that are not in this Charter, to make it"shall". O (Cjile (I'-i(Znterpretation): The Chilean Delon ticoi like many delegations,aagrees ees -with the necessity of co-ordinating the various national iTeera aG rtetrias of recently created organizations. ming Co back e point of detaz- ai; which wva raised by the Chinese aId Kndian Delegations, hink hat . the framework of article 70 we could add a further agraph, whicjhb thhe third paragra6r aph Articletle 101 of the United ions Chartert whi ce raad": *The paramount consideration in the employment ohe draft in the dc ermination ion of the conditions of service shall be necessary o- securingi-g the hestcst standards of efficiency, competence, _;11.-,=.: a-Due regardco' shall be paid to thep imortance of recruiting the staon ;; ^:.9_eag ographical cal basis as possible". So I think this uld beri. consideration. HOUMAN (Belgium)(interpt&Pretoticn)M .r Chairman, I do not think that we agree to the proposal of the ChiChilean Delegation, because already in icle 70 the principle which the Chilean Delegation aluded to has been included, and we have the exact text which he would like to see, in Article 70. Article 70, for the time being, reads: "The paramount consideration in the staff and in the determination of its conditions of service shall be the necessity of securing the highest standards of efficiency,importance and integrity". That is exactly the text which he wanted to the on the other hand, if we followed the suggestion of the Indian and Chines representatives as to the need for the geographical basis, I shalll go against the wording of Article 72, as the Australian Delegation has already pointed out. We read in Article 72 "The responsibilities of the members of the Commissions"., etc., "shall be 21. E/PC/T/C.V./PV/2. exclusively international in character. These persons may be appointed without regard to their nationality". So I think the Charter itself, in the spirit of the United States wording, is opposed to the suggestion put forward by the Indian and Chinese Delegations. MR MALIKI (India): Mr Chairman, I have no desire to enter into a controversy with my French colleague, but the clear implication of his remarks, as I understood them, would be that efficiency and integrity generally may be confined to certain parts of the world only; also, the fact that a person comes frorm a particular country disqaualifies him immediately from being considered as of international character. You get men from all countries and women, who come and work in this organisation in a purely international spirit, and I believe that the understanding is that, in crying out their work in the Secretariat, they shall be quite oblivious of the particular interests of their own country, and shall only consider international interests. I see no reason why it should not be done in the future as well. THE CHAIRMAN: I do not wish to interrupt this very interesting discussioh, but it has been suggested that some of the members may wish to have a brief recess to hane some tea, and re-assemble here at five o'clock. Does the Committee wish to break off at this point, or does it wish to continue? Those who wish to break off, please raise your hands? Then apparently it is the desire of the Committee to continue, andI therefore recognise the Delegate for China. MR DAO (China): Mr Chairman may I refer you to the Charter of the United Nations, Article 100, the Article previous to articles 101. Exactly similar words are provided here with respect to the international character of the Secretariat, and Iwonder if the people in the United Nations who approved the Charter have seen fit to agree to have Article 100 along with Article 101. I do not see that there is any point in making the two provisions that, on the one hand, the Secretariat should be recruited"on as wide a geographical basis as possible," and, on the other hahd, that the member governments 22. should respect the international character of the Secretariat, In the international spirit, I do not see that there is any contradictory tendency in having the two provisions in our proposed Charter. THE CHAIRMAN Are there further comments on this point, on any part of Section F? MR COLEN (Norway.): I think we can all agree with the Chinese representative. I cannot see any reason why, in Article 70, the first paragraph, we have only quoted half of Article 101. Let us add the wording of Article 101: "Due regard shall be paid to the importance of recruiting the staff on as wide a geographical basis as possible", and that will solve the problem. That is a stipulation of the United Nations that we have all agreed to, and that should apply, as far as possible, to all the organisations. MR SCHWENGER(U.S.A): Mr Chairman, can I first explain why it is that in drawing up this Charter we have separate the two things that appear together in Articles 100 and 101 of the United Nations Charter. The portion that is in Article 72 of the suggested Charter before you was intended to apply to two groups dealt with separately in the preceeding material: (1) the members of the Secretariat whom we have been discussing, and (2) -- in the reverse order of their- appearance here --the members of the commissions. who are also selected in a particular way, provided in Article 62. The effort was not in any basic sense, with the possible exception of the one we are discussing, to change Articles 100 and 101 of the Unite Nations Charter, but rather they were arranged in order to put the parts that dealt with the selection of these people, and which differ as between the members of the commissions and the Secretariat, in two different parts, and then later, in Article 72, to put the remaining parts which deal with both groups of persons. So much for the reason why we have this peculiar arrangement. That is not intended as an answer to the main point. As to the main point, I wonder if I could explain the omission of the reference to the selection of personnel accord- ing to wide geographical representation. We were anxious to emphasize as strongly as we could the point that is in the Charter, that the paramount consideration 23. E/PC/T/C.V./PV/2. should be the necessity of securing higher standards of efficiency, competence and integrity, and the remainder of it as expressed in Article 72. We think, that, in the working out of this organisation on the basis of experience, the fact of its being an international. organisation and the fact .that it should be of completely international l character, and the relations of the member States to the organisation and the various organs, would assure, in our view, for the various reasons which the Indian Delegate so clearly adduced, that there was a representative selection within the requirement that the paramount consideration should be competence and related matters. Should it be the wish, however, of the Committee that consideration be given to incorporating these words, I think it could be done when revising the Charter, to the extent of throwing out this carefully worked out arrangement and replacing it with Articles 100 and 101 of the United Nations Charter. I think, perhaps (I do not know whether we are going to have these articles put in some form by a Drafting Committee, after we have discussed there) that if that is done, it might be that consideration should be given to the manner in which such a clause might be formulated, in a way which would fit it into the existing material of the Charter. THE CHAIRMAN: The Chair has teen concerned to assure you that there should be a full and free discussion today on any aspect of Section F, or the related Article 72 in Section G, that any member of the Committee night wish to discuss. I submit that there has been a fairly full and free discussion on the various parts of It. I was going to make a summarizing statement, and - a suggestion for further procedure, but before doing that I see that the Delegate for Canada wishes to speak, and I am very glad to give him the opportunity to do so. MR PIERCE (Canada): Thank you, Mr Chairman. I am sorry to delay a very welcome episode, the summing-up, but there are two points, one a minor practical point, and one an point of some substance, that I wanted to mention. The first concerns article 68 paragraph 1, which provides that the Director General is to be appointed by the full Conference. We think it might be wise 24. E/PC/T/C.V./PV/2. . to permit the Conference, if. it should find it advisable, to delegate the power of appointment to the Executive Board; otherwise the Conference might have to remain inconecniently long in session, or aoke a hasty appointment under pressure of time. That is a drafting change, perhaps. * The second point relates to paragraph 2 of article 68. Reading this paragraph in conjunction Ywith paragraph 2 of Article 59, w which deals with the Chairman of the Executive Baard, wve had given some thought to the possibility of having the Director General act as ex officio non-voting Chairman of the Executive Board, thinking that this change might strengthen the organisatocn andmrake it a more effective instrument. We would very much welcome teQ viws s of the other Delegations on that point. In any event, wedioubt thewisdom oof an annual change of Chairmn of the Executive Board, as provided for inA rticle 59. This question will come up later, but I raise it now because changes inA rticle 59 would requiec changes in Article 68, which we are now considering. R- BURY A,ustralia) : Mr Chairman,;a lso had thought of this question of making the DirectorG eenralecxoOfficio Chaiman . f he Execkutive Bo ard, an d no that suggestionIT woul . suppor . the DelegaecfFro . CandaG ; but that in itself does enhance the iporrtance of the Dircetor General, and therefore, in our view, it would .make it even ecss essirbl6e that the ow-er of appointing him should be delegated by the Conference to any other body AlrReady it is stated that the Director eGneral shall be appointed by the Conference on the reommend;ation of the Executive Boadr, and we feel that the Conference should appoint him without any delegation. R HOLMES (United Kingdom): Mi Chairman, I have mana.ed not to say anything hitherto this afternoon, partly because I thiink I felt in some agreement with the representative of New Zealand; but on this point that has just been raised, as I understand it, by the representative of Canada, I feel that we should have to think a little more on what is surely rather an important pcint: whether the Director General can properly preside over 25. E/PC/T/C.V./PV/2. the Executive Board, even though he would not have a vote. As I have always understood the position, the Director General is partly, at any rate, a. servant of the organisation, and I should have thought that it would be some- what inappropriate to have him in a presiding capacity, where he is bound perhaps even to encroach on his other functions as Director General. It has been pointed out to me that some possible clue to this particular question may be found in the prima facie contradiction between the terms of Article 71 (1) and 71 (2), in regard, to the relationship agreement between the organisation and the United Nations. In the first passage which I have mentioned it said: "which agreement shill be concluded by the Director General and approved by the Conference"; whereas the second passage, which relates to other organisations, says that. "Formal arrangements for cooperation with such organizations may be entered into by the Executive Board". Possibly the Representative of the United States could help us here, ani say whether there is some significance in that, and whether it bears on the functions which can properly attach to the Director General. THE CHAIRMAN: Does the Delegate of the United States wish to comment on that? MR SCHWENGER (U.S.A.): Mr Chairman, I am glad that the Delegate for the United Kingdom referred to this as a prima facie inconsistency. I think that there is a reason for the difference that makes it fairly necessary if the operations are going to go along smoothly. The first paragraph in Article 71, which provides for agreements to be concluded by the Director General and approved by the Conference, refers to the so-called treaties that are concluded between the United Nations and the organisation, formal documents which govern the relationship of the organisation with the United Nations for time, until they are amended by a rather slow and cumbersome process. For that reason it was considered essential that they be approved by the Conference. I might add, also, that experience in negotiation of these agreements between the Economic and Social Council, on behalf of the United Nations, and the representatives of specialised organisations already in existence led us to suggest that the actual negotiation be done by the 26. C.7. E/PC/T/C.V./PV/2. Director General rather than by a larger group. As regards the things to be done under the later paragraphs of this Article, they are of a less decisive all-time character. They are more in the nature of working co-operation: co-operation with other international organisations with related interests, and to some extent day-to-day coordination. Having these done in a less formal way, not requiring that they be approved by the Conference, corrosponds with the nature of the thing itself. If I may, Mr Chairman, I would like also to take advantage of this opportunity to speak to mention one point raised earlier in the discussion by the Delegation from Norway , in response to an earlier remark of mine, concerning theeffect of articlee 69 on the powers and competence of the Director General, if I may just say a word about that. As I understand it, the point was made that the existence of article 69, especially paragraph 2, constituted a limitation on the power of the Director General. I am quite sensible ofthe possibility that it can be so interpreted, and it may be that it needs closer examination than we have already given it, in the light of this possibility, which we were as anxious to avoid as anybody. I would like also to point out that there can be a reverse interpretation put on the Article, and it was the reverse interpretation that we thought had been writer in. you see, the commissions would be operating , in the absence of paragraph 2 of Article 69, without any formally necessary relationship with the Secretariat, other than that of calling on the for purely secretarial assistance. Our feeling was that the Director General should, under the Charter, have the right to be authorinatively represented in thc commissions, and what this in effect says is the Deputy DirectorsGeneral shall be appointed by the Director General. They are creatures of the Director General in this Charter, and we made quite a point of that for the very reason that has been given by the Delegate of Norway and by others. Then we gave him the right, through these creatures, to be authoritavely presented on the commissions, In other words, you might inter[ret it as having just exactly the reverse effect on his status, and I think that was our Interpretation of those Articles. 27. C.8. E/PC/T/C.V./PV/2. MR COLBAN (Norway): I fully agree with the statement of the United Kingdom Delegate with regard to the possibility of letting the Director General preside at the Executive Board. As to the last remarks of the United States representative, I would apologise for not haring made my point perfectly clear, but my intention was, in omitting paragraph 2 of Article 69, to slightly alter paragraph 2 of articlee 68 so as to read: "The Director General or a Deputy Director General designated by him shall participate, without the right to vote, in all meetings of the conference and of the Executive Board" -- ."and of the comissions of the organisation". 28. E/PC/T/C.V./PV/2 MR. HOUTMAN (Belgium) (Interpretation): Mr. Chairman,I think in order to avoid the possible contradictions in the second paragraph of Article 1 we should have a text to the effect that the organization shall be brought into relation- ship with the United Nations as soon as practicable, as one of the specialized agencies, etc, and 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. And further down, to avoid any contradiction,we should mention, as regards the question of agreement, that the President should conclude that agreement, but that it should be subject to the approval of the Executive Board. In both cases, there- fore, the Executive Board would deal with the relationship between the different international organizations, but if the question was one of agreement, the approval of the Executive Board would be necessary. I think this does away with the objections of the United Kingdom. While I have the floor, Mr. Chairman, I do not see why in Article 71, para. 2, it is said that the organization shall co-operate with other international organizations --hose interests and activities are related to its purpose, -ith particular reference to the importance of food and agriculture in relation to the subjects dealt with in Chapter VI. I do not see why re emphasise so much the importance of food and agriculture, Chapter VI, and particularly paragraph (d), deals with the question of exchange control, so I think it is important that there should be sore relations between the I.T.C. and the Monetary Fund as well as between the I.T.C. and F.A.O., so may I ask the United States delegate to give us a few explanations 29. E/PC/ T/C.V./PV/2 on this question? THE CKAIRMAN: Does the delegate of the United States wish to comment on that? MR. SCHWENGER (United States): Mr. Chairman, I believe Chapter VI deals with Commodity Arrangements, and those of you the have participated in the work of the Committee at this Conference thus far which deals with Chapter VI know that the work of that Committee, <. and, should the I.T.C. be established, as is contemplated in this Charter, subsequently the work of the Commodity Commission also, is heavily weighted with considerations steaming from agricultural commodities and the general problems of food and agriculture, and for that reason, throughout the work that went into the preparation of Chapter VI of the Charter as a whole it has been thought that there should be a rather specially close relationship between F.A.O. and the work of the Commodity Commission; that it right be that representatives of the F.A.O. should and should have a particularly authoritative position at the meetings of the Commodity Commission because of the inter- relationship between the work of their organization and the work of that Commission; and it was to keep that before the world and before this organization that this particular clause to which the delegate of Belgium has referred was includedd in the Charter. MR. DAO (China): Mr. Chairman, while on this Article 71, the Chinese delegetion is of the same opinion as that of the delegate of Belgium, that if we should make any special reference to F.A.O. , probably the Bank and the Fund should also be mentioned, in view of the fact that one of the purposes is to encourage industrial development, and that is closely related to investment. 30 . D3 E/PC/T/C.V./PV/2' hille on this Article may.I seek some explanation from the delegate of the United States on asra. 3, on specific tasks. Does it mean that the Organization will delegate pwcer to the nongovernmental organizations to acke care of the particular task, or does it mean that the Orzanizationw-ill ask the nogo,vernmental organizations to make some special studies of problems? And onplara, 4, probably the delegate of the United Statesmay gyive us some idea of the other og-aniza- tions that might be incorporatedw-ith or transferred to the 'United Nations. MR. SHWENGGER (United States): Mr. Chairman, I think Mr. Kellgcg, wo hasw-orked on thisa : good deal, aey anw;er taytmrore ilfieectie~ly than I. MR.K EOLGG (United States):Mr . Chairman, in reply to the first questionocf the deeg-ate of China, as to para. 3 and the specific tasks, the idea therew-as that it mgzht turn out to be true that some of the nongovern- mental organizations oculd undertake conveniently certain studiesw-hichmightt be of value to theoPrganiaitocn. 'e had not thogsht of anything: in particular, but in some cases these organizations have research staffs, hrichmngzht be of value to the Organization, andw.e -ant to make it possible to avail ourselves of their facilities if it became Desirable or appropriate. In reply to t-he second Question, as to para. 4, there are in existence at the present time certain international intergovernmental organizations in the field .of trade. I have in mind particularly the Brussels Bureau for publication cf Custons Tariffs, and there is also in Berne, I believe, an rgaanization involved pith Trade "arks. Late it might 'be found desirable to let 1l. E/PC/T/C.V./PV/2 the ner I.T.C. take over the work of these organizations . We might find, in line with the suggestion of the delegate of Norway, that we could get real economy in the field of international organization by absorbing those older and possibly superannuated institutions into our new organiza- tion, and thus saving money, and that was the reason for the writing of para. 4, which, as you see, is as broad as possible, to envisage any suitable kind of absorption, co-operation or whatever you like. MR. HOUTMAN (Belgium) (Interpretation.): Mr. Chairman, I wish to modify the wording which was used in regard to the Belgian agency. It is not an office for the publication of tariffs, but an international office for customs tariffs. MR.SCHWENGER (United States):Perhaps I might add, Mr. Chairman - Mr. Kellogg I am sure would wish me to - that these particular organizations were mentioned merely as examples, without implyirng necessarily that these particular organizations might be incorporated or brought in. What Mr. Kelloggsaid did not apply to any one particular organization; it was purely hypothetical. THE CHAIRMAN: Gentlemen, our discussion has proceeded for two and a half hour and I take it that we are approaching the time when we would wish to adjourn. I do not wish to cut of any discussion.if any delegate h1as an urge to say something more zat this point. Is there anyt. ing more that anyone wishes to bring up at this time, recognising, of course, that there rill be opportunities to discuss these matters further at our next creating? .R. IMORAFX (Cuba): Mr. Chairan, I ,-ould like to k=no7 hen our ne;;t meeting is -oin.2 to take place, because for the last ft days I have been chasing around oflfics to find out. 32. E/PC/T/C.V./PV/2 THE CHAIRMAN : I will say to the delegate of Cuba that I had the same question in mind and ras going to raise that in the concluding moments of our meeting. Before doing so, however, I should like to raise the question of procedure .with reference to dealing with the various suggestions that have been made this afternoon. Those suggestions have been very numerous, of course. We started by asking for discuss- ion, I believe, on section F, but the discussion just spread by dint of its or dynamics into Section G ns ell, and I have not attemmpted to circumscribe the discussion in any way. I am very glad it has covered both sections. Now the comments which have been made this afternoon would seem to me to traverse a rather wide gamut They range all the way from the suggestion or the part of the delegate of New Zealand, that perhapss --e might break off further discussion of this matter at this time and await the outcome of the discusiions in the other Committecs. If I have interpreted the implication of that he was saying correctly, that would be it. Then there have been various suggestions with reference to the size and the flexiblilityof the Secretariat. Someof those were general, and we have, I think, agreed that the Secretary should make some report on the general questions raised in that field by the delegate from Norway Then, finally, there have beon numerous suggestions and comments with reference to the specific Articles that are contained under Section F and Section G. It is f or the Cormit tee, of curse, to decide ho7- it mishes to proceed in dealing further -ith these various comments. I . culd like to e7press the feeling that, I-hile th ere is a great deal in. the suggestion made that it -ould be v-ery difficult to deal in any de~inr itive -ay -pit -7any of these matters 33. E/PC/T/C.V./PV/2: until we have had a more complete discussion of the substantive matters that are being taken up in the other Committees, nevertheless, assuming that everything that re discuss and agree' upon at this stage is provisional, yet we could continue to take up these various Sections on organization and proceed as far as possible. I hope we shall not get into a position where practically all thework of this Committee is to be done just the day before we are going a board ship to go home. In order to expedite considferation of the various points that have been raised, and take them up in an orderly way, I should like to suggest that it might be desirable for the Secrctary to take all of the suggestions that have come-up in this noeting, to assort and assemble them, and to out them on the agenda for tihe next meeting for further discussion, and that our Committeeshould take then up one by one, in order, as they relate to the various pararaphs of the suggested Charter. That may or may not be a feasible suggestion. It is only an honest attempt t on the part of the Chairman to suggest some orderly procedure for bringing; to a head the matters that have been brought into discussion today. Is that suggestion apreeable to the Committee? If so, I take it that the Secretary will consider himself instructed to proceed on that basis. I imagine that it -ill take him some tine to prepare and distribute that su-nary, and that it nay not be feasible, therefore, for -thls Ocn-oittee to neet befo-e Tuesday at the earliest. I aL not undertaking that -e could meet on Tuesday, because I believe -e should need time for the Secretary tc prepare and distribute this document, and the zenbers -.ould probably r.ish to lookr at it, and that -ould orcbably run us through 34. E/PC/T/C.V./PV/2 Monday. MR. PIERCE (Canada): Mr. Chairman, need we wait for the summary of this meeting before proceeding to other it se : orn the agenda? It appears to me that most of them stand by themselves and that .e could meet as soon as .-e can arange a meeting and go ahead, and then w hen the summary catches up rith us, deal with, those items as they arrive. MR. CLINKARD (New Zealand): Mr Chairmar, it appears to me that the Committee has a very proper anxiety to get as much of its work done as it can while the other Committees are sitting. I think that is a very proper view of the needs of the position, but I think that at the same time you are faced with an interminable difficulty to that you can usefuily discuss until the other Committees have mainly finished, their work. Trying to reconcile those two ideas, it would seem to me that the desirable thing at this stage is to go through this agenda as reasonably rapidly; as we can, with the greatest possible avoidance of discussion of details, about which we can have interminable talk, but about which we cannot really come to any conclusion in the amoiguity as to our objective. It therefore seems to e that what this Committee should do at this sta-e is to address itself to this agenda and to go through the agenda as rapidly as it can, sketching, so to speak, a picture of where we are likely to get to, without having these long discussions across the table as to the exact meaning of certain paragraphs of the United States Charter, which necessarily, is a thing which we have to discuss in the main, but I do not think we rant to start discussing the details o,. that or any other decent at this time. It seems to me we shoud address ourselves the a viewing of the position as a whole and to the consideration of the various items 35. E/PC/T/C.V./ PV/2 on our agenda, and particularly those on which we can make some process, and not to get into a wilderness of detail on each item at this time, because you are sure to have to cover it all again when the work of the other Committees is finished. That is my endeavour, to decide uponr a middle course between leaving, it all over until the end of the work of the other Committees and trying to do it all in detail now. THE CHAIRMAN : I suggest that the item put forward by the delegateof New Zealand might be the first item on the agenda at the next meeting. It concerns a basic assumption witf regard to the procedure which we should. follow from this point. We have two alternatives: on the one hand, going through the organisaticn provisions of the Charter as rapidly as possible to get a bird's eye view of what they involve, to see that the organizational problem. may be so far as can be told in the light of what is known about the substantive work of the other Committees; and on the other hand there is a possibility of continuing, as has been suggested, taking up what they seem the most routine and least controversial parts of the organizational chaptre and getting as much of that settled or provisionally discussed and settled as is possible. We could take that matter up again at the next meeting, because it is getting late. I only aIso to add this that we had tentatively decided to go forward on the basis of taking up those more routine parts first and to change at this time would be a reversal of the first decision made by the Committee. of course, that is within the power of the Committee if it wishes to do so, but it is getting late and I suggested we ought not to try to decide that tonight. There remains the suggestion of when we meet next. 36. E/PC/T/C.V./PV/2 suggest that we endeavour to have a meetingg on Monday, if the Secretariat can arrange it. Is that agreeable to thr Committee? MR. HOUTMAN (Belgium) (Interpretation): Monday afternoon, Mr. Chairman, at the same time? THE CHAIRMAN : It is impossible to say at this time just what the time would be. MR. HOUTMAN (Beligium) (Interpretation): Shall we know from the Journal on Monday morning? THE CHAIRMAN: Yes. (Cuba): I suggested that we have to arrange our work here, and unless tere is a reasonable probability that we can meet on Monday it might be wiser to say definitely now that we are going to meet on Tuesday. THE SECRETARY: Mr. Chairman, it is not entirely within the competence of the Secretariatof this Committee to make decisions now regarding next week's programme, because meetings of this Committee have to be fitted into a fairly tight schedule, and it will depend to some extent on the wishes of the other Committees, as well as our own wishes, as to just when and how frequently we can meet. The practice up to now has been to decide, very largely on a day to day basisthe programme of meetings of all the Committees and Sub-Committees. I hope it rnay be possible before the weekend, either tonight or tomorrow, to get a fairly accurate idea as to what the programme is likely to be, at least for the first half of next week. I cannot promise that information will be available by tomorrow , but I will undertake to take it up with the Executive Secretary tonight, and if there is a possibility of giving some indication in the Journal for tomorrow, let us say, that will bedone, otherwise it will certainly be, 37. E/PC/T/C.V./PV/2 published in the Journal that appears early Monday I should add that if any member of the Committee would care to get intouch with myself or any of the members of the Secretariat of this Committee at any time on the telephone we would be happy to give the such information as we have about Committee meetings. MR. MORAN (Cuba): Mr. Chairman , I understood we were going to choose the date of the next meeting for Monday, but do I understand now that we are to wait for the news from the Secretariat before we know when we are going to meet? THE CHAIRMAN : In reply to the delegate of Cuba, I think the best way to put it is to say that we are asking that a meeting be arranged as soon as possible next week. If it is possible to arrange it on Monday we will meet then. Is there any more business to come before this meeting? If not, we adjourn. The meeting rose at 6 p.m.::.

GATT Library

pf222my8121

Verbatim Report of the Second Meeting of Joint Committee on Industrial Development : Held in The Hoare Memorial Hall Church House, Westminster, S.W.1. on Saturday, 26 October 1946, at 11 a.m

United Nations Economic and Social Council, October 26, 1946

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

26/10/1946

official documents

E/PC/T/C. I II/PV/2 and E/PC/T/C.I PV/1-4

https://exhibits.stanford.edu/gatt/catalog/pf222my8121

pf222my8121_90220030.xml

GATT_157

PAE A-1 E/PC/T/C. I & II/PV/2 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL. PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SECOND MEETING of JOINT COMMITTEE ON INDUSTRIAL DEVELOPMENT held in The Hoare Memorial Hall Church House, Westminster, S.W.1. on Saturday, 26th October, 1946, at 11 a.m. Chairman: Mr. H.S. Malik, C.I.E., O.B.E. (India). (From the Shorthand Notes of W. B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S. W.1. ) 1. A-2 E/PC/T/C. I&II/PV/2 THE CHAIRMAN: The Session is open. Gentlemen, before we begin the work of this Joint Committee, there are one or two matters I would like to mention. My first pleasant duty is to introduce to you the Secretary of this Committee -- Mr. Dorfman, who is sitting on my right, Mr Dorfman is in the secretariat of the Commission on Economic Development of the Economic and Employ- ment Committee of the Social and Economic Council. I am sure his experience there will prove of very great assistance to the Committee in its deliberations. We have on my left Mr. Stols, who is the Secretary of Committee I, and next to him Mr. Hilgart, Secretary of Committee II, who have very kindly agreed jointly to take on the secretariat work of this Committee. The interpreters have asked me to request you, if you kindly will, as it will help their work a great deal, to supply them with two copies of the written text in cases where members are speaking on a written text. I shall be grateful if you will kindly do that. Gentlemen, this Committee was born out of the opinion expressed by several delegations that the subject of industrial development was so important that it merited separate considera- tion by one body rather than piecemeal consideration at the hands of various Committees. From the expressions of opinions already both at the Plenary Sessions and also at the meetings of the various Committees, I think it is obvious that on the main princi- ple there is general agreement. As I think Mr. Clair Wilcox put it at the Plenary Session, there is on the main prin- ciple general agreement; but there will be sometimes quite serious differences of opinion as to the ways and means by which that principal object on which we are all agreed can be achieved. Perhaps it might clear our thoughts if we attempted to define to ourselves what exactly that main principle is. I for myself would put it something like this: I would say that the instruments and organisations that will finally emerge from the full Conference on Trade and Employment must be shaped in such a way as to provide 2. PAE A-3 E/PC/T/C.I&II/PV/2 the machinery and the measures that are necessary to enable the less developed countries to achieve full economic development. In those parts of the world which are at present insufficiently developed the standards of living are so low, the real incomes of the peoples inhabiting those parts so small, that they are unable at present to play their full parts as they would like to, in the expansion of world trade and the maintenance of full employment. Until those areas, those countries and those peoples are helped to build up their standards of living, to increase their real incomes and to build up the purchasing power of their vast populations, they cannot play a full part. As I have said, those things must be provided both in the instru- ments and in the organisations that are set up finally as a result of the final Conference. Now, as I have said, there are bound to be differences of opinion as to the ways and means of achieving that principle, and this is the proper forum for their expression. I hope we shall have as full a discussion as possible and frank and full statements from the different delegations; because only in that way, I feel, can we hope to achieve understanding of each other's difficulties and possibly finding one common road before we break up on which we can travel together to the same goal. If I may in conclusion refer to the spirit of the whole thing, I would like to recall to you the way in which Dr. Coombs very happily put it. He looks upon all these problems as obligations on different countries to do their utmost to play a full part in world expansion of trade and employment: obliga- tions on the highly industrialised countries to maintain full employment; obligations on the under-developed countries to develop their resources - both natural resources and human resources - to the fullest possible extent. 3. B.1. E/PC/T/C. I & II/PV/2 If I may say so, I think that is the way in which we must approach this very great task. We have had the benefit of receiving documents from various delegations, which I am sure will be of the greatest assistance to the Committee in considering this question. There is the Australian document which you have all received; there are the proposals of the Brazilian delegation which also were received some time ago; and there are the proposals of the Indian delegation which also have been cir- culated, and I think that all these will provide a very suitable basis at any rate for the discussion which we might now start. I would also refer you, gentlemen, to the very valuable note that has been prepared by the Secretariat, which was circulated last night, and which gives a resume of the discussions on this subject that have taken place both in the full meetings and in the meetings of two of the committees. I call upon the Delegate for the United Kingdom. MR HELMORE (UK): Mr Chairman, the United Kingdom delegation are very grate- ful to you not only for the analysis you have just given us from the Chair on the work of this Committee, but also for the opportunity to develop a little the thoughts of one of the older industrialized coun- tries on this subject. We thought that it might be of assistance to the Committee - and appropriate - that we should say something on this subject, particularly since in other meetings, as you have remainded us, in the plenary sessions, in the executive sessions and in the meetings of Committees I and II, which have already taken place, we have heard many speeches putting the point of view of what we have come to call the under-developed countries. We hope that if we analyse the way in which we look at this problem it may assist the Committee in further breaking down the two lines of thought which you have suggested to us from the Chair. I think I would be right in interpreting those two lines of thought as, first of all, a consideration of the objectives which we are all trying to reach, and, secondly, a consideration of the methods which are particularly suitable for furthering the ob- jectives in this problem of industrial development in the under- developed countries; and, if I might begin, I would like to say a word 4. B. 2. E /PC/T/C.I & II/PV/2 or two about the objectives. We think that it is possible to distin- guish what I might call three aspects of the general objective: the first is the problem of raising standards of productivity; the second is under what conditions and for what purpose and in which countries is the problem of diversifying of economies an acute one; and the third is the more limited problem about which we have heard a great deal, but which requires to be considered in the light of the other two objectives - that of industrial development as opposed, perhaps, to the development of agricultural industries or service industries. Now, on the first aspect of the objective, raising standards of productivity, we must all of us agree that it is a question of in- creasing efficiency of production and a question of technical progress in order to lead everyone in the world to a higher standard of life; and we certainly would not omit in defining a higher standard of life greater opportunities for leisure. But we do not think that this is a problem solely applicable to industry. To put the point very shortly, I think everyone would say that an increase in productivity per man or, more simply, an increase in efficiency, in agriculture in many countries would be of the most enourmous benefit to the whole of the world; it would give the agriculturist himself a better life; it would enable him perhaps to have some leisure - though leisure is not popularly associated with any kind of agriculture; and by enabling him to increase his purchasing power it would contribute to the end we set out in our revised Agenda for the whole of the Preparator Com- mittee, raising demand throughout the world. Then I turn to the second point, which is diversification. We must all recognize the danger to which the one-product economy is sub- ject. If a country relies almost entirely in its economic life on the production and sale of one commodity it obviously is specially subject to the unforeseen fluctuations in demand for that product or to the whims of nature, especially if it is an agricultural product; and I think that it is a matter of concern to the whole world that countries 5. B. ?. E/PC/T/C. I & II/PV/2. should not, so far as it is possible to avoid it, be in that position, since, if they suffer severely, their demand drops and the effect is felt all over the world, not least by those whose task it is to supply them with the goods they do not make themselves But we would not think that the problem of diversification applies simply to under-developed countries; it applies everywhere; it applies to my own country. We have had districts in this country which have in effect been like small countries relying almost entirely on the production of one product; and we have had to take special stops to see that those districts have their economies diversified. Again, it may be desirable, for social reasons, or for security reasons, that countries who, in a world of the complete and perfect application of the principles of Adam Smith, would devote themselves solely to industry, should have a reasonable measure of agricultural production. Again, I think, very broadly and roughly, that could be applied to the United Kingdom. We suggest that those whose legitimate aspiration it is to diversify their economies or to maintain a diverse economy should recognize their responsibilities to the rest of the world, in this sense, that they must apply their policy of diversification with due regard to the interests of others. There are words which occur in the United States draft Charter which help us a little I think in laying down a principle there. I will not quote the exact words, but in that part of the Charter which relates to inter- governmental commodity agreements, where the problem of the transfer from the less efficient to the more efficient producers is discussed, there are words which remind us that in the process of transfer the problem of the reaction on other countries must be remembered and that it is not reasonable to expect these transfers of economic activity to take place too quickly or without regard for the transitional unemployment that they may cause in other places. Then, Mr Chairman, I come to the third aspect of our objectives and that is industrialization as opposed to the complete dependence, or nearly complete dependence, upon agriculture; and there we suggest that 6. B. 4 E/PC/T/C. I & II/PV/2 it is most important in the interests of the country that is industrial- izing and in the interests of other countries that efficiency should be the prime criterion. If all countries were to seek to engage in every kind of production, regardless of efficiency, we should be destroying our approach to the first objective I mentioned, which is a rising standard of life throughout the world. If I may take the argument a little closer home and suggest that this concern for efficiency is a vital interest to the under-developed countries who are seeking to set up industrial undertakings, I would like to put it like this: If a new industry in an under-developed country is set up without regard to efficiency, later on the time will come when that infant has grown up and wants to go out into the world, when that industry will want to compete on world markets; and if due regard has not been paid to the problem of efficiency it will find that its products do not sell on world markets; and that would be, again, a departure from the first of our objectives, increasing the standards of life throughout the world. I suggest it sounds almost paradomical, that the smaller the country that is engaging in industrialization, the more important is this consideration. In a very small country it is probable, in the present state of technical development, that the home market will not be sufficient to provide a large enough off-take for the product of one undertaking, and the infant from the very early months of its life will have to consider how it is going to get a market large enough to bring it to full growth: that is, it will have to be in a condition to begin to compete in world markets very early. Those, Mr Chairman, are the thoughts which occur to us on the objectives. .fls. 7. C. 1 E/PC/T/C. I & II/PV/2 I turn now to the problem of methods of fostering the infant during the early months and years of its life, the methods obviously not so important in principle as the objectives, but, none the less, I suggest there are some serious problems for this joint body to face when we come to consider the question of method. So I would like to begin, if I may, on what I hope is the least controversial part of this problem of methods; and I suggest that there the important thing for countries which wish to industrialise to do is to address themselves to this problem of how to very discover the efficient things to do. That is/largely a national problem; it is a matter which clearly each Government has got to decide for itself. I do not think that there is yet opportunity for a world plan on industrial development to be set up, but there are there, we think, opportunities for international action of a positive and helpful character; and I would put very high in the order of priority the question of discovering whether some international body or may be several international bodies cannot contribute to what is really the key to industrialisa- tion - access to what my colleague on my right would undoubtedly call "know-how"; and the development of that first step in technical achievement which is so essential. for all industrialisatilon to succeed. Well, the I.T.O. or may be the International Bank or may be one of the organs of the Economic and Social Council may have a big function there in arranging for the proper passing on of technical knowledge; and it may be that this knowledge can be exchanged; it may be that the old and declining industrial countries would like to sell some of it. There is another aspect of that which applies to some under-developed countries possibly but not to others, and that is how we can set about organising a proper flow of capital to those countries which are anxious to 8. C.2 E/PC/T/C.I & II/PV/2 industrialise; and there again I hope we shall be able to hear perhaps from the observer from the Bank whether there is any contribution of a positive character for which international machinery is already in being. Now, Mr Chairman, I must turn, I am afraid, to the more controversial part of this consideration of methods. We have heard in various speeches a great deal of anxiety expressed on the problem of how to shelter the infant from the competition of the elderly, how to enable the infant to get started behind the protection of a tariff of uncertain height possibly or behind some other barrier; and there has been a tendency, I think it would be fair to say, rather frankly, in the previous speeches to suggest that this is solely a problem which concerns the so-called under-developed countries and does not at all apply to the more developed countries. It may apply more acutely in some countries than others, but I think all of us have to face it. Except where industry is to be left in a completely static and fixed condition. there is always the problem of how a new industry can be started. The protection aspect, it seems to us, has been over emphasised here. But how does a new industry start in the largest market of all, the market of 145 million people within which there are no protective walls? I do not believe that American infants are so much more strong and healthy at birth than all other infants that the problem has not to be faced there. I know it can be replied that at least the American infant has the advantage of the technical skill that has been developed by his elder brothers, and I would agree with that criticism of what I have said, but I would say again that it adds point to the previous part of my remarks, where I suggested that the main solution to this problem lies in the discovery of proper methods to enable 9. C . 3 E/PC,/T/C. I & II /PV/2 technical knowledge to be exported freely and moved about the world. But, all that having been said, there is obviously a residual problem of enabling certain countries to protect their newly-born infants; and I think generally three methods have been suggested. They are: subsidies, tariff protection, and protection by means of quotas. I am sure, Mr Chairman, we shall discuss these in great detail when we come to them, but I think I should say straight away that we in the United Kingdom at any rate think there are grave objections to the use of quotas for this purpose, not simply from our own point of view but also from the point of view of the country that uses them; and that aspect of our argument we shall develop in detail when we come to discuss that problem in detail. Tariffs are being discussed at the moment by Committee II, but I think it is just worth saying that the selective method of negotiating tariffs offers a good deal of hope to those who wish to use protection for their infant industries. On subsidies, we know it is commonly said that they are not open to the poorer countries, and when we come to that we should hope to show that that argument is really mis- conceived. It is not a problem of a country's national income whether it can afford to pay subsidies; it is a problem of securing from the consumer of one article or from the taxpayer as a whole means to enable him to buy one article cheaper and to pay more for another. My last point, Mr Chairman, is this. We have heard suggestions that the under-develope countries should retain complete freedom to adopt any method to any degree for the purpose of fostering industrialisation. I do not know how seriously and how firmly that proposition is put forward, but it seems to us to be a counsel of despair. It is easy for 10. C.4 E/PC/T/C.I & II/PV/2 any country to say "To enter into an international commit- ment is a sacrifice of my sovereignty", and to think that that ends the argument; but it is not possible for one country to say that and for others to go on and to enter into international agreements; there is and there must be found an opportunity for enabling us all to enter into an agreement reasonably compromised; and in any case, surely it is unnecessary to retain this complete freedom? New industries take time to develop. You cannot build factories all over a country at once; and in the course of time we expect commitments to be modified in detail. To relate it to the tariff problem there are and must be opportunities at intervals for revising the tariff commit- ments that have been entered into; and there are in the American draft charter one or two so-called escape clauses which may be useful in enabling countries with legitimate apprehensions on this subject to undertake the commitments which will enable us all to set up the I.T.O. Mr Chairman, I am afraid I have taken a very long time on this. I would now like to end, if I may, by making a concrete suggestion about the work of this Committee. We have had an extremely valuable paper from the Australian delegation on this subject, and it divides itself into various parts, beginning with general principles and going on to deal with technical and other assistance, and then it touches on some of the points which I have a ready made relating to methods. 11. F1. 1 D E/PC/T/C.I & II/PV/2. I would like to suggest to the Committee that we should take the Australian paper as the basis of our discussion and try to clear our minds on those passages in it which deal with objectives. Let us got that clear first and then we can come on to the question of methods with much more certainty about what we want to use the methods for. That will have the incidental advantage that Committee II, which is discussing the framework of these methods, may itself have cleared its ideas and give us a better knowledge of the background against which we must consider the use of these methods on the subject matter of this joint body. THE CHAIRMAN: May I thank you for your very valuable contribution to the work of this Committee by opening this discussion in this fine way. I am tempted to ask you, if you will, to elaborate a little on one point that you raised, which I think is one of the most important points, and I am making this request because I feel that, if you could elaborate on it at this stage, it would help the discussion. Other members would then be able to refer to that point, I think, more specifically. That was the question of efficiency. MR HELMORE (United Kingdom): Yes, Mr Chairman, I will gladly do so in answer to questions perhaps, but I think my French colleague had a point of order to put to you before I went on to that. M. UGONET (France) Mr Chairman, I am rather embarrassed to be speaking now after my British colleague has spoken, as his statement was almost the one that I myself should have liked to make, and I should not like to have it thought here that we had spoken of it and put our ideas together before coming here. Nevertheless, I think it might be useful to put it to you before the debate goes on that France is in a situation easy to be compared with the one of Great Britain upon all these points. France is, in certain ways, in a situation comparable to the one of the non-developed countries. As a matter of fact, she has, on the one hand, an overseas empire of colonies and territories, the economic development of which is not as yet high enough, and, on the other hand, the destruction of her own territor- ies has placed her, as Mr Helmore has already said, in a rather difficult position easy to be compared with the one of new and young countries. If you will allow me, I shall give you the statement which I have 12. F1. 2 E/PC/T/C.I & II/PV/2. prepared for today and which may be, in certain ways, a repetition of what has been said by may British colleague. France remains within the traditions of her ideals when she takes full part in all the efforts which aim at improv- ing living conditions and the existence of humanbeings throughout the world. The administration of the different rules of international trade with a view to achieving such an aim appears, therefore, highly desirable to her, more desirable in every way, every day, because of the general economic inter- dependence which has been brought about by the development of transporta- tion and means of communication. A gradual increase in the effective purchasing power of the populations of one part of the world entailing an increase in the demand for goods and services on the part of those popula- tions gives workers in other parts of the world the opportunity to purchase more and, therefore, to increase their own purchasing power. This is by now a commonplace. This favourable evolution of human conditions naturally presupposes a certain permanent state of general economic stability. Among other things, it is desirable that the purchasing power of the one part should be effectively used for the acquisition of consumer goods and producer goods in a relatively reasonable proportion, and that the use of the new production goods in the increase of the productivity of labour should be highly beneficial to the workers. The lowering of production costs, if we gave to this phrase its widest meaning, with regard to the hours of work for the processing of commodities ready to be used is one of the pre-requisites for bettering the living conditions and increasing the standard of living, but cannot for a moment be considered sufficient. The profit made must be real profit to the worker and must benefit the worker by meals of increasing his effective remuneration as well as benefiting the consumer by way of lowering the real sales price and also capital invested by amd remunerating it in fair proportion to the possible risks. It may not be improper to recall the shocking and dangerous aspects of the situation of the Japanese workers before the last war. Full employment was guaranteed in Japan, but under such miserable conditions in regard to working hours and wages that this country could not be considered a customer for others in relation to the mass of its population. On the contrary, it was for them an 13. F1.3 D E/PC/T/C.I & II/PV/2. extremely dangerous competitor because of the low level of its sales prices. The extension of such a situation within the frame of total freedom of exchanges would have led to a progressive lowering of the standard of living of workers in the other countries. France is very anxious greatly to increase the productivity of her agriculture and industries and also desires to see that the increase of the productivity may benefit the workers themselves in the greatest possible proportion. She is concerned with the problem of increasing production and giving, as far as possible, an appropriate profit to the workers themselves. She is at the moment preparing a plan of re-equipment and modernisation which she hopes to put into effect as early as possible and as soon as her resources of energy, manpower and foreign currency permit. In other words, the problem of full employment does not concern her very much for the time being. On the contrary, she envisages the opening of her frontiers to workers from outside, in so far as she will be in a position to control the quality of those workers from the point of view of technical skill, moral standards and political views, so as to make possible the integration of these people within the French community. This great aspiration towards a general increase in the standards of living in the world can, however, never be brought about except in a progressive way and in a progressive manner. It is not certain that the development of the productivity of each country and of each sector of activity will remain constantly and harmonious- ly balanced with that of each other country and of each other sector. Accidents beyond the control of man may, for instance, have an influence on the productivity and purchasing power of agricultural populations. The rapid evolution of technology may break the relative equilibrium of industrial means and means of production. Abnormal situations, such as those of the present post-war period, may lead workers to direct their activities to jobs to which they are not well-suited and night later give rise to difficult problems. Crises may appear owing to this break of equilibrium. The effect will be all the more brutal as the specialisation of producers in the world will make them more dependent on one another. The problems of a social order and very great problems will then arise and Governments will be confronted by them. They will arise with the same brutality with the risk that they might 14. F1. 4 D E/PC/T/C.I & II/PV/2. induce those Governments to renounce the pledge they have given under the Charter. It is, therefore, wise to provide that the economic structure of the world should be such that steps against these crises could be effect- ively undertaken. If indeed we leave it to each Government to take the appropriate internal measures when a crisis appears, this would imply that the Government can really do so. This puts it in a position to plan its economy with positive measures as well as by means of negative measures, and, in particular, to maintain unemployment on the lowest possible level. But this also presupposes that internal measures alone would have a real effect. A quick change of production is a purely theoretical view. Workers do not easily change from one sort of occupation to another, and they do not easily change the place where they work. They are prisoners, more or less, to the traditions of their work. This, at least, is true of French workers. Adaptation to new economic conditions is not easily put into practice if the economic activities of the country are not sufficiently diversified. This has already been emphasised in the history of my own country, which has so often been a battleground, owing to the necessities of its independent policy. Some categories of production in a limited number are carried on in France, despite the relatively low level of their productivity. This remark might lead one to observe that to persevere in this way only means condemning the French worker to a standard of living lower than the one which he could hope to have in a world specialisation of production. I think we must consider this sacrifice as a kind of insurance against the risk of an international economic and political crisis, and I think we can say that this insurance has found in our past history full justification. We must admit that in such conditions and in exceptional cases, some categories of our production to be maintained must be the subject of particular protection. This does not seem to me to be opposed to the spirit of the Charter. I do not insist on the limited and partial escapes regarding the undertakings of such a Charter which will have to be granted to this world faced with crises, when their normal balance of payments will be in an adverse position. I should only like lastly to lay stress on the fact 15. Fl.5 D E/PC/T/C. I & II/PV/2. that the actual inequality in the economic conditions of various countries ought to bring with it a certain possibility of modifications in measures to be undertaken relating to full employment. It seems to me it would be shocking to see a country highly industrialised, and a country which, as a consequence, has already achieved a high standard of living, re-establishing within its own borders full employment through measures which might prevent the increase of purchasing power of the workers of other countries where the standard of living has remained lower. PAE E-1 E/PC/T/C. I&II/PV/2 I am thinking at the moment in particular about countries whose balance of payments is at the moment unfavourable but whose monetary reserves have remained very high, which would allow those countries to absorb these deficits within a limited period of time without serious danger. The contributions of such a country in a fight against economic crises could serve to main- tain and encourage internal consumption of imported products as much as for the maintenance of full employment. That, Mr Chairman, is what I have to say, apologizing once more for the similarity which my statement may have shown to the statement of my British colleague. THE CHAIRMAN: Thank you very much. Mr J.R.C. HELMORE (UK): Mr Chairman, I wonder if I might ask- I was not perfectly sure - exactly how you wanted me to amplify what I said about efficiency? THE CHAIRMAN: If I might explain, I think you said that efficiency must be the criterion to be considered always before any attempt is made to establish new industry; and I felt that as that was such an important point, the discussion on it might be facilitat- ed if you could kindly put it in greater detail at this stage. If you prefer to wait until a later stage, I think it would be perfectly all right; but I thought it would help the discussion if you could do so now. Mr HELMORE (UK) : Well, I really had two points in mind, Mr Chairman. One relates to what I may call natural efficiency. The example has been used before in another place, that it would obviously be inefficient of the United Kingdom to set up a new industry for the production of bananas. We are totally unsuited by natural condi- tions to do that. It would be inefficient for a country with no coal and no iron ore to set up a large steel works. That is the first general consideration: that the type of industry has in some way to be related to the natural geographical physical economic 17 PAE E-2 E/PC/T/C. I&II/PV/2 conditions of the country that wants to set it up. But the second and much more important point seems to me to be that if a country decides that it is possible within what I have just said to set up an industry, it should take all the precautions it can to see that the productivity of its workers is not wasted by making the product in (I find myself at a loss for another word) an inefficient way. The unit of production must be the right size; the workers must be trained by those who know the best and most up-to-date methods; the machinery should be (again all I can say is) the most efficient machinery. The danger that I am seeking to avoid is that in pursuit of industrialisation just considered by itself a country may very well set up a number of undertakings; but if there is waste, if those undertakings are enabled to be established behind excessive protection, the country will be wasting its own resources and causing an unnecessary decline, however small it may be, in relation to one particular undertaking, in the standard of life in every economy which is affected in any way by the operations of that undertaking. THE CHAIRMAN: Thank you. Mr HAKIM (Lebanon): Mr Chairman, I am obliged to make a few comments on the very illuminating speech made by the United Kingdom delegate. The United Kingdom delegate emphasised the importance of efficiency in production. It must be recognised that production is much more efficient in the advanced indus- trial nations and that for a long time the less developed, generally agricultural countries, will not be able to achieve the level of efficiency of the advanced countries; but, on the other hand, it is not true that labour and material resources generally in the less developed countries are wasted to a very large extent. Now, this waste also from the point of view of the world as a whole means a great deal of inefficiency in the utilis- ation of the economic resources. We should not forget in this Committee the point of view of world production as a whole. 18 PAE E-3 E/PC/T/C.I&II/PV/2 Another point made by the United Kingdom delegate was that small countries having small markets are not able to develop the large-scale production and profit from its efficien- cy and from the economies that it involves. This also is very true; but there are ways of helping small nations not to become very much industrialised - that is not what is desired - but to develop certain industries for which their market and the markets of the region to hich they belong may be amply sufficient. I suggested some time before in a previous debate the possibility of the formation of customs unions in certain regions among a number of small nations. I also suggested the method of regional tariff preferences. These two methods may enable even the small nations to develop a certain number of industries. The small nations do not want to become as much industralised as the big advanced nations. That is impossible for them. All they want to do is to develop certain industries for which their resources and their economic conditions entitle them. But, Mr Chairman, I want to make a statement as to the reasons why smallnations and less developed nations generally want to develop their industries. Industrial development is not an end in itself; it is only needed as a means to the end, the raising of the standard of life of the people. Industrialisa- tion has its evils, but the less developed nations are willing to put up with certain evils of industrialisation in order to achieve the very important end of higher standards of life. Now, I submit that the raising of the standard of life of the common people cannot be achieved fully without the develop ment of industry. Agriculture alone, no matter how efficient it is, cannot raise to the same extent the per capita income and hence the standard of life of the people. I agree entirely that many of the less developed nations must set themselves first to the task of increasing the productivity and the efficiency of their 19 PAE E-4 E/PC/T/C.I&II/PV/2 agricultural production; but when that is done, manufacturing industry is still necessary to raise the standard of life of the population. I am going to state three propositions in support of this statement. I do not think there is time here to prove these three propositions fully, but I am going to suggest the reason why these propositions are true. The first proposition is that in manufacturing industry technology has a much greater scope in increasing productivity per man thatn in agriculture. The application of science has much greater chances of increasing productivity in manufacturing industry. The use of machinery and the economy of large scale production increase productivity tremendously in manufacturing industry. The second preposition is that, aside from technology and for reasons other than those of large scale production and mechanical application, labour is more effective in manufacturing industry than in agriculture. It is more disciplined, more continuous and more economical of time than in agriculture. 20 E/PC/T/C. I & II/PV/2 The third proposition is this: In the exchange between industrial countries and agricultural countries of manufacturered goods against agricultural products the industrial countries get the better bargain. This is partly due to the monopolistic position of certain industrial countries as against the less-developed countries, and also partly due to the monopolistic elements in manufacturing industries conducted on a large scale basis of production. For these three reasons I submit that manufacturing industry enables a nation to achieve a much higher per capita income than agriculture. I want to conclude, Mr Chairman, by pointing to a reason which is not purely an economic one why the less-developed countries desire to develop their manufacturing industries. Higher standards of life for the population do not only mean more food and clothing, but also better education and better enjoyment of the higher elements of culture. This cultural aspect is as important, if not more important, than the purely material aspect of raising the level of consumption. The relation between manufacturing industry and culture is very in- timate. Manufacturing industry advances science and enables man to control nature, while agriculture leaves man in a state of dependence on nature, thus fostering fatalism and a generally unprogressive men- tality. While manufacturing frees man materially and intellectually, agriculture keeps him in a sort of slavery to forces which, especially in the less-developed countries, are beyond his control. If we really want to raise both the material and the intellectual life of the less- developed countries we cannot escape the conclusion that our aim can only be attained through industrialization. A world divided into rich and progressive countries on the one hand and poor and backward countries on the other is a world that is fundamentally divided against itself and will always contain the seeds of conflict. If the United Nations are to unite the world into one human family the greater number of members of this family cannot remain condemned to a backward state of material and in- tellectual existence. In the interest, therefore, of human understanding F.l. E/PC/(D/C. I & II/PV/2 and of the peace and prosperity of the world all measures should be taken to help the less developed countries to industralize themselves in order to raise the standards of life of their people. THE CHAIRMAN: Thank you. I call upon the Delegate of Brazil. MR MARTINS (Brazil) : (Interpretation): Mr Chairman, at the last meeting of Committee I the Brazilian Delegation made certain declarations, and it now wishes to present some propositions to the joint meeting of the First and Second Committees. Before presenting these proposals, however, we wish to appreciate some of the points made by my colleague the British delegate concerning the three considerations or aspects of the matter which he stressed respecting the problem of the industrial devel- opment of countries. The first aspect, together with the correlation of industrial and agricultural development, interests my country very close- ly, because the economic structure of Brazil, which is peculiar to that country, is what I might call a mixed structure, consisting of agricul- ture and industrial production. Historical events and geographical conditions have led us, at the early stage of agricultural development and later to a first period of industrial development, which grew very rapidly and profited from the stimulus given by the two great world wars. We can, as a result of this, appreciate quite well the conditions in order to achieve the harmonization of two parallel sets of activity, and we think that the economic concept of full employment cannot be applied without some reservation in this country where labour can be employed fully, but where the human conditions of tlhe working masses are not the same as those of labour in the more developed countries. This concept cannot be purely static, it must be, above all, dynamic. The agricultural development of one country cannot be retarded by the industrial development of that country, because the natural conditions on the one hand and agricultural industrialization and mechanization on theother might modify to such an extent the situation that, on the con- trary, industrial development must always follow agricultural development. Agricultural mechanization in several of the countries where agriculture 22 F. 3 E/PC/C/1& II/PV/2 has not yet risen above a certain level will permit each man to produce ten times as much as he now produces, and therefore labour can be di- versified by the application of industrial processes without prejudicing agricultural activity. On the other hand, industrialization can provoke a greater demand for agricultural products in those regions where trans- port permits the goods to reach the producing markets. Another aspect of the British statement is that of the diversification of industry. In some countries diversification is synonymous with stability. In those countries which are producers of raw materials and, above all, of agricultural products, in those countries which coneentrate their pro- duction on one, two or three products, economic instability threatens economic productivity. We are now faced with many difficulties, and in the past with many crises, provoked by the instability of the principal product of the country in the matter of price levels. There- fore, one cannot think of economic instability without at the same time thinking of greater industrial diversification. One aspect of the British statement on efficiency deserves a reference, too, with due respect, to the period of transition between training and adaptation which is always necessary for the installation of a new economic ac- tivity. One cannot, without a period of some years, hope to attain the same productivity and the same efficiency as those of other countries which have carried on this activity over a period of some hundred or two hundred years. We agree with the British delegate, that the statement made by the Australian delegation might be perhaps used with great advantage as a guide and basis for the discussion which we have to conduct here, and it is very likely that the Brazilian delegation will wish to submit a few amendments to this proposal: but in principle the spirit of this recommendation is absolutely in accord with the thoughts of the Brazilian delegation. I now pass on to my submission of the Brazilian proposal, which is made concerning international investments and loans as a means of maintaining a high level of employment and of developing international trade. G. fls. G.1 E/PC/T/C.I & II/PV/2 Our first proposal is as follows: The members of the I.T.O. recognise that international capital long-range investments and the granting of international loans on a liberal basis constitute convenient means for the develop- ment of international trade and the maintenance of a high level of employment, while moreover facilitating the progressive reduction of commercial barriers. It is recognised by the members of the I.T.O. that export of capital is one of the most effective means of combating unemployment in over-capitalised countries. Third point: Export of capital by over-capitalised countries, with the aim of encouraging industrialisation in less developed countries, is therefore very desirable; and on this point the I.T.O. will establish an agreement amongst the interested countries. In this respect the most appropriate form for each country must be considered. Four: When private investments cannot reach the desired aims, the I.T.O. will recommend the negotiation of governmental loans among the interested members. Five: The .I.T.O. will recommend the granting of such loans by the International Bank for Reconstruction and Development and will request for these loans a preferential treatment. We do not want to end this little statement of the Brazilian point of view without expressing our hope that the point of view of the less developed countries, which has been expressed so far by the delegates of the Lebanon and by the delegate of France, will be fully harmonized with the points of view of the more capitalised and developed countries; because we are assured that these problems can be brought to a common solution. MR FREDES (Chile): Mr Chairman, I beg delegates to excuse me and kindly to listen to me in my own language, because I do not speak English correctly and I do not speak French 24 G. 2 E/PC/T/C.I & II/PV/2 correctly. On account of this unfortunate circumstance, I shall not be able to make a general exposition concerning the economic structure of my country and its foreign commerce, and therefore I shall limit myself to reading certain proposals that my delegation thinks useful in discussing this point of industrialisation. It has been the constant pre-occupation of my country to eliminate restrictions which upset the development of international trade, but it has always maintained that one cannot make headway unless one remedies restrictions of this sort. The Chilean delegation has therefore seen with pleasure the creation of this joint body to deal with the development and industrialisation of countries which are under-developed. The Chilean delegation hopes that as a result of the work of this Committee we may arrive at a new chapter in the draft of the charter for inter- national trade, a chapter which, according to our estima- tion, may contemplate the following points. First, the state members will undertake to try, by all means within their reach, to see that the countries industrially under-developed may place in sufficient quantities during fairly long terms and at remunerative prices the natural products and industrial products which are indispensible for their national economy and for the improvement of the standard of life and working conditions. Such products may constitute the main source for the commercial interchange which is an essential means of existence and is vital to the economic stability of a country. Two: As a general policy consideration shall be given to the necessity for compensating the disparity which can be seen between the primary products and those manufactured, establishing the necessary equity among these products. Three: In case there should be shortage of indispensable products for the maintenance of 25 G. 3 E/PC/T/C.I & II/PV/2 established industries or for the consumption in a member country, this country will be consulted concerning the interest it has in its importation, in order to give it a minimum participation. If no agreement can be reached, the problem will be submitted to the consideration of the organisation. Four: With the purpose of finding an efficacious means to raise the standard of life of the people by evaluating their natural resources and human resources to contribute to the help of international commerce, and it being of mutual interest and benefit for the highly industrialised countries to develop in the countries which are under-developed, the member countries undertake to try by all means possible to lend help for such purposes. For the realisation of these purposes the member countries will promote the industrialisation of the raw materials which might constitute the basic production of the countries industrially under-developed, the creation of new industrial branches and the perfecting and amplification of those industries which already exist, provided that they adapt themselves to their local economic conditions and providing they contribute to the greater consumption in the country as well as to its foreign trade. For such purposes the member countries will facilitate the getting of the raw materials, means of production and the technical personnel which are necessary. Five: The member states reiterate the principle which has been consecrated in the Atlantic Charter - that of equality of access to all sorts of raw materials. Also they declare and accept the principle of equality of access to the means of production and the manufactured and the semi-manufactured articles which they may need for their industrialisation and for their economic development. Six: With the purpose of financing the member countries, where there is an abundance of capital, 26 E/PC/T/C.I & II/PV/2 in order to give to those countries requiring ample credit on long terms and at low rates of interests and equitable amortisation, the necessary steps shall be taken towards such operations. Seven: In order to develop economically the member countries they will try to lend ample facilities for the free transit and investment of capital, giving equal treatment to national capital and foreign capital, unless the investment of the latter is contrary to the fundamental principles of public interest. Eight: The investment of the. above-mentioned capital must be effected as far as possible in a mixed manner, assuring thus the fair and equitable participation of all in the formation of enterprises and businesses, and avoiding as a general rule that investments abroad displace national capital of industries and business activities which may exist in future. 27 G.4 D/D H.2. E/PC/T/C.I & II/PV/2 means of judging it and so that they may consider it, if they think it advisable to do so, at the next meeting. THE CHAIRMAN: Thank you very much. One of the disadvantages of starting these meetings at eleven o'clock is that they come to an end almost as soon as they have begun. I was just wondering whether we could make it a rule, when we do meet. in the morning, to meet at 10.30 instead of at 11. I do not know how the Members of the Committee will react to that suggestion. It is a suggestion which I throw out in the interests of the work. I am entirely in the hands of the Committee in the matter. MR. COOMBS (Australia): I would like to support the suggestion, Mr. Chairman I think it is a good idea. THE CHAIRMAN: May I take is that is generally agreed to ? (Delegates indicated assent). Thank you very much. Then we will meet, when we meet in the mornings, at 10.30. With regard to the question of our next meeting, the suggestion has been made that we might continue and meet this afternoon. I do not know whether that will be convenient to the Members of the Committee. If not, then we can discuss the question of a meeting next week. I would suggest that it should be fairly early. Are there any suggestions with regard to that ? What about this afternoon ? (Delegates indicated dissent). There is general opposition to that. MR. HELMORE (U.K.): Mr. Chairman, I was going to say that I am as rooted in my opposition, as I think all other Delegates are, to Saturday afternoon meetings as a general rule, but I think it might perhaps be wise to make an exception this afternoon. We are right in the middle of our general discussion; all the speeches are fresh in our minds, and if we were determined to get on this afternoon we might reach a point at which the future scope of our business would have become clear. 29. D1.1 H. 3 E/PC/T/C.I & IIPV/2. MR FRESQUET (Cuba): Mr Chairman, taking into consideration the importance of the statements made this morning, I think if we were to have more time to study them, it would be better for our work and for our consideration and for our judgement. THE CHAIRMAN: Shall we decide then to have a meeting early next week? MR COOMBS (Australia): Mr Chairman, it is obviously going to be very difficult, particularly when so many of the Delegates are interested in the work of other Committees. I fully appreciate the difficulty of Delegates, particularly at five minutes to one on Saturday, deciding that they want to work on Saturday afternoon, but I do feel that it is going to be very difficult for us to get through our programme if we adhere to the present schedule of times. Could I suggest that we hold some meetings in the evenings? THE CHAIRMAN: Would it not be possible to begin the afternoon meetings at 2.30 instead of at three o'clock? That night help, might it not? IS COOMBS (Australia): Mr Chairman, I think one of the difficulties arising from the adoption (if I may say so, very successfully) of the plan of devoting the whole of the day to the work of the major Committees is this: While I am not suggesting that it would not be a good idea to start at 2.30 (it may well be), I do feel that it will not necessarily solve this problem, which is that we have a number of Committees in which Delegates wish to participate, and it is exceedingly difficult, therefore, to divide up the time in such a way that they all get fairly frequent meetings. I think that problem can only be overcome actually by adding to our working time either on Saturday afternoons or, alternatively, in the evenings. If we start at 10.30 and at 2.30, the chief benefit will be that we will get a longer time to devote to the work of. the main Committees working through each day. If it would be possible for us to meet at some times in the evening (not necessarily every night of the week, but if certain nights could be decided upon in advance so that Delegates could keep them free), I think we could make very good progress if we had two or, say, three sessions each week from eight o'clock to 10.30. THE CHAIRMAN: Perhaps the Secretary could kindly make some suggestions with 30. D1.2 H.4 E/PC/T/C.I & II/PV/2. regard to that. MR WYNDHAM-WHITE (Executive Secretary): I think, Sir, it might be helpful if I were to explain what the programme complications are. Under the on Monday arrangements which we have provisionally made for next week,/there is to be a full meeting of Committee IV, that is to say, a meeting which begins at 11 and continues three o'clock in the afternoon. Equally,. on Tuesday, another principal Committee, Committee II, has provisionally a meeting which will last all day, and I had contemplated that Wednesday should be devoted to Committee I, which has not held a full meeting since Monday. You will see, therefore, that the prospect of this Committee meeting again is rather remote, if we are to avoid a clash with any of the other principal Committees. A. possible solution would be, in addition to extending the hours of work (which, I think, is essential, if we are to get through any time-table at all), to hold a morning meeting of this Committee on Monday or Tuesday, at the expense of Committee IV or Committee II, but with the understanding that Committee IV or Commiittee II (whichever gives way) would meet for longer hours, that is to say, perhaps beginning at 2.30 in the afternoon and sitting as late as possible. MR COOMBS (Australia): I think that is a useful suggestion, Mr Chairman. I would like to plead on behalf of Committee II, however, that we have a very heavy programme and that, therefore, the time in the early part of next week to be handed' over to any other Committee should not be taken from Committee II. MR HELMORE (United Kingdom): If I might speak in my capacity as United King- dom Delegate and Chairman of Committee IV, there are equally good reasons for not taking time away from Committee IV. The Chairman of Committee I is here, so he will be able to stand up for himself in a minute, but I hope I shall be forgiven if I suggest to him that, as he postponed the Sub-Committee of Committee I, which was to engage on some analysing of proposals and assembling them, perhaps in this case Committee I might post- pone itself for one day. MR WUNSZ KING (China): Mr Chairman, Committee I has not met since last Monday; that is because the Sub-Committee has not been able to meet up 31. DI. 3 H.5 E/PC/T/C.I & II/PV/2. till now. I think the Sub-Committee will be able to meet on Monday next, and I would like very much to have the matter disposed of as quickly as possible in the early part of next week, so that the rest of the time will be entirely at the disposal of all other Committees, including this joint one. MR COOMBS (Australia): Might I suggest, Mr Chairman, to test the feeling of the meeting, that this Joint Committee meet again on Monday night at eight o' clock? THE CHAIRMAN: What is the general reaction to that? MR HELMORE (United Kingdom): Mr Chairman, my suggestion for meeting on Saturday afternoon having been rejected unanimously, perhaps I might say something about evening meetings. They are possibly the least difficult for the United Kingdom, since it is at home, but there are a great many ways in which the work of the Preparatory Committee can be facilitated by leaving evenings free. I do not think that I have spent a single evening yet during the week without being engaged in consultation with other Delegations on particular points; and that type of work, which must be done at some time, really merits consideration in allocating our time. I would be perfectly prepared for evening meetings if we have reasonable notice that they are going to happen, and not on every evening, but I would have thought Monday or Tuesday of next week is rather too soon to start on that process. I am prepared to make a suggestion ? I hope will solve this problem, which is that we arrange an evening meeting for one of the later days next week so that people may have time to re-organise themselves for it, and I suggest that the Chairman of Committee II and the Chairman of Committee IV abide by the toss of a coin, which of them gives up half a day on Monday or Tuesday and meets in the evening instead, so as to make room for a half day' s meeting of this body. That is a challenge. MR SPEEKENBRINK (Netherlands): Mr Chairman, with regard to the possibility of meeting this afternoon, in my opinion, as we have a heavy programme before us next week, we might easily sacrifice our Saturday afternoon today. 32. E/PC/T/C. I&II/PV/2 And thus progress is achieved. Otherwise I fear we shall be here not merely for one month but for three months. THE CHAIRMAN: It seems to me that the general opinion is very much against an afternoon session to-day. I do not know whether I am right in saying that. It seems that the general opinion is rather against it. Mr HELMORE (UK) : We do not like to put these things to the vote, obviously, but would it assist the chair if you asked those who were prepared to sit this afternoon to raise their hands - not in the way of voting on it, but simply to see exactly how the matter stands? THE CHAIRMAN: Will those who are in favour of meeting this after- noon raise their hands. (There was a show of hands.) Then we are still left with this proposal, that Committee II or Committee IV may very kindly give up Monday afternoon. Mr COOMBS (Australia): I would suggest that the Chairmen of the various Committees and the Executive Secretary go into a huddle over this. THE CHAIRMAN: Yes, and then we can announce the date of the meeting in the Journal on Monday. Dr. SPE???NBRINK (Netherlands): I suggest we should have a combined meeting of Committees I and II on one of the evenings of next week, so as to pay for our free Saturday afternoon. Mr COOMBS (Australia): I think that might be done, Sir. If we have the week-end off, we can arrange to have at least one evenin? meeting next week and one or more Committees to sacrifice some of their time during the day. 'THE CHAIRMAN: There is one little point: it would be very helpful if delegates when they have fairly long drafts to submit for addition to the Charter or Proposals could kindly submit their texts in advance of the meetings. It would help the discussion, I think. The meeting is adjourned. (The meeting rose at 1.3 p.m.) 33.

GATT Library

qc806cn8522

Verbatim Report of the Second Meeting of the Joint Drafting Sub-Committee of Committee II and Committee IV on Subsidies on Primary Products : Held at Church House, Westminster, S.W.1. on Friday, 15 November 1946 at 3 p.m

United Nations Economic and Social Council, November 15, 1946

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

15/11/1946

official documents

E/PC/T/C.II IV/PP/PV/2 and E/PC/T/C.II PP/PV/1,2

https://exhibits.stanford.edu/gatt/catalog/qc806cn8522

qc806cn8522_90220036.xml

GATT_157

A. 1. E/PC/T/C. II & IV/PP/PV/2 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SECOND MEETING of the JOINT DRAFTING SUB-COMMITTEE OF COMMITTEE II AND COMMITTEE IV ON SUBSIDIES ON PRIMARY PRODUCTS held at Church House, Westminster, S.W.1. on Friday, 15th November, 1946 at 3 p.m. Chairman: Mr.E.McCARTHY (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 & IV/PP/PV/2 THE CHAIRMAN: After our meeting on Wednesday, after a fairly full examination, we endeavoured to define the points of view and the Rapporteur was asked to produce something for us this afternoon. I think the best thing I can do is to ask the Rapporteur to tell us what he has done. THE RAPPORTEUR: Mr. Chairman, with the help of some members of the committee and, especially, yourself, I got out this paper which we have in front of us entitled "ReDraft of the Rapporteur's Report of the Joint Drafting Sub-Committee on Subsidies of Committees II & IV". The first two sheets give the reasoning behind such changes as were made or not made, in an endeavour to cover the main points brought up in the committee. Then I have a redraft text, which is on the last two sheets. For convenience of reference in that redraft text the new material is under- lined and anything that has been struck out is marked through with hyphens. THE CHAIRMAN: Looking at the redraft text, on page 4 of the paper, the first part remains the same as when we looked at it before, with the exception that after "subsidization" the words "and of gradually decreasing it" have been included. The note says that that was sugges- ted by Brazil in a paper that was put before the sub-committee. Would the Brazilian Delegate like to say whether that meets his point, or would he care to comment on it in any way. MR. GUIMARAES (Brazil): I am favourably disposed towards production subsidies but not export subsidies, because in some forms of production you must have development with those advantages. THE CHAIRMAN: Your idea is that the subsidy should be used during the period of development? MR. GUIMARAES (Brazil): It is intended to gradually lower the subsidies. THE CHAIRMAN: As the development takes place. MR. GUIMARAES (Brazil): Yes. THE CHAIRMAN: The insertion of those words would meet your point of view, would it? MR. GUIMARAES (Brazil): Yes. 2. B. 2 E/PC/T/C.II & IV/PP/PV/2 THE CHAIRMAN: The Brazilian Delegates is satisfied that the inclusion of those words would meet his point. Would other members care to comment on the whole paragraph, including the addition suggested by Brazil, or do we consider that we might accept paragraph 1 as it stands? SIR GERARD CLAUSON (United Kingdom): I think we must say a word about gradually decreasing it at this moment. The point is that it is not clear whether that means that the gross amount of the subsidy is to be decreased gradually or the unit value of the subsidy. I think the United Kingdom at any rate would be bound to reserve their position on the unit value point. The United Kingdom policy, as is well known, is to assist the producers of certain articles, but not to enrich them. The intention is merely to give them that which is required to ensure that they produce those particular articles - whether it be wheath or sugar or anything else. If we accepted these words, with the implication that the unit value of the subsidy might be reduced, then we should either be being quite dishonest because we did not intend to do it, or we should be admitting that the unit value of the subsidy was at present too high - and I do not think we should be able to do that either. On the other hand, we are very conscious of the fact that this paragraph only comes into effect when it has been determined that serious injury to the trade of any member is being caused or threatened by the particular acts of the United Kingdom Government. If that is being determined - although I am speaking without any instructions on this subject-- I think my Government would feel that they could not just flatly refuse to do anything about it. In fact they are already committed to do something about it by the wording without the underlined words; they are committed to discussing the possibility of limiting the subsidiza- tion. I think that is quite wide enough to cover both - the provision that the quantity to be subsidized should not be increased and also that it could be contemplated that it might be decreased. Though I am no 3. B.3 E/PC/T/C.II & IV/PP/PV/2 agriculturalist myself, that seems to me to admit of whether you can grow something else instead of subsidizing the article. Therefore, I would not say the words should limit the extent of the subsidization or the area covered by the subsidization, but I think the words "limiting the subsidization" are better than anything longer, because they are less restrictive. But I do not think the United Kingdom Government could accept the other words, which do imply that the subsidies at present are unduly high and contain an element of water which can be squeezed out - because the Government flatly deny that, not only to foreign countries who are competing in production of that article but also to the inhabitants of the United Kingdom who are consuming it. THE CHAIRMAN: I think the Brazilian Delegate wanted to make two points really. He wanted to amplify "limiting" by referring to a decrease, and he also made the point that any decrease should be a gradual one. The point is, you should not just cut it off but make it gradually. MR. GUIMARAES (Brazil): Yes, gradually, taking into account chiefly the new products. THE CHAIRMAN: It is a general term. MR. GUlMARAES (Brazil): Yes, as a general policy. THE RAPPORTEUR: When we put "limiting" we read into it the possibility of its being limited in any sense of the word that might be appropriate in the particular case, which would not preclude limiting the unit value but would not necessarily suggest it. I think perhaps we could all accept "limiting" as a general word; that might mean limiting at a higher or a lower rate in a different form - the actual form the subsidy happened to take at the time discussion was joined. I wonder if it might meet Brazil's point if in the note covering this we state that - that the word "limiting" is understood to be in the broad sense of discussing the possibility of what can be done about the subsidization in order to deal with the injury that is positive here. That is really what you want to do, to find a means of modifying the injury that is found here. 3.a B.4 E/PC/T/C.II & IV/PP/PV/2 MR. GUIMARAES (Brazil): Brazil can stimulate the production of caroa fibre, and the Brazilian Government will grant a subsidy for its produc- tion. The first subsidy will be of such and such an amount; next year it will be a little less and so on, until it has disappeared. If the new production cannot continue without the subsidy, then it must be abandoned, because it would be uneconomical. THE CHAIRMAN: The suggestion of the United Kingdom Delegate is that the term "limiting" really meets the point. MR. GUlMARAES (Brazil): Limiting the subsidization. That is limiting quantities or the value? THE CHAIRMAN: Well, both probably, or either. MR. GUIMRAES (Brazil): The Government must put aside a certain amount to subsidize. Are you limiting the amount in value or quantity? THE CHAIRMAN: I think that term would permit of both. I was wondering whether "limiting" would meet your point. MR. GUIMARAES (Brazil): Yes, in the sense I have indicated. I have given the instance, of fibres. THE CHAIRMAN: In the covering, note we will refer to your point about the gradual decrease. "If it is decided upon it may be gradual, having regard to the economy of the product concerned," or something like that. MR. GUIMARAES (Brazil): Otherwise we will have a world economy based on high prices. THE CHAIRMAN: That is what we want to avoid. PROFESSOR de VRIES (Netherlands): As a matter of drafting, we also under- stood "limiting" should be both ways. But we should not be against gradually decreasing it, bearing in mind that now there is a new No. 13 being proposed by the United Kingdom to cover the case of primary commodities. The report says we have to cover especially the case of non-primary commodities. The Netherlands Delegation tried to make clear the distinction between primary commodities and non-primary commodities. As it stands sometimes it refers to all articles and sometimes expecially 4. B.5 E/PC/T/C.II & IV/PP/PV/2 to primary commodities. May be it would be better to make it clear what is the procedure for primary products and what is the procedure for non-primary products. If this sentence remains for non-primary products, then I believe the Brazilian idea is quite all right. I believe the instance Sir Gerard Clauson mentioned relates mainly to agriculture, and there the Netherlands Government must support the British idea that the subsidization of such articles just goes to the limit of necessity and does not go over that by one penny, as it is only intended to keep in existence agriculture which is necessary for the social and national security interests of the country. There also you may speak of limiting, but if you limit in the braod sense you cannot include any idea of gradually decreasing it until it is nil. If it is drafted so as to cover the primary products - something like the new No.3 - and to cover non-primary products, then we can accept the Brazilian addition C fols. 5. C1 E/PC/T/C.II & IV/PP/PV/2. THE CHAIRMAN: Is there any other view on this? The position now is that the United Kingdom rather prefer that the sentence be left as it is; the Brazilian representative is content with subsidization" but agrees that some reference should be made to the matter of a gradual decrease if such is finally decided upon; and I think the Netherland's representative, subject to acceptance of clause 3, would rather like to see "and of gradually decreasing it" in. PROFESSOR DR. E. de VRIES: If it is left out we are quite happy. THE CHAlRMAN: I think the consensus of opinion now is that we might restore the full stop to "after subsidisation", but the view of the Brazilian representative be included in our report. Is there any other comment on paragraph 1? THE RAPPORTEUR: Not so much as a comment on paragraph 1, but on general organisation there is one thing that I might have said in the first place. I was a little confused in the course of the discussion the other day and, therefore, I was not very clear in my remarks, I am afraid, about the relationship that was intended here between the application of "primary"' and "non-primary" products. I would like to say a word or two about how it appears to me as perhaps this would facilitate the discussion of the later parts. Paragraph 1 refers to all subsidies and provides that they shall be the subject of a full notification and information to the organization in paragraph 1 the first sentence. That obligation continues except where it is specifically said that it does not throughout the Article as a general obligation, that members establishing or maintaining subsidies shall tell the organisation about them. The second sentence of paragraph 1 provides that regardless of any special provision later on a subsidy that is determined to seriously injure the trade of any member is thereby made the subject of discussion between the injured member and the subsidising member with an idea of looking towards its limitation. This determination is provided for in the last sentence of the Article of consultation between the 6. C2 E/PC/T/C.II & IV/PP/PV/2. interested members so that the determinator is not an administrative but a consultative. So the very fact of elimination of injury gives rise to sufficient discussion between the interested countries to see whether it can be determined that there is indeed injury. That allows for an exchange of view on that point in an effort to get at the facts of the matter prior to the discussion and limitations. The second paragraph deals especially with such forms of subsidization as give rise to a difference between the price at which a product is offered for export and the competitive price in the domestic market, but without removing the obligation to report in paragraph 1. Then in the paragraphs dealing with primary products a further and more special kind of consultation is provided for. I believe there is no internal conflict between the paragraph as now drafted. The member injured in the case of a primary product could presumably be satisfied merely to use the procedure of Article 1 or Article 2 and obtain sufficient redress, so that he would not want to go further. Or he could go on into the general consultative study group procedure envisaged in the ensuing paragraphs, according to the difficulty that might be involved in the matter. I do not believe that possibility of a limited discussion and a quick resolution of the problem, or a more extended discussion and the completion of a commodity unit is a difficulty. SIR GERARD CLAUSON: I would like to ask the Rapporteur what he considerstis the effect of paragraph 1in the case where it is determined that serious injury is caused in the event of that discussion not leading to a satisfactory result. Could there then be a case under the Impairment Article, or not? THE RAPPORTEUR: Which Article? SIR GERARD CLAUSON: I refer now to the impairment Article as No. 30. That says in the second sentence: "Moreover, if any Member should consider that any measure adopted by any other Member, whether or not it 7. C3 E/PC/T/C.II & IV/PP/PV/2. conflicts with the terms of this Chapter, has the effect of nullifying or impairing any object of this Chapter". It then goes on to lay down the procedure which in the last resort may lead to a suspension against a member against whom a case is hold to be made. As I understand it, that is the effect of the Article. I am wondering whether, supposing the discussion under paragraph 1 to Article 25 should not lead to a satisfactory result, it would then be open to the member to go on and attempt to make a case under Article 30. THE RAPPORTEUR: I would take it that that would be so. PROF. de VRIES: I may say the difference of procedure has changed article 30 and enlarged it so that there is no chapter but charter, so that it covers the whole charter and it will be believed to cover as an escape clause all types of consultations and discussions. So it is on very broad lines on all types of questions which cannot be solved by ordinary means of consultation. THE RAPPORTEUR: That is the reason why I wanted to discuss that, in order to avoid any misunderstanding about the relationship between primary and non-primary, to go from the general to the more specific problems. PROF. de VRIES: May I ask one more question on Article 1. It is said by the United States delegate, and we agree to it, that the first and principal thing in thos whole Article is that any kind of subsidy you have to notify to the organisation. I do not understand really why there is "except as provided in paragraphs 2 and 4 of this Article". Is it not necessary to say that any member has to report any type of subsidy without exception. THE RAPPORTEUR: I am afraid I am not an expert on constitutional inter- pretation to feel certain. In re-drafting this report I had the same question in my mind. I should be glad personally to agree with the suggestion that those introductory words be dropped if it will not impair the provision in Article 4 that in certain circumstances paragraph 1 shall not apply. 8 C4 E/PC/T/C.II & IV/PP/PV/2. PROF. de VRIES: May be we should leave this question to the Drafting Committee in New york, to keep it in mind that may be they have to be omitted. THE CHAIRMAN: We will make a note of that. SIR GERARD CLAUSON: I think as a matter of fact the reference to paragraph 1 in Article 4 (b) is superfluous because there would have been a complaint or report already. Perhaps we can look at the point when we get to Article 4 (b). THE CHAIRMAN: I think that to include any form of price support covers all subsidy. I think we will now look at paragraph 2. The two points I remember arose out of this was (1) where the question was raised, I think, rather fully by the Canadian representative, of the second sentence which deals with exempt exported products from duties or taxes imposed in respect of like products, such as an excise duty. It is now proposed by the Rapportteur that the words that are underlined shall be added. If I remember rightly, that covers the point that Mr Deuch made. MR DEUCH: But it does not cover my fundamental point, that the use of the excise tax does in fact allow you to operate a two part system, which presumably you have ruled out in that Article previously. It seems to me that it just an ingenious device for having a two price system and yet comply with the general rule against it. That is what it comes down to in fact. THE CHAIRMAN: I suppose the problem of the two price system is in two parts. The aspect that is usually questioned is artificially reducing your export price below what might be called your normal or correct domestic price. But then you have got the other where the domestic price is artificially lifted above what is unquestionably the correct world price, because it is the world price in fact. It occurred to me before, but I had forgotten it on arguing this point, that it is perhaps a fairly boiled down distinction between the two price system on these articles set out to stop what we call the two price system. We did 9. C5 E/PC/T/C. II & IV/PP/PV/2. not call it that. We call them the home consumption price which made the creation of a home consumption price irrespective of the export price. I think this added clause does cover the latter, or does cover the cases there you artificially lift the price to your consumer above export. You do that with an excise, because the excise has the effect of lifting your total costs, and the consumer pays for it. It is this excise and bounty principle which is in effect. It all has the effect of decreasing your local consumer and spreading the proceeds over the producer. But you do not touch the export market. MR DEUCH: Only indirectly, so far as you allow high cost producers to keep up or increase the export market. THE CHAIRMAN: The other point we had as where you have this excise and bounty you have got to regulate your production. The excise stimulates production, increases your export surplus and then reduces your overall price. Then you put a bit more on to bring it up and you find you have got to keep lifting your local taxation, and you can only do that by saying that as long as you have got to get help in the sale of your local product you are not entitled to free expansion on your production, because it is an artificial stimulus, and the counter to it is to limit your surplus. MR DEUCH: You might just keep in production high cost and inefficient producers for a long time by this device, who would be able to get on to the export market by this method, as against the more efficient producers who are not doing this kind of thing. THE CHAIRMAN: You can do that in two ways, either by taking away your support or cutting back your production artificially still further. SIR GERARD CLAUSON: I think Mr Deuch's point is really this, that the producer ought to get the same price for what is sold in the external market as for what is sold internally. He is getting a higher price as soon as he has been subsidized. Would not the case be met if you put after accrued "but if the producer by reason of these duties and taxes receives a higher price for goods received in the home market than for goods exported he shall be deemed to be receiving as a subsidy the difference between the two"? D fls. 10. D.1. E/PC/T/C.II & IV/PP/PV/2 MR. WARWICK SMITH (Australia): What about export? SIR G. CLAUSON (U.K.): Then there is no difference. MR. WARWICK SMITH (Australia): Though he might be subsidised on his actual exports? SIR G. CLAUSON (U.K.): You mean the individual producer? MR. WARWICK SMITH (Australia): Yes. SIR G. CLAUSON (U.K.): I meant producers as a whole. SENOR GUERRA (Cuba): I am not a member of this Committee, but might I ask a question because I am a member of Committee 4 and there is a point here to which I would like to call your attention. In the discussion in Committee 4, the drafting committee put great emphasis on the question of allowing for the displace- of production to more effective sources of supply. That, I think, is the real question to which the Canadian delegate is referring. The two Committees - No. 4 on Primary Products and No. 2 on Subsidies - were not able to make it clear, and now we have a joint committee it should be made clear that under commodity agreements this displacement should be allowed to take place not only as between different exporters but also as between exporters and internal production in the case s where internal production is supported by subsidies. THE CHAlRMAN: I think paragraph 1 rather contemplates that. SENOR GUERRA (Cuba): The only other point I want to make is that I find an inconsistency between paragraph 4(b) and the general objective. The solution suggested is the permitting of subsidies. That for me is an absolute contradiction. The way to solve the difficulty would be to decrease the subsidies and in that way get rid of the surplus. THE CHAIRMAN: I think the reference to subsidies in that paragraph means that certain actions are to be taken in respect of subsidies which include any form of income or price support. to the domestic producers of any product which operates to increase - 11 - D. 2. E/PC/T/C.II & IV/PP/PV/2 the exports of such product or to reduce the imports into a certain country if a county, by its subsidies, is reducing its imports and it is considered by the Organization that there is a dander to other countries. If a county, such as on exporting country, is more efficient and is deprived and suffers injury because of deprivation of the market, it goes to the Organiz- ation in accordance with paragraph 1. Then the next step, we rather suggest, is that the presence of subsidies and the necessity for correcting those is, on the fact of it, an argu- ment for setting the machinery of Chapter 6 in motion. If you set that in motion, the process that you follow automatically brings under review the subsidies of the countries which are in that. Does that not hang together? SENOR GUERRA (Cuba): That would meet my point. The only doubt I have is that expression "reducing", because it would not be a question of reducing export trade of other members but pre- venting an expansion. If that could be made clear, my point would be covered according to the general objective of the commodity agreements allowing for the displacement of production commodity resources. THE RAPPORTEUR: On a point of drafting, In paragraph 1 the word was originally "tends", then it was changed to "operates". I rather agree that "tends" gives a better idea. MR. SHACKLE (U.K.): The point is: "increase" as compared with hwat? And "reduce" as compared with what? Is it increase as com- pared with an existing situation, or increase with what the situation would be were it not for the subsidy? THE RAPPORTEUR: If it "tends" to increase, it does not necessarily increase, but the tendency is there. SENOR GUERRA (Cuba): Could we add "Or in the case of primary products under paragraph 3 to prevent the expansion...."? THE RAPPORTEUR: That is already in paragraph 3 and does not need to go in here. This is to care for cases not covered by para. 3. - 12 - D. 3. E/PC/T/C.II & IV/PP/PV/2 THE CHAIRMAN: Once you get into the commodity agreement stage you can try everything. That machinery operates and you get it taking over the entire problem. Until that stable is reached, however, we must have special provisions here to deal with subsidies. SENOR GUERRA (Cuba): There is a case for doing everything within the agreements. Could there be a general principle that a subsidy is considered as such if it has the effect of preventing the expansion or displacement of production for export to more efficient sources? THE CHAIRMAN: I think there is something in that. THE RAPPORTEUR: It comes out of the injury. It is left to any member who objects to make his case that he is injured because of the reasons given, but we do not actually say it in this first part. SENOR GUERRA (Cuba): Perhaps, in paragraph 3, the words "seriously injured" could be changed to "seriously affected"? That would have a broader meaning and cover the point, because "injured" carries the implication that it gets worse from a given situa- tion, but "affected" might give the effect of "preventing". THE RAPPORTEUR: That is a limited interpretation of "injured". You are injured if you are prevented from doing anything. You are affected if you are prevented from changing. THE CHAIRMAN: Or it might be made broader. For instance, if a member considers that his interests are "seriously prejudiced". That would cover everything. He is prevented from undertaking legitimate expansion. SENOR GUERRA (Cuba): That would be better. The word "injured" gives the idea that it would be made worse from a given position. THE CHAIRMAN: It means that you have to reduce him from some position he has already had. THE RAPPORTEUR: It could be so interpreted, but this all falls into the discussion area. In order to get this determination of injury, you have discussion between two parties, and if one - 13 - D.4. E/PC/T/C.II & IV/PP/PV/2 says: "I was going to have a market of so much, and then you were subsidised so that I did not get it", the other country can hardly, in face of an increase in his own production, say that was not so. I think you can depend on the injured person to stick up for his rights in the discussions. THE CHAIRMAN: Might we consider substituting those words "seriously injured" by "if a member considers that his interests are seriously prejudiced"? Or could we put something into the report? Could the Committee Accept what I have suggested? THE RAPPORTEUR: It should go wherever we have the word "injuryy" so That there is a standard terminology for this situation. MR. DE VRIES (Netherlands): I would like to make the same point. The word "injury" is used in paragraph 1, and if different words are used in different places, somebody eventually makes a specific difference out of it. It is better to have one word used throughout which has a broad meaning not too closely defined. If it is too defined, a lawyer will make something different of it from an agriculturist or an economist, and there will be trouble. THE RAPPORTEUR: Perhaps my colleague who was responsible for this ambiguous language can make a suggestion? SIR G. CLAUSON (U.K.): If I may return the ball rapidly over the net, we debated the language of paragraph 1. Where it says "In any case in which it is determined that serious injury to the trade of any member...." I would have preferred the word "prejudice" myself instead of "injury" in both cases. THE RAPPORTEUR: "Serious prejudice to the interests of any member"? THE CHAIRMAN: The words "serious injury" rather suggest that somebody has hit him on the head! THE RAPPORTEUR: You handled the ball very successfully, and scored a goal, Sir Gerard. SIR G. CLAUSON (U.K.): What about "serious prejudice to the interests - 14 - D.5. E/PC/T/C.II & IV/PP/PV/2 of any member"? THE CHAIRMAN: Then we should alter that right through. Having had a good look at paragraph 3, I suggest we switch back now to paragraph 2. On the point of excise and duty, I want to be clear as to what is actually meant by an excise tax or any sort of a sales tax. Or, to put it this way: a tax which is reflectcd in the costs of production and is remitted on export because of the normal reasons for remission, so that the product will be able to compete in the world market. It must be so because it sells in the world market. We have a sliding scale. At one stage we had a sliding tax which rep- resented the difference between the price it was designed to maintain in the home market and the export price, and as the export price went up, the tax went down. That amounts to an exemption from export, and it really seems to me that the whole idea here is to exempt the excise and nounty principles from the Article. SIR G. CLAUSON (U.K.): I suggest that the difficulty arises from considering what transaction you are referring to. In paragraph 2, lines 4 and 5 it says it "results in the sale of such pro- duct for export at a price lower than the comparable price charged for the like product to buyers in the domestic market". If - to state the impossible - we grew tobacco in this country, both for consumption and for export, the price that you and I would pay for an ounce of tobacco when we bought it, would be vastly more, both than the price which the seller gets when he sells it to the factory, and than the price which he gets for export. E follows -15 - E.1 E/PC/T/C.II & IV/PP/PV/2 I think that there is a little ambiguity in the words "comparable price charged for the like product to buyers ..." If you are talking about the ultimate buyer, and if there is an excise tax on tobacco or sugar, the ultimate buyer pays more than the producer receives. MR. DE VRIES (Netherlands): That is covered by the words "due allowance being made for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability." / R. S1KLE (X? Iassumes a comparable type of transaction. THE RPPMUR: ie discushat, and that is what all those words are intended to cover. THE CHRMiA: ihy cver tthe case where the Governmuen hags on to the oney when they take it. MR. DEUTCH (Canada): The problem arises when the money collected from the domestic consumer by means of tax and is paid to the producer of the article. SIR m CLUSON (UK): The probleuaises that there might be a certain amon-o friction which might enable the producer to get a bit more. R. UUTC (Canada): There is quite an accumulation of clauses in this Charter about agriculture. In Article 19 (e), as you read, any country may impose quantitative restrictions on agricultural iorts if they are restricting production at home. That is, briefly, t mhovision. It see to itat that clause is open to abuse. Now, in this subsidy chapter, you allow the device of putting an excimmse tax on a coodity to subsidise producers which, gain, may operate tokeep high cost producers in the ekport mlly,rarket. Fina in this very chapter also, where a subsidy is being paid and an international agreement cannot be reached, then all bets are off and you can continue subsidising as you wish. It seems to me that the 16. E.2 E/PC/T/C.II & IV/PP/PV/2. accumulation of all these clauses greatly weakens the application of the principles of the Charter to agriculture. You have practically nothing left. It is the accumulation of all these things that bothered me, particularly for a country a large part of whose exports are agricultural commodities, such as own country. I am worried about the accumulation of all these socalled escape clauses on agriculture. MR. SHACKLE (UK): To some extent they are safety valves, if the principle of quantitative regulation is ruled out, except in the case of Article 19, (2e), where you have an internal scheme, and where you are given exemption in so far as is necessary to the operation of the internal scheme. It is arguable that having got rid of the simile protective use of quantitative regulation, you do need certain safety valves, and these things may be said to be to some extent safety valves. MR. DEUTSCH (Canada): There is a lack paralellism in the sense that manufactured commodities do not have these safety valves allowed. THE RAPPORTEUR: The question is how far we can go in correcting that general problem, if it is one, by operating under a subsidies Article? I think this is consistent with the rest of the Charter, particularly Chapter VI. Actually paragraphs 1 and 2 here will rarely be applied, to the commodities which I think the Delegate of Canada has in mind in this discussion, because paragraph 3 throws it all into Chapter VI. MR. DEUTSCH (Canada): In Chapter VI you have to reach agreements and it is very easy for a country not to agree to anything, especially if it is a country already involved with very high cost producers. It is very simple not to agree, and then, by that disagreement. it causes all bets to be off so far as this chapter is concerned. 17. E.3 E/PC/T/C.II & IV/PP/PV/2. MR. DE VRIES (Netherlands): as I see the case, if somebody is seriously injured by a subsidy, he asks for a study group or for consultation. Then you get negotiations, and there may or may not be an arrangement. If there is an arrangement, you may say the problem is settled. If it is not settled, then the old position recurs, and a member who is giving a subsidy may go on; but that is restricted by article 4 (c), which says that if he goes on it cannot have the effect of giving more than in a previous representative period. I believe that we have now to have a connection with Article 11 on anti-dumping and counter- vailing duties, and as we cannot consider that this afternoon, I would like the Drafting Committee in New York to consider the connection between this article and that on antidumping and counter- vailing duties, so that if anybody misuses this Article on subsidies and has more advantage out of the subsidy than is allowed, then antidumping and countervailing duties can be applied by all the other Members against him. I believe that then the whole thing is covered. On the other hand, the Delegate of Canada says it is easy for a high cost producer to see that there is no arrangement. At the same time, it would be easy for the consumer not to make an arrangement and not to agree to an arrangement. If, by simply not agreeing to an arrangement, he could abolish the subsidy altogether and maybe at short notice, he could upset the whole economy of a country which is prepared to come, by consultation, to some result and is frustrated by a consumer who is vetoing the agreement. At the moment we say, "Well, you can go on, but you cannot expand, and if you do so, we will put antidumping and countervailing duties against you." Do you not think that system can work well? There will be an induoement to both sides to get an arrangement. 18. E.4 E/PC/T/C. II & IV/PP/PV/2 . THE CHAIRMAN: I have doubts about the countervailing duties, because they are purely weapons against exporters, and the problem of subsidies is just as much one for importers as for exporters to consider. Again, I rather fear that the different interpretations that countries put on dumping would probably delay things. It might be that when the dumping experts are quite satisfied on it, we could go ahead, but I do not see an immediate prospect of every country getting uniform dumping laws. MR. DE VRIES (Netherlands): It will be very sure that it is dumping if a country has an export subsidy and after consultation is not ready to give it up at a reasonable request from other members, and goes on with it, and does not want to come to an agreement. I suppose then it is very clear that he is dumping. THE CHAIRMAN: What do you do to an importing country that cannot dump because it is not physically possible to do it, but has subsidies twice as big as the subsidies in the exporting country, and is engaged in much more uneconomic production than the exporting country? As a matter of fact, on wheat all the damage that has been done by way of subsidies on wheat between the two wars was done by the importing countries. MR. DEUTSCH (Canada): Not all. THE CHAIRMAN: Nearly all. MR. DE VRIES (Netherlands): That case can only be covered by the addition of an Article in the sense of arbitration and possibly snactions, and you cannot find it in this way. You must find it in general provisions to cover the position of a country which is a Member of the ITO but frustrates all its principles. THE CHAIRMAN: I see something in Mr. Deutsch's worries. I have the same qualms myself, but I have found difficulty when I have got down to seeing what I would do myself if I were struggling with this 19. E.5 E/PC/T/C.II & IV/PP/PV/2. as the USA and UK have been. The only thing I thought of at one stage was that primary production subsidies should be taken away and put in Chapter VI. Then you would have governmental intervention or governmental control or influence, whether it be by tariffs or subsidies or agreements, all dealt with in one chapter on primary production. But it was rather a revolutionary change to suggest, and I did not go on with it, but it is brought back to my mind by Mr. Deutsch's remarks. Of course, in this thing it seems to me that the change in paragraph 2, which is proposed, is really throwing the excise and bounty wepon or device into paragraph 1. MR. DEUTSCH (Canada): That is an improvement. THE CHAIRMAN: I think myself, speaking for Australia, I would be prepared - I do not know whether I am adequately supported ? for the strengthening of (1). I would make all people subsidised under (1) toe the mark in a more definite way than is proposed here, because I think that the whole trouble with subsidising primary products is either an uneconomic increase in surpluses or an uneconomic decrease in imports, and whatever way you do it, if you take money from somebody and give the grower more than he would get on the market, that is the only damage that can be done by products that have a world market. But we have got this idea, which was set up very early, of a distinction between export subsidies and production subsidies, and the problem is that you cannot separate all subsidies clearly into those two categories. I think the only true production subsidy that was intended here was money out of general revenue, which is taken from the general taxpayer, and in some way put into the returns that the producer gets, and the only export subsidy which is a true one is money out of public funds which is banded to a man when he presents his invoices for export, and which has the effect, the very bad effect in some cases, of lifting the whole of the production in the country up to an artificial export parity. That is a thing we have never felt we could tackle, because we are 20. E.6 E/PC/T/C. II &IV/PP/PV/2 afraid if we paid a bounty on an export of a product -- for example, meat -- where we export 25 per cent., if we put an expert bounty on, and lift the whole of our production by the amount of the export bounty, the stimulus to uneconomic production would be so great that it would come about our ears. I thought about that recently, and also about the fact that it could be seriously unfair to consumers, that you should unduly tax a particular product which is supposed very often to be the staple diet of the people. It was considered from the sociological point of view to be wrong to tax the eaters of bread and of meat in order to give the producer more than he was perhaps entitled to have. It was considered that the support of the export market should not come from the local consumers. They had to pay for their bread, but they should not have to pay the producers for the bread that somebody got in the market overseas. F fols. 21. F.1 E/PC/T/C.II & IV/C.II.& IV/PP/PV/2 When we get down to this document we find trouble in separating them. Now we have gone a step further and shifted the excise and bounty principle into No.1. We went further, and in this other paragraph - which the Rapporteur will introduce in a minute - we tried to take out the schemes which in their incidence are the same as the excise and bounty principles. In effect he has put this into No.1. He has not done it in actual practice, but he has adopted practically the same criteria as applied to 1. That is the case where some fund comes form the Treasury and goes to an exporter. What is the next step? It is decided that these excise and bounty schemes, which are consider, in effect, production subsidies, have gone into 1. Therefore, (1) do we want to do that? - and I understand from our meeting the other day that we do - and (2) Does this do it? I think it does myself. DEUTSCH (Canada): I do not want to held up the committee any further at this point. I have expressed my qualms about the thing. I am also escape worried about the cumulative effect of all these agricultural/clauses throughout the Charter. At some other appropriate time and place we may have to consider the cumulative effect of this agricultural escape clauses in the whole Charter. I do not want to held up the committee now, and I accept it temporarily. THE CHAIRMAN: We cannot do anything revolutionary at this stage. SIR GERARD CLAUSON (United Kingdom): The principal effect of these words is to take this kind of bounty out of the three-years' rule. THE CHAIRMAN: Yes. SIR GERARD CLAUSON (United Kingdom): I do not know whether that is intended. PROFESSOR de VRIES (Netherlands): May I put it in a more general way. It is intended to take the excise and bounty out of the three years' plan. Then again, at the end of paragraph 2 there is a system for the stabiliza- tion of the domestic prices. That is a very long sentence or paragraph, and I am afraid it will give a lot of trouble. There are types of price differences which in reality are not harmful subsidizations, which come within the whole spirit and purpose of the Chapter and of the whole Charter. 22. F.2 E/PC/T/C. II & IV/PP/PV/2 Would it not be preferable to put the duty of placing it before the Organization on the member who has such arrangements? In the long sentence in the last paragraph on page 5 of the redraft text it is said it "may be determined by the Organization." If it has to be determined by the Organization the first point is that the member who has such a system gives notice and an explanatory statement. In paragraph 2 it is said that "If any Member considers itself unable to make the provisions of this paragraph effective", or deems the scheme he has is consistent with the Charter, he "shall give to the Organiza- tion a notice in writing . . . accompanied by an explanatory statement." If we put that in that will cover these two cases. For instance, you may have a two-price system propogated by F. A. O. Say Australia has a lot of excess wheat, and a scheme is brought forward to take that wheat into Java cheaply. Then at once Australia has a right to come to the Organization and say that selling cheap wheat to Java is consistent with the Charter, because they are helping an underdeveloped country, and it is raising the standard of living there. You have to give a subsidy to the exporters for that portion of the wheat. You must fix a scheme to see that a man who is exporting that, say, 100,000 tons of wheat gets his money. On the other hand, Java and Indonesia must have a right to complain to the Organization and say "That cheap wheat is spoiling our market." All these things are covered in the first sentence in the one line. There may be other cases consistent with the purpose of the Charter. Can we try to cover in the Charter all possible cases? I do not believe we can. THE RAPPORTEUR: I think such cases as would arise under that point were intended to be covered in the sentence on page five beginning on the sixth line. I would point out that the cases he cited is not perhaps the best example of what he had in mind, for two reasons. In the first place, presumably a relief subsidization scheme will only be entered upon where there is a surplus, which would throw the commodity under point 3. I think we would expedite our work a little if we did not try to consider 23. F.3 E/PC/T/C. II & IV/PP/PV/2 primary commodities as covered under 1 and 2. If, however, there was a commodity that did not come under 3, but which for good and sufficient reason should be, without any violation of other interests or the purposes of the Charter, subsidized year in and year out -- I do not have any in mind, but there might very well be some - I should think that under this scheme the member would merely so notify the Organization, and unless other members objected it would automatically be a closed issue. This says: "If any Member considers itself unable to make the provisions of this paragraph effective . . . such Member shall . . . give to the Organization notice in writing to that effect." It could come into effect right away, as soon as the Organization gets going, so that unless the Organization wishes to challenge the matter the member may consider the subsidy is a permanent part of its operations. That would close the matter. Under this sentence as it stands the only case in which it would be reopened would be in connection with the determination, which is determination of the consultative and not the administrative type. Someone would have to complain, or it would go on. If no one complained the determination would be in favour of the member asking for it, because the determination is a consultative, determination. If every other country accepted the fact, that would close the case. You might want to consider how the sentence should be worded if you do not consider it does cover that. MR. SHACKLE (United Kingdom): If I understood the NetherIands suggestion, it was, to avoid having a lot of complicated trade provisions to deal with particular suggestions by having a general provision by which members who took particular forms of action should notify the Organization, and there should be a right for other members to complain to the Organization. If we had some general provision of that kind it would unable us to get rid of a great many very complicated provisions. There is one difficulty which occurs to me about that. If the Organization is asked to decide a great many questions purely in its own discretion it will have a great deal of difficulty in doing so. It will surely need to be given some guidance on the sort of principles on which it should consider such cases. If we give it no guidance at all it will have a heavy burden laid upon it. It is one 24. F. 4 E/PC/T/C. II & IV/PP/PV/2 of the frightening things about the whole of the Charter that there are so many cases in which a discretion is given to the Organization. One rather wonders whether it will be able to support the very large burden of discretion, unless it has a fairly clear directive as to how it should use that discretion. THE RAPPORTEUR: This is not a discretionary organization. This says "shall be determined", but it also says ---- MR. SHACKLE (United Kingdom): I was not referring to any particular provision here, but to Professor de Vries's suggestion - the general point. MR. DEUTSCH (Canada): I agree with that. MR. GUERRA (Cuba): I agree very much with the United Kingdom statement. In Cuba from 1937 to 1940 we had an agreement in effect with a very low price on the internal market. The domestic consumption quota was too large every year, and eventually part of it had to be permitted to be experted. Yet, the so-called world price was so low, even under the agreement, that we had different prices. Our internal consumption price for sugar was muh higher than the world price, yet we were not given any subsidy for sugar. We did not have any scheme of any kind directed to achieving these differences in price, but the difference in price was there. THE RAPPORTEUR: The world price was not your net export price - your average export price. MR. GUERRA. (Cuba): You may even say there was an export price to certain countries, to certain markets. That was the case in the United States, when their price was much higher than the world price, not because we have any scheme for keeping the price higher - because every year the actual quotas were much larger than consumption. The same happened with the local consumption in Cuba. The quota was not directed in order to keep the the domestic price higher. Eve y year we had an excess of/local consumption quota, yet there was a difference in price. Our worry is that in a case like that we are not responsible at all, but the country suffered as a consequence. If certain clear directives are not given to the Organiza- tion it could make a case against us but not having any scheme for a difference in price, yet the difference would be there. - G fols 25. G1 E/PC/T/C.II & IV/PP/PV/2. THE RAPPORTEUR: It is another case that would fall under paragraph 3 and not paragraph 2. MR GUERRA : I call your attention to that. THE CHAIRMAN: I think we can try and clear up these points of principle. We are leaving a good bit to the organisation .in 1 and even in 2. I am afraid I have got to come back on to this point as to whether it is intended to remove excise, where the excise tax is returned to producers as a production subsidy, whether we want to put that into paragraph 1. If it is in paragraph 1 and stays in paragraph 2 you will have trouble in defining when a production subsidy is not a production subsidy. Do we agree now with the further proposal that where excise is collected and returned as a production subsidy it should be brought under the terms of paragraph 1? MR DEUCH: Yes, I would agree. MR WARWICK SMITH: I think we should be agreeable to that proposal as it is worded. THE CHAIRMAN: With these extra words in? MR WARWICK SMITH: Yes. PROF. do VRIES: I should prefer to have a general sentence giving the right to the organisation to explain that the scheme is no real subsidisaition. THE CHAIRMAN: I think you might put that in too. You see, he will do that in effect when he is hauled before the organisation. PROF. de VRIES: For instance, if there is a two price system there is no subsidisation. You must have the right to explain. MR GUERRA: You will have the right to explain your case. It will be for the organisation to decide on that, and it will be a good thing if the organisation has certain directions. PROF. de VRIES: I quite agree to that, but I believe you cannot give all the explanation if it is in the report. We must give as much, guidance about the ideas behind the charter as possible, and it is most 26. G2 E/PC/T/C.II & IV/PP/PV/2. necessary, I believe, for the World Conference next year when 50 countries are to discuss this problem again to give an extensive report giving the idea of this preparatory agreement of what is meant by the Articles and the whole thing. You will get in those discussions again three times as long as now. If you give a good explanation in the report attached to the charter we can get through it quickly. MR GUERRA: I doubt very much whether we can cover all the cases. PROF. de VRIES: It is not possible. MR GUERRA: It would be better in some of these cases to make a better report. THE CHAIRMAN: Supposing then we put in: "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 of his difficulties." We already say: "accompanied by an explanatory statement". I should think if we left it as it is and put in "accompanied by an explanatory statement containing a complete analysis of the position in which he finds himself", or something of that kind, would that meet your point? PROF. de VRIES: Yes. THE CHAIRMAN: I think we could put in there, to amplify it, "an explanatory statement to provide for a complete analysis of the practises in question". MR GUERRA: I have some idea that we could get the organisation to determine not only the extension of the period but to determine if the scheme itself came under this chapter or section, because on the basis of the explanation the organisation may freely decide there was not really any scheme of subsidy or anything, notwithstanding the difference in price referred to in paragraph 2. THE CHAIRMAN: I think it is easy to assume that when these forces were 27. G3 E/PC/T/C.II & IV/PP/PV/2. set in motion the country that was in question would prepare all the data that was required. I think that would be the obvious step. THE RAPPORTEUR: Under the last sentence the organisation could give an extension of the period. MR GUERRA: I feel you did not understand me. What I meant to say was that the decision of the organisation should not be limited to only extending the period but to say that notwithstanding the presence of differences in price the scheme was not a scheme to be considered applicable under this section. That is my idea, and I think that is the point. THE RAPPORTEUR: There is no harm in that. I should add perhaps at this point that the underlining is omitted in the last paragraph of page 5. That is all new. PROF. de VRIES: I believe this is not a case for a charter but a case for an explanatory note attached to the charter. THE RAPPORTEUR: That should not be a separate transaction. THE CHAIRMAN: I am inclined to think that this is a class that is not covered. MR DEUCH: I think this should be included. THE CHAIRMAN: Is that agreed? I think it would be clearer to us if or the fourth last line after "difference in the ether" there was a semi colon. THE RAPPORTEUR: Also a comma is omitted in the fourth line after the word "market". MR GUERRA: I think if there is a system for the stabilisation of a domestic price, if you give the reason I explained regarding sugar what was in consequence of regulation of production. THE CHAIRMAN: What do you suggest; production where? MR GUERRA: After "price". I suggest "of the domestic price or production". THE CHIRMAN: Or "the stablization of production". I do not think that really bears on the question of an export subsidy. That is what we are 28. G4 E/PC/C.II & IV/PP/PV/2. trying to do here. We are trying to cover a category which, if nothing is said about it, will be considered an export subsidy. MR GUERRA: That is what I am trying to cover too. PROF. de VRIES: I cannot find an instance in the past, as here in the second half of page 5, for a non-primary product. If such schemes were set up for manufactured goods I do not know where we come if it is for a primary product. I discovered by article 3 that it all comes into the negotiations under chapter 6. As it is now it is giving first general rules and then specific rules for the primary products. You cannot give into the general idea an instance which is stated for and specially allowed in primary products, especially in agriculture; that is an agricultural problem, "stabilization of the domestic price and production". I do not think it can come in textiles, or such things. THE CHAIRMAN: I do not think it can, because there is no world price. Is there any objection to raking this applicable to primary products only? THE RAPPORTEUR: No. PROF. de VRIES: You conic against the rules of dumping in the manufactured goods. THE CHAIRMAN: One covers primary products. PROF. de VRIES: But that is a general provision intended to cover both. THE CHAlRMAN: You mean 2 is. PROF. de VRIES: But 1 also, if you have production subsidy on a new type of industry and then you agree with the idea of the Brazilian represent- ative that you have it temporarily only and you will merely decrease it because it is not economic to set up new industries which have to have subsidies . That is not a general thing, but this type of stabilization I can only concede in the case of agricultural products. 29. H.1. E/PC/T/C.II & IV/PP/PV/2 MR. SHACKLE (U.K.): Might it be a good idea to make this a new para- graph to deal with primary products, with a consequential alter- ation in the: fifth line - instead of saying "this paragraph", saying "paragraph 2"? THE CHAIRMAN: I think that would meet it, but I do not think it can be accepted that paragraph 3 covers this in the same way as 38 because we have to cater for the state when there are no commodity agree- ments and when subsidies are applied. THE RAPPORTEUR: If the procedure of Chapter 6 is adopted under 4(a) and fails, under 4 (b) nothing that is in paragraphs. 1 or 2 applies. THE CHAIRMAN: I was coming to that, I think the idea that if you cannot get a commodity agreement you scrap the whole thing, is unsound. THE RAPPORTEUR: Members are bound not to use a subsidy to hog the market. THE CHAIRMAN: If you fail to get a commodity agreement, you come back to where you were before you started to try to get it. MR. DE VRIES (Netherlands): That is met by paragraphs 4 (b) and 4(c). THE RAPPORTEUR: If I may suggest a line of reasoning - you can do one of two things. You can so loosen paragraphs 1 and 2 as to permit any kind of subsidy of primary products, which is where you start from. Then, you can get a commodity agreement, or you can make your subsidy on the primary product. Or you can say that paragraphs 1 and 2 as drafted cover non-primary products primarily and primary products which are not subject to the terms of Article 6. If they are products which are subject to the terms of Article 6, you try to operate the procedure laid down in Article 6 and, if you fail, then you have a kind of anarchy. This recognises it, and you only bind yourself not to hog the market. THE CHAIRMAN: Then you come back to paragraphs 1 and 2. THE RAPPORTEUR: Could you throw out 1 and 2? -30 - H. 2. E/PC/T/C.II & IV/PP/PV/2 SIR G. CLAUSON (U.K.): The difficulty I see is that a rich country with an uneconomic industry in a primary product can first wreck the scheme and then ensure the survival of its industry, whereas if there was a scheme, that industry would slowly have to disappear. THE RAPPORTEUR: We went into that at some length last year. That was the reason for d(a), to prevent that. SIR G. CLAUSON (U.K.): It does not. - MR. DEUTCH (Canada): No it does not. SIR G.AUCLUSON: No, it prevenetse th rich country from extending trade but not from maintaining an uneconomic trade. TAPPORTEeUHR: That is true of paragraph 1 for domestic subsidies to maintain uneconomic production. You cannot expect one to be more vigorous than the other. . ASACKLE : (UEZ.): It occurs to me that it is one of the principles of the commodity chapter that there should be a switch from the less effective to the more effective producers. If that is a principle of the Organization, surely at long last it becomes a case under the Impamirent Article that some scheme is definitely maintained which prevents a switch from the more effective to the less effective producers. It is a far cry, but there may be a possibility. THE RAPPORTEUR: That is true, and it applies equally to the scheme where the country happens to be an exporter, or has been an importer and has cut down imports by subsidy prices. We are dealing here with one oft he most difficult fields in the whole Charter - not the most difficult, but one of them. The experience we had in the '20's and '30's, especially the latter, made it evident that all countries have a good deal to lose, and not mary have much to gain, by using their power as widely as possible under conditions of difficulty to subsidise on a unilateral basis. In the first place it - 31 - H.3. E/PC/T/C. II & IV/PP/PV/2. recognises the international interest in subsidies and looks toward co-operation and consultation and, where possible, com- promise, which will achieve some orderly and reasonable inter- change without the unfortunate effect that subsidisation of one kind or another produced during the inter-war period. But, partly because of the security interests, partly because of the national sovereignty rights that have been associated with this practice, it cannot lay down here the rules that an economist would lay down, and say that a country shall use its subsidisation progressively until it is producing at the world market price. We are talking, of course, about primary products. The first two paragraphs are the general provisions that are intended to state the ideal and this point that has been made, that the purpose of the Charter is, wherever it is possible, to bring about a recog- nition of the international interest in these things and their reduction or elimination. Now we come back to the case of the primary products and recommend that in that case there are special difficulties. That throws us over to Chapter 6. Those special difficulties are such that you cannot take the line of eliminating subsidies and going into a pure world market trading relationship because of a variety of situations which we- have been through pretty thoroughly in Committee 4. I think it would be unformulate to start anything entirely afresh in terms of eventual goals. We started it three years ago with a draft very much like that which the Chairman said he would himself start with. We said we would eliminate export subsidies and would call for a similar kind of treatment for domestic subsidies, which resulted in cutting the market for people who exported to it. Then we developed it in the light of this whole problem and the specific practical diffi- culties that one encounters. I wonder if it is going to be possible for us to reopen all that? THE CHAIRMAN: I do not think it is, not at this stage, anyhow. We - 32 - H.4. E/PC/T/C.II & IV/PP/PV/2 might find ourselves struggling with it next spring again. MR. DEUTCH (Canada): I agree very much with the statement made by the United Kingdom delegate. I think the result of this is directly inconsistent with the whole spirit of the Charter. It seems to me that if you fail to get a commodity agreement, then surely you go back to the situation prescribed elsewhere in the Charter? You any still subsidise, but you must not subsidise by paying export subsidies. You may subsidise by paying general subsidies. Presumbly, if an attempt at a commodity agreement fails, you may resort to export subsidies. I see no logic whatever in that. THE CHAIRMAN: It might mean, if it was sufficiently important to a country, that it would prevent an agreement being made - MR. DEUTCH (Canada): Exactly. That is what I am afraid of. THE CHAIRMAN: - and get exemption from some of its erstwhile errors. MR. DEUTCH (Canada): That is exactly what worries me. The country may net have an interest but it may demand things in a commodity agreement which are hard to consent to. There is no sanction on that country. It says, "All right, if you do not give me the agreement, I resort to the subsidy programme". Look at the weapon which it puts in the hands of that country in making an agreement. It gives the country with a large purse an extra- ordinary weapon in arriving at the terms of a commodity agreement. THE CHAIRMAN: The only dissentient to that point of view is one of the authors. THE RAPPORTEUR: I would be glad not to dissent, Mr. Chairman. I will tell you the circle we are in. It seems to me that we shall draft this so that 1 and 2 are such that, whether or not you have a commodity agreement, they can be accepted by every member of the Committee. I daresay that the majority of the members of the Committee will not accept them in so rigid a form as they are if they imply that a commodity agreement can be reached in a -33 - H.5. E/PC /T/C. II & IV/PP/PV/2 particular primary product, so you will broaden then to the point where they have no restrictive effect whatever to commodities not subject to non primary products. Then you will want a special one for non primary products. They will be separated and will be closely associated with problems dealt with in paragraph 4. So they will be thrown back into Chapter 6, and then we shall not have a cross-reference and we shall go back and say that because the subsidisation Articles that we have drafted to fit non primary products may, because of the difficulty of distinguishing, hit primary prdoucts schemes, we shall have to put in exceptions. And pretty soon we shall have been round this circle." Rather than leave the impression that it is only because a rich country can subsidise heavily that this has taken this form, I would be glad to see an effort made to redraft it in another form. which represents a balance of conflicting interests. THE CHAIRMAN: We are a sub-committee appointed by Committees II and IV. It is competent for us to give an opinion on it. I am wondering whether, in the leight of th views expressed, we might no go ahead with the Charter as it stands, but state in our report to Committee II that there was a general view amongst members. of this sub-committee that in the event of a failure to make a coamremmodity geent, the conditions laid down were not sufficient in that they did not provide for returning to the pre-negotiation conditions. (These are not the proper words.) The Committee felt, however, that to include this in the draft involved a re-examination of the whole problem of subsidies, particularly as between primary and secondary products, and felt that it should note the matter for the Committee's consideration. We cannot go on chewing this over indefinitely and it is too late now, so much as to be unravelled. Could we decide then, that we ought to put the appropriate reference -34- H.6. E/PC/T/C.II & IV/PP/PV/2. to the views of this Committee on paragraph 4 - as it stands now 4 (b) and (c)? SIR G. CLAUSON (U.K.): Might I suggest that we leave out paragraph 4(a)? And start with 4(b) - "If it is determined that the measures provided for in paragraph 3 have not succeeded.."? MR. DE VRIES (Netherlands): Yes. THE CHAIRMAN: Before we met to that, let us look at this now proposed sentence in paragraph 2. The last suggestion was that a separ- ate paragraph might be made and that it might be referred to primary products. SIR G. GLAUSON (U.K.): I think it had better be. THE CHAIRMN: I rather agree. MR. DE VRIES (Netherlands): If kept, it should be a separate paragraph but there are some phrases in it which I cannot agree. For instance - "There is evidence that there is some subsidisation - It is not so easy to get evidence. Take the case of a principal supplier of some agricultural product. By this scheme, when you get a slump in the world markets, he may make things wrose for even efficient producers because, by the use of a fund which he has been able to build up in the years of high prices, he can support his agriculture or other primary products in the time of slump, making the slump worse than it otherwise would have been because his farmers can sell in the market. I follows - 35 - I. 1 E/PC/T/C.II & IV/PP/PV/2 But even if there is evidence that there is no net subsidisation over a period of years, still there must be the claim of any other member to say, "I am seriously injured even by this system, and I ask now for a study group for the problem." THE RAPPORTEUR: There is that provision. I would remind the Delegate of the Netherlands that the word "determined" in this context means determined by consultation among interested Members. It is so defined in the last sentence of the Article. Does not that take care of the case. If any country has any interest in this matter, it has the right to be in on the determination, and being in on the determination, it can object to its being made in this way. MR. GUERRA (Cuba): I would. suggest that in the fourth line from the bottom of the page we omit the word "or". MR. DE VRIES (Netherlands): That would meet by difficulty. THE CHAIRMAN: There is the other thing that Mr. De Vries mentioned, that there might be extreme difficulty in producing evidence that there will be no net subsidisation. I would say that would apply to our wheat. We had for eight years an oversea price that was less than the home price, with the exception of a few weeks on one occasion. For the last three years it has been the other way round, and probably will be so for another three years. Had you looked at this in 1941, you would have said, "You have had this wheat going for three or four years, and still there is no question of net subsidisation, because it is subsidisation," but our answer could be that we hope and expect -- the nature of the scheme is such -- that when the world market does rise, there will be this offset of which we speak; but it might not rise for another two or three years, and it is pretty hard to prove it. All you can do is demonstrate that it is part of your scheme that that could and might happen, and probably would. MR. DE VRIES (Netherlands) If such a scheme is accepted under Chapter VI, I think everything is all right. 36. I. 2 E/PC/T/C. II & IV/PP/PV/2 THE CHAIRMAN: We might not get Chapter VI. MR. DE VRIES (Netherlands): This detemination comes under paragraph 6 of article 55. I believe this paragraph 6 of Article 55 has to apply on determinations for non-primary products., as we have now determination and consultation regarding the whole thing coming under Chapter VI, and not under Article 55. The whole procedure of Chapter VI provides for consultation and determination under Chapter VI. THE RAPPORTEUR: Article 55, paragraph 6, merely says what "determination" means when used either in Article 55 or Chapter VI. It avoids repetition of the words. MR DE VRIES (Netherlands): Article 55 says that the Organisation has to make procedures in order to get such a determination. As it is for the primary products under Chapter VI, those procedures already exist now. THE CHAIRMAN: Cannot we meet the point that we might not get to Chapter VI? MR. SHACKLE (UK): when you get there, it is limited to expected surpluses. THE CHAIRMAN: I think that once you get agrement, it would be all right. The whole thing is that there are several products which have subsidies on them now, and this thing will come into force, we expect, next year. What are we going to do until we have got commodity agreements? One thing that is certain is that we shall not get commodity agreements for every one of these, or even go into the examination of then, next year. In some cases we do not want commodity agreements for four or five years, because the products are too tied up. MR. GUEERA. (Cuba): Do you not think we could have a wording which would Iike that determination subject to the fact that the system is operated so as to unduly stimulate exports or injure the 37. I. 3 E/PC/T/C.II & IV/PP/PV/2. interests of other Members, and lay stress on the difficulty of determining the point raised about the net subsidisation. THE CHAIRMAN: Having "or" there means that you have got an alternative criterion to the not subsidisation, but when you put in "and" you mean that you have got an additional criterion. You have the two -- net subsidisation and this other category. MR. GUERA (Cuba): I do not want to put "and". I want only to take out the "or". The net subsidisation will not be considered such if the system is so operated as not to unduly stimulate exports or injure the interests of other countries. THE CHAIRMAN: You would have to alter the "net subsidisation" to make it rather more general. When you have the alternative, it could stand up fairly well, but I think we must take stock of our progress. Are members of the Committee ready to go on for another hour? SIR G. CLAUSON (UK) An hour, yes. MR. DE VRIES (Netherlands): Could we take out the words "evidence that there is no net subsidisation over a period of years" and make the passage read ...."like product to domestic buyers in the sense that the aggregate difference, etc...." THE CHAIRMAN: If we said, instead of "there is evidence....", "and the - nature of the arrangement is such that it may be expected...." how would that do? THE RAPPORTEUR: Could we leave out "and there is evidence.....period of years"? THE CHAIRMAN: And put in my phrase "and the nature of the arrangement is such that it may be expected...." THE RAPPORTEUR: I agree with Mr. De Vries on this clause. It is put here particularly to see that a particular kind of arrangement for primary products does not hurt anybody. There will be lots of them that will not hurt anybody, and they will all be dealt with under paragraph 3. 38. I.4 E/PC/T/C.II & IV/PP/PV/2. THE CHAIRMAN: You would leave out the "net subsidisation" phrase? MR. DE VRIES (Netherlands): We would say that this is a harmless system for world trade and as consumers. THE RAPPORTEUR: We are getting back to what had to bein with. What we say here is that if you have an export subsidy which nobody objects to, you report it, and say you are keeping it up for certain reasons, which might be that you are operating it in such a way as not to hurt anybody, and if the Organisation circulates the matter in the process of making its determination under the preceding sentence among other interested countries, and they say it is all right, then you may do it, the reason being that it has not hurt anybody. J fols. 39. J.1 E/PC/T/C II & IV/ PP/PV/2 No. 3 then becomes a repetition. THE CHAIRMAN: I do not want to complicate it. First we had "of", then nothing was suggested. then "and" and new "'but." SIR GERARD CLAUSON (United Kingdom): I would like to suggest one small change in 3. The thing, may be settled out of court very often, so I think it would be better to say "the difficulty may be deemed" instead of "shall." At the moments it is rather manadatory. If you say "may" it leaves it open, and say "in that event." It imports the whole of Chapter VI, which says the first thing to do if you get into trouble is to see if you cannot stimulate consumption. PROFESSOR de VRIES (Netherlands): I completely agree with that, but cannot we say Chapter VI (i), leaving out "Article 3"? of THE RAPPOTEUR: Shall we, for accuracy, refer once say "special difficulty", and that makes it sound better. SIR GERARD CLAUSON (United Kingdom): ". . may be deemed to be a special difficulty of the kind referred to in Charpter VI, and in that event the procedure laid down in that Chapter shall be followed." The second "shall" is right. MR DEUTSCH (Canada): I suggest we strike out 4 (d). THE CHAIRMAN: I think we had better revert to the old square brackets with an appropriate note in the report. SIR GERARD CLAUSON (United Kingdom): That applies to (b) and: (c)? THE CHAIRMAN: Yes. MR DEUTSCH (Canada): I would rather strike it out. I do not want anything in there. THE RAPPORTEUR: Perhaps we might have some discussion, in that case. THE CHAIRMAN: I think we were agreed we did not have authority to strike it out. In view of the reservation made by the Rapporteur - and I think I suggested we might indicate that - the general view of this sub-committee was that the provisions of (b) and (c) had the effect of increasing the had latitude that members using subsidies/after a failure to make commodity agreements to a much greater extent than they had before the commodity agreement was entered into. That is a bit involved, but I think it is 40. J. 2 E/PC/T/C. II & IV/PP/PV/2 clear. It was thought by some members however, that to strike this out meant a review of other Chapters, and for this reason it was decided to put them in square brackets and report to the committee. I take it out attitude is that some of us at any rate feel that when we go into the matter there are certain conditions in existence regarding subsidies which have to submit to certain procedure. Then you put them before the commodity agreement procedure and you fail to make an agreement. Then it is believed by some of us that the subsidy should go back to the conditions that were laid down in the first place, rather than as a result of the failure of the commodity agreement to secure greater latitude than they otherwise would have had. PROFESSOR de VRIES (Netherlands): Is it possible te arrive at a solution of the problem by comning (b) and (c), saying: "If it is determained that the measures provieded for in sub-paragraph (a) of this paragraph have not succeeded" - that means the commodity arrangement is no success - and if it has not succeeded "no Member shall grant any subsidy on the expertation of any primary product which has the efffect acquiring for that Member a share of world trade in that product in excess of the share which it had during a previous representative period"? SIR GERARD CLAUSON (United Kingdom): We, that is not good enough. THE CHAIRMAN: You see, there are two clear-out views. One is that paragraphs 1, 2 and 3 apply to subsidies; then provision is made to use the machinery of Article 6. If Article 6 fails one view is that 1, 2 and 3 continue in force as far as the subsidies are concerned; and the other view, an expressed in the present paragraph, is that more lenient conditions obtain than those provided in 1, 2 and 3. There are the two views if you fail; that your commodity agreement does continue with 1, 2 and 3, or if you fail that your commodity agreement does go to (1) and (c), which is a more lenient attitude towards subsidies. 41. J. 3 E/PC/T/C. II & IV/PP/PV/2 THE RAPPORTEUR: I believe that gives a somewhat disterted picture of the way the thing actually happens. It seems to me, to put the other extreme, you might say that members who have practised subsidization of primary products in the past must fuel, if they can agree with that view, that they are permitted under paragraphs 1 and 2 to do substantially what they have done in the past - which we do not believe to be the case. If, however, the latter part of paragraph 2 in particular is to be construed in that way we would consider that fairly unfortunate. Under the sentence "If any Member considers itself unable to make the provisions in this paragraph effective", and shall explain to the Organization why it has to keep on the export subsidy, we had not thought that we would have the case where we were subsidizing it because it was in burdensome surplus. SIR GERARD CLAUSON (United Kingdom): Nobody complains if you are giving them something cheaper than it would otherwise be. THE RAPPORTEUR: In the case of a burdensem surplus those words only retain a limited amount of their ordinary significance. That is where the demand at any price -- as has been the case in burdensem surpluses in the past -- is less than the supply that will be offered at any price down to something which is far enough above zero to cover the carrying and handling charges, which owing to a relative cheapness loses practically all its significance. I cannot quite see how that point applies. All I am saying is that when you get into that kind of situa- tion -- and this, of course, is directed only towards that situation,-- burdensome world surplus -- it had not been our idea that the provisions of paragraph 2 permitted that type of action. If we feel it does, we come back to redrafting the Article in terms of making 1 and 2 carry the whole load, and that may be the best way of doing it. I did not mean to suggest it was not. K fols. 42 . K1 THE RAPPORTEUR: That is what it comes down to, a question of re- examining: one or two to see whether it is the situation. PROF. de VRlES: If it is done as I suggest then paragraphs 1, 2 and 3 are still in force. But then if you say that no member shall grant. any subsidy on the exportation which has the effect of a share in excess of a previous share, that means there is an obligation to the amendment even without consideration to limiting the subsidis- ation. If by going on with this agreement he will get an excess share, so to give special obligation to the member not to use it to get a greater share in a slump. If you cannot come to an agreement, at least you cannot take an advantage out of your subsidy. THE RAPPORTEUR: What I would agree with is that this gives the rich country a much greater advantage than it had before. You are asking that the rich country shall operate entirely under the terms of 2, which merely says it will be ready to discuss and not that it will limit the extent of its subsidization. Paragraph 5, the parts that are suggested for deletion are a measure on the operation of the rich country in a case where you cannot get an agreement on a commodity subsidization. It is unfortunate for the purposes of discussion, but not for the purpose of writing it, that the word "determine" here sounds as though the organization is going to sit in judgment. It is not going to sit in judgement. It is the interested countries. PROF. de VRIES: But you must have the agrement with the other countries. THE RAPPORTEUR: No, I think not. PROF. de VRIES: If the agreement is not reached, or delayed by two or three years by long consultation, you go ahead. But then you would put a brake on that subsidy and say, especially in a period of emergency, if you go on before there is an arrangement, or the arrangement is delayed or obstructed by somebody, you are not allowed to use a subsidy to-increase your-share of world trade. SIR GERARD CLAUSON: I disagree with this. What paragraph 2 says is that 43. E/PC/T/C.II & IV/PP/PV/2. K2 /C/T/C. IV//V/2. no member shall grant any subsidy on the exportation of any product. It goes on to say that members shall give effect to the provisions of the paragraph at the earliest possible date and at any event not later than three years from the day on which it is put into force. So that is a death sentence for all export subsidies three years after the Charter entering into force. Then it is said it is not fair, there is a discussion and the member who does not believe in the death sentence finds himself in the minority. Then the determination must be that the subsidy shall die. Then the subsidizing member has two alternatives, either to kill it or to leave the organization under the special clause, or whatever it is. MR DEUCH: Or other countries may take sanctions. SIR GERARD CLAUSON: Yes. THE RAPPORTEUR: I can only say I cannot believe any exporting country can accept that paragraph without the material that is in brackets. I think we go round, as I said we would, to the point where it will not adequately cover a non-primary product and we will have to write a separate one for the primary product. We have taken that position clearly in all discussions of this material and we have always come but with this kind of agreement. I very much regret that we have to go round it again, because I think that .is where we come out. We will have to see that 2 is written clearly so it will not have that interpretation. I am sure that will not be a position held exclusively by the United States. SIR GERARD CLAUSON: I think you are the only people who can afford to subsidize export products. We certainly cannot; we have not got any money for export. THE CHAIRMAN: You have not got many exports of the primary product. SIR GERARD CLAUSON: Not more than £250,000,000 a year. THE CHAIRMAN: You include the Colonies. SIR GERARD CLAUSON: I am talking about the Colonies as well. MR DEUTCH: The same problem affects us. We are not in a position to 44. K3 E/PC/T/C.II & IV/PP/IV/2. enter into a competitive subsidization programme, because agricultural exports are such a large part of our exports. THE CHAIRMAN: We cannot do it either with these schemes we have got. PROF. de VRIES: I feel if there is any agreement or solution found the Netherlands at home and the Netherlands overseas can take up the obligation not to try to have a bigger share in world trade by subsidy; not not so if there is no agreement. That is the death sentence for any export subsidy. That may have such an enormous effect, and an effect not as the Brazilian representative asked for of merely decreasing it but giving it the death sentence after three years. You cannot see what the consequences of that death sentence will be. But you can undertake not to get a bigger share. You can effectively try to get an arrangement to Chapter 6. SIR GERARD CLAUSON: I do suggest we leave these words in brackets, because you are not suggesting they should be out out but that they should be bracketted. THE CHAIRMAN: I think then the meeting can have a go at it. It is a pretty important point in principle. On the matter of the report, we do not have to say very much, I suggest, because we just want to say what we have done in the way of alterations. I think we can cut that down. That is paragraph 4, at the end of the first page: "The sentence at the end of paragraph 2 was added to permit a domestic stablization scheme under which the domestic price is maintained at a level which" SIR GERARD CLAUSON: That is paragraph 3 now, of course. The words. 'at the end of paragraph 2 are now to be in paragraph 3, because we have turned that into a separate paragraph. THE CHAIRMAN: Yes, that is right. "added to permit a domestic stablization scheme under which the domestic price is maintained at a level". I suggest we alter that to "sometimes higher than the export price". "might be expected to result in the difference between the export and domestic price when the domestic price is the higher is offset by the difference when the domestic price is the lower. The 45. E/PC/T/C.II & IV/PP/IV/2. sentence permits approval by the organization if such a stablization scheme does not prejudice the trade or other interests of any members. "The additional paragraph added to the Article as paragraph 4 (a) is designed to make clear that the procedure provided for primary products subject to subsidization is intended to be identical with that worked out in detail in Chapter VI. It is thought that the interim drafting committee right study the treat- ment of this matter in Article 25, in Chapter. VI, and in Article 55, paragraph 6, with the idea of simplifying the treatment of what is intended to be (a) a standard type of procedure for dealing with primary commodities encountering special difficulties, and (b) an adequate consultative procedure in the case of non-primary commmodity s subject to subsidization. "In general, the intention of the Article as a whole may be roughly stated as follows: "Paragraph 1 provides that any type of subsidization operating to distort trade shall be fully reported to the organization and that, whenever such subsidization seriously prejudices, the trade of another member" SIR GERARD CLAUSON (U.K.) I did want to go back to the beginning of the sentence, because it is not quite right. The additional paragraph added to the Article No. 4. (a) is designed to make clear that the procedure in provided in Chapter 6 may be adopted for dealing with difficulties arising from subsidization. THE CHAIRMAN For dealing with difficulties with which subsidization is associated. SIR GERARD CLAUSON (U.K.) Yes. L fls. 46. L.1 E/PC/T/C. II & IV/PP/PV/2 THE CHAIRMAN: Can we go down to the paragraph starting- "In general.."? It then goes: "In general, the intention of the Article as a whole may be roughly stated as follows: "Paragraph 1 provides that any type of subsidization operating to distort trade shall be fully reported to the organization and that, whenever such subsidization seriously prejudices the interests of another Member there shall be consultation under the organization looking to a resolution Is"resolution" right? Shall we make it solution"? Then - "solution of the problem thus created. "Paragraph 2 is intended to provide that such subsidization, where it results in export at lower prices than domestic sale, shall be eliminated as soon as possible or shall lead to consultation among interested Members. "Paragraph 3- That becomes paragraph 4 now and Paragraph 3 deals with special cases that might be considered to come within the category of export subsidies. I will ask. the Rapporteur to fix that up in consultation with Mr. Deutch. MR. DE VRIES (Netherlands): I still feel a little uneasy about paragraph 3. Paragraphs 4 (b) and (c) are put into square brackets, and so the whole procedure is left/somewhat in the dark. Paragraph 3 is now more or less exempt, but others which may be quite as harmless are not exempted. I do not feel there is much harm in the whole thing THE CHAIRMAN: With due respect, I do not think it was ever, a particularly harmonious document; at least, I found myself breaking out into something other than harmony once or twice when I was reading it. What is your difficulty, Mr. de Vries? 47. L.1. L.2. E/PC/T/C. II & IV/PP/PV/2 You think that paragraph 3 is somehow bound up with paragraph 4 (b) and (c)? MR. DE VRIES (Netherlands): Yes, if you have 4 (b) and (c). If you have a system which is not covered by 3, and you do not get an agreement under 4 (a), you are nowhere. THE CHAIRMAN: I should say that if you do not bet an agreement under 4 (a), 3 still stands. MR. DE VRIES (Netherlands) : It stands for the other case, but for the other special cases, it does not stand. THE CHAIRMAN: That is the difficulty when you try to put into two categories all the various forms of price support. MR. DE VRIES (Netherlands) : That is the difficulty, I agree. THE CHAIRMAN: I do not know how you can get over that, but it is a matter which the Organization will work out. It has room to do it and 1, to my idea would be that when you fail to get down to a commodity agreement, you come back to 1, and that covers all subsidies. I say that subject to the fact that I may not have analysed it as closely as our Rapporteur. Now the idea seems to me to be that you want to get rid of 1. once you have entered, with others, into a discussion on a commodity agreement and you fail to come to an agreement. And 1. covers all subsidies. THE RAPPORTEUR: Only in the case of a burdensome surplus. THE CHAIRMAN: That makes a difference. MR. DEUTCH (Canada): That is where 1. would be helpful. MR. DE VRIES (Netherlands): As I see it, if you do not agree, you only have an obligation not to expand your share of the world trade. If that is excepted, you can except paragraph 3 as well. There is no danger for this system, or for any other harmless system,which has no intention of expanding its share of the world trade. You notify the Organization about the nature of the measures you are taking. THE RAPPORTEUR: I would accept that. 48. L 3. E/PC/T/C. II & IV /PP/PV/2 ' MRIESEL DE V (andNetherls): Then everything is all right. TIgDECH(Canada): No. SILG. ACLUSON (U.K.): No, it is toe. That is the whole potnl. Do not let us go back and discuss 4 (b) and (c) beceauseew have decided to put temh into brackets. Profeessor e Vries wants to put pargrapph 3 into brcketss, but I understand that his objection is not that 3 is wongn, but that it is incom- plate. R. DE VRIES 1Netherlandsa: Yes, it is one special case. SIR G. CLAUSON (U.K.): The solution, then, is to put two little square brackets under the Article, with nothing between them, and a note in the report saying that one delegation considers that the text is incomplete at this point since there are other cases which ought equally to be decided not by subsidi- sation. THE RAPPORTEUR: I agree with that, and would support it. MR. DE VRIES: All right. Then we can see it in the United States or at Geneva. SIR G. CLAUSON (U.K.): Then you will be able to produce your Christmas box of the other clauses which ought to go within square brackets; MR. DE VRIES (Netherlands): I have one more thing to ask Can a note be put in the report to the effect that the drafting committee will, at a later stage, have to consider the relation between Articel 25 and Article 11? THE CHAIRMAN : I do not agree with you, but I shall be glad to put it in. Is there anything further? No? Then we will end the meetings The Committee rose at 6.10 pm. 49.

GATT Library

qz514hm6546

Verbatim Report of the Second Meeting of the Sub-Committee of Committee II on Quantitative Restrictions and Exchange Control : Held at Church House, Westminster, S.W. 1. on Tuesday, 12 November 1946 at 3 p.m

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/QR/PV/2. and E/PC/T/C.II/QR/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/qz514hm6546

qz514hm6546_90220021.xml

GATT_157

A. 1 E/PC/T/C.II/QR/PV/2. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SECOND MEETING of the SUB-COMMITTEE of COMMITTEE II on QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL held at Church House, Westminster, S.W. 1. on Tuesday, 12th November, 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. A.2 E/PC/T/C.II/QR/PV/2 THE CHAIRMAN: Yesterday we deferred from consideration the subject-matter covered by Articles 21 and 22 of the draft Charter; that is, the sections dealing with the nondiscriminatory administration of quantitative restrictions and the exceptions from this general rule. Of course, views have boon expressed on those two Articles in general terms in earlier discussions. Particular points were raised. First, the need to link the transition period during which discrimination would be permitted closely with the transition period provided for in the International Monetary Fund; next, there were some doubts as to the adequacy of a past representative period as a basis for a definition of nondiscrimina- tion, and a suggestion was made that the substitution of the general term "commercial considerations" would be preferable for this purpose. Other documents, affecting particularly those Articles, were submitted, including a paper by the Czechoslovakian Delegate and by the Polish Observer. A number of other papers were submitted affecting quantitative ristrictions as a whole, but I do not recall any which particularly dealt with this nondiscriminatory principle. The subject-matter of these two Articles is now open for discussion. MR. SHACKLE (United Kingdom): I do not think I am saying anything new in what, I am about to say, but it may be as well to put it forward shortly. First of all, I do think that for the purposes of this Article we want something in the nature of a glossary which would explain the terms we use; the distinctions. between, licenses, quotas and so on, should somehow be clearly brought out. I think the terms themselves will lead to some confusion without some kind of glossary. As regards the method of the sort of rule to be followed for the purpose of ensuring nondiscrimination, we are not greatly onamoured of the past representatives period. Our order of preferene as between methods would be as follows. First preference, that the permit to import shall not be assigned to any particular source of supply. In other words, it becomes a matter for the commercial judgment of the importer who has received the permit as to what sources he will to go to get his supplies. 2. A. 3 E/PC/T/C.II/QR/PV/2 That is I think, in effect, the method which is mentioned at the end of paragraph 3 of Article 21 of the United Status draft. Failing that, if it is necessary to choose sources, should prefer that the basis be commercial consideration, thereby following the rule in the state trading chapter. If, however, in any particular case it is not possible to assess the commercial considerations, and the first method is not available other, than, as a last resort, we would be prepared to contemplate the previous representative period, if a suitable one can be found, which would obviously be a matter of difficulty in present-day circumstances, subject to special factors. Broadly speaking, our under- standing of the meaning of the term "special factors" is that they are much the same thing as commercial considerations. I want to remark that the greater prominence that one gives in this procedure to the past representa- tive period the more rigid becomes the effect of the quota, the more it freezes a pattern of trade. MR. BARADUC (France) (interpretation): I would like to support the statement just made by the United Kingdom Delegate. I have said several times -- and in particular explained to my United States colleagues -- that it would be extremely difficult to choose a period of reference which would be adequate. The best way of avoiding discrimination in the administration of quantitative restrictions would be to let the importors be free to choose the sources. This period of reference should be considered only in the third place. We agree with tie United Kingdom on that point. As for the second stage which has been mentioned by him, I think it would be rather difficult to have a definition of it, but we are quite prepared to discuss it. THE CHAIRMAN: Would anybody else like to comment upon this particular question, namely, the basis for nondiscriminatory administration? MR. HANKINS (United States): I do not think there is any disagreement here, if I understand the position which is taken. The French Delegate, if I understand him, suggests that the best way to avoid discrimination where quantitative restrictions are employed is not to allocate the quota by countries but to simply give licences to those that apply for them, with the 3. A.4 E/PC/T/C.II/QR/PV/2 stipulation that they can utilise the licences to purchase wherever they please. I think we would agree with that. There is the other question, however, raised by Mr. Shackle, as I understood him, whose view was that if quotas are allowed, if it is permissible to allow them although not required, they should not be based on a previous representa- tive period but should merely conform to the formula of commercial considerations. I would only just like to suggest that, poor though the representative, period formula is - and nobody who has had any experience of it is likely to be wholly satisfied -- it may be at least the starting point for establishing how the quotas would be allotted if they conform to commercial considerations. You start with the shares which countries have had in the past, you modify that to try to take account of any chances in the competitive position, and as a result you come out with shares which should, as nearly as can be determined, conform to the rule of commercial considerations. I am not clear whether the United Kingdom Delegate wants to strike out any reference to representative period. MR. SHACKLE (United Kingdom): Perhaps I might answer that. I would say that as between the second alternative, commercial considerations, and the third alternative, the past basis modified by special factors, I think the difficulty is really one of degree it is the degree of prominence to be given to commercial considerations. If I understand. it, the term "special factors" is meant to mean, much the same thing as "commercial considerations." We are not saying that the greatest weight should be given to commercial considerations, so far as ascertainable. My third is that when they are not so readily ascertainable it may be that the past representative period would have, to be the first test applied, but qualified so far as possible in the light of the knowledge available of commercial considerations. I would add just one thing. You may have cases in which the parties concerned being brought together agree upon an allocation amongest themselves. I take it it would be generally agreed that where it is possible. to follow that method, that is a proper way of giving effect to nondiscrimination. A. 5 E/PC/T/C.II/QR/PV/2 THE CHAIRMAN: I did not quite gather your last point. MR. SHACKLE (United Kingdom): There is possibly a further method which may sometimes be used for ensuring nondiscriminatory allocation; that is, to bring together all the interested parties, the importing country and the exporting countries. If they all agree an allocation amongst themselves I take it that would be regarded as complying with the requirements of nondiscrimination. THE RAPPORTEUR: May I, as Rapporteur and not as a member of the United Kingdom Delegation, ask a question? If there is any difference of what opinion between the United States Delegate said and what the United Kingdom Delegate said on this matter it clearly does not rest on the first choice, which is that the importer should have a liberty of choice of supplies; it rests on the second line of defence, whether it should be a representative period suitable, modified, or whether it should be commercial considerations. Is there a way of joining those two into one, by talking about commercial considerations which include, among other things - which would also be stated - the trade which was done in a representative period. Indeed, that might be the first in the list of things which you considered. When we are dealing with what you fell back on, freedom of choice would be a commercial consideration which would be a matter of trade done in the previous period plus what had happened to relative prices, plus what had happened to demand and so on and so forth, whatever factors one, puts down there. I wondered whether the United Kingdom and United States Delegates thought there was a basis of reconciliation there, because the wretched Rapporteur wants to know whether he should try to have a single draft or put up two alternatives. MR. HAWKINS (United States): I think Mr. Mead has hit upon the way to bridge the gap. I would be perfectly willing, to see a clause worded roughly this way. "If quotas are allocated" - that is the only time the question arises - "they should be allocated in accordance with 5. A.6 E/PC/T/C.II/QR/PV/2 commercial considerations. If a representative period is used to establish what are commercial considerations it should be subject to adajustment in the light of any special factors which may have affected the trade in that period." That is not the language, but a rough formula which might straighten it out. MR. SHACKLE (United Kingdom): I think broadly speaking that would meet us. I express that provisional View. THE RAPPORTEUR: May I repeat it to make sure I have the idea? If quotas are allocated they should be done on commercial considerations. If the representative period is used as the basis for those commercial considerations it should be modified according to any change in other factors. MR. HAWKINS (United States): That is it. THE CHAlRMAN: Any special factors which may have affected the trade in that period. would anybody like to comment further on that? MR. LOKANATHAN (India): Since we are dealing with quantitative restrictions arising out of balance of payments difficulties, I would like to ask whether the fact of exchange difficulty with a particular country would or would not be regarded as a commercial consideration? For instance, suppose we are short of a particular member's currency, in making alloca- tions naturally we would obviously be guided by the fact that goods from that country cannot be financed, and hence any allocation must have regard to that factor. Would that be regarded as a commercial consideration or as a special factor to be brought in as a special criterion? THE CHAIRMAN: Might we leave that question for the moment? I would like to dispose of the point about the representative period. we can come back to that later and have a look at what is meant by "commercial considerations" if we can clear this suggestion of the reconciliation on the question of the representative period. 6. B.1. E/PC/T/C.II/QR/PV/2 MR.BARADUC (Frane) (Interpretation): Mr Chairman, I should like to see clearly the position of my United States and United Kingdom colleagues. Is it the I T. O. which is going to judge whether the period selected is an adequate period or is it through bilateral nogotiationsthat both members concerned will determine the commercial considerations to be taken into account? MR HAWKINS (USA): Mr Chirman, I think it should be understood - and I believe the United Kingdorm delegate agrees with this - that a country would not be required to allocate: that is the first point. Therefore the question would not come up. Now if he does decide to allocate then you have got the problem of determining how to allot shares to the various supplying countries. The proposal, as I understand it, would require them to be located in accordance with commercial considerations. The draft would recognize that past period as modified by subsequent practice might help to establish whlat allocation would result if commer- cial considerations were taken into account. TH CHAIRMAN: I think the point which the French delegate wishes to have clarified is who is to be the judge of what are commercial considerations, or whether commercial considerations have in fact been observed. As I understand the original draft, the decision would be for the country or the government of the country imposing the quotas, and that it would not be for the I.T.O. to decide, nor is there any provision for con- sultation; it would be for the country imposing the quotas to make the decision as to what were in fact commercial considerations. Is that correct? Mr HAWKINS (USA): In our draft he would make that determination initially and subject to the obligation to consult if anyone questioned it. THE CHAIRMAN: Is there any further discussion on this point, or can we take it that the suggested reconciliation with the United Kingdom-United States view is a n reasonable way of interpreting what is meant by non- discriminatory administration? Mr Rapporteur, you can proceed accordingly. 7. Bd.2 E/PC/T/C.II/QR/PV/2 I think that we might now pass to the point raised by the Indian delegate, which was I think that he asked whether the fact that a country was experiencing shortages of a particular currency would be regarded as a commercial consideration justyfing presumably the allo- cation of a smaller quota to that country than it might otherwise obtain. MR HAWKINS (USA): Mr Chairman, in our draft we have made provision which I think probably covers the point. There is an exception from the rule of non-discrimination in Article 22; that permits discrimination where a country holds inconvertible currency and leaves discrimination in favour of the country where that currency is held in order to liquidate it and utilize it. Those are the only circumstances we see in which there might be discrimination on that ground. THE CHAIRMAN: Is this the scarce currency provision? MR HAWKINS (USA): No; there is the scarce currency provision that is also excepted; that is in paragraph 2 of Article 22. THE CHAIRMAN: That is what I meant. The only circumstances in which the Indian delegate's question would be answered by an affirmative would be where that currency had been declared to be a scarce currency by the International Monetary Fund. MR HAWKINS (USA): Then there might be discrimination in favour of the country. MR SHACKLE (UK): Might I remark that there is also the United Kingdom alternative draft, and this includes in its paragraphs 2 to 4 provisions about non-discrimination, which although we have put them into the Balance of Payments draft Article would really, I think, be suitable as a general definition of non-discrimination. The Paper to which I am referring is Committee II/W/22. Under those paragraphs one has in the first place an exception for countries with inconvertible currencies, and then this carries on to paragraph 2(b) which is dealt with in a rather different way from the way in which it is dealt with in Article 22 of the United States draft. One has also paragraph 2(a) which deals with scarce currencies. It seems to us that apart xxx from those two cases it could not be short of another country's currency if the International Monetary 8. B.3 E/PC/T/C.II/QR/PV/2 Fund procedure were working. MR LOKANATHAN (India): Do I under stand that the answer is thart it will not be regarded. as a commercial consideration, but that it will be regarded as coming under either of the, exceptions provided for in the articless of the American Draft Charter or the, scarce currency provi- sions of the Monetary Fund? THE CHAIRMAN: Iam not quite sure; I would not have understood that. I think I would have understood it in this way, that it would not be regarded as commercial considerations, but that the situation which you envisage is provided for in certain circumstances where the International Monetary Fund has declared the currency concerned to be a scarce currency. If it has not been so declared, even though an individual country may find itself short of that currency, there is no provision in the Draft Charter to enable it to discriminate against that country. MR LOTHRINGER (IMF): Mr Chairman, I think this is pertinent to the ques- tion which has been raised by the Delegate of India. It Would be possible for a country in those circumstances to obtain the currency through the Fund, even though it did not hold balances of that par- ticular currency, assuming it had drawn up to its full quota. Mr PHLLIPS (Australia): I was wondering whether the representative of the IMF could clear up one point. Supposing a country had drawn up to its quota from the Fund but had reserves outside the Fund, of other currency, is there any provision in the Fund enabling that country to use those reserves through the Fund for buying other currencies? Mr LOTHRINGER (IMF): Well, I do not know that there is a specific provision exchange in the Fund Agreement. It is assumed that members could use their foreign / reserve freely for whatever purpose they wish. I was not clear in my own mind as to the intent of the Delegate of India'a question - whether it was dealing with a situation in which a currency would be generally scare, which is an Article 7 scarce curency feature of the Fund, or whether a particular importing country happened to be short of a particular currency. 9. B.4 E/PC/T/C.II/QR/PV/2 It was not clear to me just which situation he had in mind. MR LOKANATHAN (India): May I explain my question. It is this, that when you are dealing with difficulties, or rather with the quantitative restrictions needed in order to solve the balance of payments problem, this balance of payments is a total concept which is made up of difficulties in relation to particular members. Therefore, before a particular country's currency is declared to be scarce the Rules of the International Monetary Fund would become obligatory, and countries should be entitled to use quantitative restrictions in allocating the resources available to restrict purchases from the countries whose currencies are likely to be scarce in relation to that particu- lar country, and deal in given quotas, which would necessarily govern the amount that would be allotted to purchases from countries which were running on a deficit. MR LOTHRINGER (IMF): I think the chief bearing that the Fund's opera- tions would have on the situation would be that until a currency actually becomes scarce or is declared to be scarce by the Fund, a member would be able to buy that currency through the Fund provided his balance of payments situation was not so bad that he had exhausted his quotas - in other words, I think to the extent that the Fund is able to achieve its broad objective of effective inter- convertibility of currency in current transactions, there would be a diminution in the imaportance of this question as to how much of a particular foreign currency a given country happened to hold at any one time. THE RAPPORTEUR: May I put my understanding of the position in this way, Mr Chairman because it would help me as Rapporteur to make sure that I have got it clear, There are three types of currency from the ppint of view of the Fund. There are those which are inconvertible, there are those which are convertible but not scarce, and there are those that are scarce. Now, if a country as far as the first is con- cerned wants to buy from another country which has an inconvdrtible 10. E/PC/T/C.II/QR/PV/2 currency, the United Kingdom draft in paragraph 2(b) would enable the country to discriminate in favour of imports from that country, watched by the Organisation. As far, as the scarce currency is concerned, under Article 7 of the Fund, a country could discriminated against that country and not buy its goods, but we are left there with the intermediate class of currencies which are convertible but are not scarce, and if the country concerned had not got some of that currency but had same other currency which was convertible it could convert it through the Fund into that currency. Am I not right in understanding what? MR LOTHRINGER (IMF): Yes, I think thant was the point that the Delegate of Australia raised, if I understand it, that it might have some other foreign exchange reserves it could buy, or, of course, it could buy some of the currency which was not scarce from the Fund, simply by drawing on its quotas, that is buying in its own quota in the purchase of the needed currency from the Fund. MR PHILLIPS(Australia): May I clear up the point I raised? I think my answer is in Article VIII, Section 4,of the Agreement, that a member" shall buy balances of its currency held by another member", and so on, but it would not actually be one through the Fund in the case I was quoting, where a country had used all its full drawing rights in the Fund. MR LOTHRINGER (IMF): Yes, of course that is one of the features that give effective interconvertibility. That is, when it has a balance the county either gets paid off in its own currency or in gold, and if it is paid off in its own currency the paying country could obtain that currency through the Fund, which would reduce the Fund' s holdings and put them in a position where they could get whatever particular foreign currency was needed; but it is getting into very technical aspects of the Fund, including multilateral clearing. 11.2 B. 6 E/PC/T/C.II/QR/PV/2 THE CHAIRMAN: Is there anything farther upon this point ? MR BARADUC (France) (Interprotation): I think that the proposal of the United Kingdom Delegate in paragraph 2(b) should be taken into account, and I should like to put a question in connection with that. Many countries, at least European countries, are having very impor- tant trade transactions with countries with inconvertible currencies because those countries are not members of the Fund. In connection with that question the representative of Czechoslovakia has submitted a statement, and I should like to ask the Delegate who represents the Fund if he knows that statement of the Czechoslovak Delegation, and I would also like to ask if we cannot consider that the proposal of the United Kingdom in paragraph 2(b).could not meet the views of the Czechoslovak Delegation, which to me seem to be quite justified. MR LOTHRINGER (IMF) I do not know that I am sufficiently familiar with the Czechoslovak proposal to be able to attempt to answer at this time whether the proposal under ruference in the United Kingdom draft would meet it. As I recall, the Czechoslovak proposal was to the effect that you should consider rather separately countries with a balance of payments, countries with a convertible basis and those on an inconvertible basis, and the United Kingdodm draft under reference would, I presume, subject to the approval or non-objection of the ITO, permit a country to discriminatc against convertible currency countries in order to get a balance with inconvertible currency coun- tries. That is the way would understand the relationship of the two proposals, but I am not sure that that is an answer to the question THE CHAIRMAN : It is clear thatiwould would go some way at any rate to meeting the Czech point, but it is not clear whether it woulg go the whole way. MR BARADUC (France) Yes. I think perhaps we might leave that to our Rapporteur, after having consulted the representative. of the IMF. THE RAPPORTEUR: It occurs to me that there is one very important point here, which may be mainly of theoretical interest, from the point of 12. B.7 E/PC/T/C.II/QR/PV/2 the Czechoslovak case, but I am not sure. However, as the United Kingdom draft stands at the moment, I should understand it in this way, that if Czechoslovakia - and I take that merely as an illus- tration, because that is the Delegation that has raised the point - were in general balance of payments difficulties and were therefore able to impose import restrictions on balance of payments grounds, then under Article 2(b) of the United Kingdom draft it could dis- criminate in those restrictions in favour of countries or of the country whose currency x was inconvertible, always subject to the fact that the Organisation would be able to rule that this was being misused; but the problem which arises in my own mind is this: Supposing that the Czechoslovak balance of payments was not in general out of equilibrium, so that it could not under the general rules impose restrictions on balance of payments grounds, but yet it was exporting from countries whose currencies were inconvertible, could it then impose restrictions in order to be able to discriminate in favour of those countries, even though its total balance was not in disequilibrium? Perhaps that is an impossible situation, but if it is not impossible it would be possible easily to redraft the thing to meet the case, because just as the American draft Article 22 says in its paragraph 1: "Members which are members of the International Monetary Fund shall not be precluded by this Section from applying; quantitative import restrictions (a) having equivalent effect to any exchange restrictions which the Member is authorised to impose in conformity with Article VII of the Articles of Agreement of the International Monetary Fund", you could put "or in order to make use of inconvertible currencies", subject to this, You see my point. It says that if you have quantitative restrictions on balance of peyments grounds, then in this case you can discriminate. It is a different thing to say: "You can put import restrictions on in order to be able to discriminate for this purpose"; and I think the Rapporteur has to know 13. B.8 E/PC/T/C.II/QR/PV/2 which he has got to say, whether he has to put them up as an alterna- tive, or whether he is asking a nonsensical question. MR CLARKE (UK): Surely the point here is that it is perfectly possible for a countryt,o be in an over-all balance of payments equilibrium while at the same time a cosiderable drain is taking place on its montary reserves because it is having a surplus on its dealings with inconvertible currencies, while having a deficit on its dealings with countries with convertible currencies ; and if Czechoslovakia, to take this illustration, were in difficulties on this scorean and wished or needed to discrminate iin favour of countries with inconvertible currencies, it would be undergoing a drain on its monetary reserves, and this would therefore be a permissible thing for it to do, but if itw as not undergoing a drain on its monetary reserves which would permit it to impose quantitative restrictions, then the question would not arise THE RAPPORTEUR: Mr Chairman, your Rapporteur would like to say that he thinks he asked a nonsense question, and that he withdraws it. THE CHAIRMAN: No, it is a very important question, because it makes the choice of language in the articles in which the exception is granted for balance of payments purposes of importance, and that phraseology does not relate solely to the total balance of payments but is linked with international reserves. MR CLARKE (UK): This was one of the many reasons we put our money on monetary reserves in framing these particular criteria; that is a very real difficulty, too, in many countries. THE CHAIRMAN: If the Rapporteur bears that in mind when he drafts the balance of payments exceptions, to see that it is based on monetary reserves and not on balance of payments alone, then I think it is clear that the situation will be covered. MR BARADUC (France) (Interpretation): That is clearly stated in the 14. B.9 E/PC/T/C.II/QR/PV/2 British proposal. MR LOTHRINGER (IMF): Mr Chairman, I wanted to point out in this connection what effect the pertinent provisions of the Articles of Agreement of the Fund would have on this situation. I think the situation is covered in article 8, Section 3, which says: "No member shall emgage in, or permit any of its fiscal agencies re- ferred to in Article V, Section 1, to emgage in, any discriminatory currency arrangements or multiple currency practices except as authorized under this Agreement or approved by the Fund." I think what that means pretty clearly is this, that after a member assumes obligations under Article 8, that is after the transitional period, he wil have to get specific approval from the Fund in order to discrininate or to use discriminatory currency practices in order to deal with a situation such as that posed by the Czechoslovak Delegation. Of course, under Article in could do it during the transitional period without such specific approval. MR CLARKE (UK): Might I just add that this paragraph 2(b) about in- convertible currencies does deal with the state of affairs in the transitional period, which is when these fundamental difficulties arise, and when the transitional of a country is then under the IMF then this problem automatically falls to the ground. THE CHAIRMAN: Is there any further discussion on this particular point? While we are still on Articles 21 and 22, you will recall that tho Czechoslovak Delecate, in the general discussion on this, did submit an alternative draft of Article 21 in particular, which was designed, if I understood it correctly, to leave out of this Article a number of matters which related to administration, and there I think his point was that it was sufficient in this paragraph to state the principles but to leave the question of machinery to the Governments concerned, to put into effect in accordance with those principles. If I remember rightly, Mr Hawkins in reply said he thought the suggestions were matters which should be considered carefully by the Drafting 15. B.10 E/PC/2/C.II/QR/PV/2 Sub-Committeee. I do not know whether any further thought has been given to that, because reaIly it is something which the Rapporteur would need to be advised upon; but I think that paragraph l of the Czechoslovak draft is identical with the United States draft Charter down to the word "restricted" . Then he omits the letter part; that is: "In order to facilitate observation of the operation of the provisions of this paragraph . . . . Members undertake that in the application of such restrictions they will employ the use of quotas, and will avoid the use of licensing or other non-quota methods of restriction, to the fullest practicable extent." MR HAWKINS (US.): Mr Chairmran, I have given some consideration to they, and I agree fully that we should not get into too much detail, but I would suggest that the last sentence is not exactly detail; it is expressing a preference for making it absolutely obligatory for stating what the total amount of goods will be that will be allowed to come in, so that the balance can be met. Now, that is a rather genrral injunction, not absolutely rigid, because it might be neces- sary for a country to have a licence later on. THE CHAIRMAN: Does anybody else wish to express a view upon that? That example you have quoted is only an example, but I think the same point is carried through in practically every paragraph of the Czech re-draft. MR HAWKINS (USA): I could comment upon that if you like. THE CHAIRMAN: Yes, please do. MR HAWKINS (USA): I think the second change there, if I remember rightly, was merely to strike out the provision for public notice in the second paragraph. I think he struck out the first sentence. THE CHAIRMAN: Yes, that is right. MR HAWKINS (USA): Again, there is a great deal of detail there, but the idea is to help traders to know what is going on. Then the third change was this; I thinkhe struck out the last sentence of paragraph 3 - at least, that is My memory of it, because I have not got his draft before me. 16. B.11 E/PC/T/C.II/QR/PV/2 THE CHAIRMAN: Yes. MR HAWKINS (USA): If that is correct, I think it would be a mistake to strike out the last sentence of paragraph 3, because that is a very basic point. THE CHAIRMAN: Similarly with paragraph 4, I think he has omitted the provise. MR HAWKINS (USA): The purpose of that is to avoid having a member doing a lot of consulting before it acts; so it gives it the initiative. THE CHAIRMAN: Well, the three things which the Czech Delegate has suggested should be dropped are first of all paragraph 1, with the undertaking that in the application of such restrictions they will employ the use of quotas rather than any other methods of restric- tion; and secondly to remove the requirement that they will give notice of the total quantity or value to be included in the quotas; and thirdly, in the third paragraph, the requirement that restric- tions shall in no event be applied by sources of supply - that all these points are felt everywhere to be points of substaned which would require to be embodied in any alternative draft. MR HAWKINS (USA): Yes. I think countries having to resort to these quantitative restrictions would want to know thescope within which they could operate this, because they would want a great deal of elasticity. You see that under this draft you are not compelled; without this is merely to express the order of preference/xxx making any of them binding. It is the last science which he suggests should be dropped, the last sentence of paragraph 3, which seems to me is important. THE CHAIRMAN: Would anybody else care to comment on that? THE RAPPORTEUR: I think the Rapporteur is in a muddle. Perhaps that can be cleared up out of school. THE CHAIRMAN: May be. Has anybody got any other point on Articles 21 or 22 which he wishes to raise? 17. B. 12 E/PC/T/C.II/QR/PV/2 MR PHILLIPS (Australia): There is one point I think we outlined briefly in the general Committee: that was the possibility of pre- viding mechanism for the Organistation to approve discrimination in restrictions imposed on balance of payment grounds where it consid- ered that the discriminatory restrictions would have a less harmaful effect on world trade than nondiscrimination. The sort of cases we were thinking of there were cases where perhaps the difficulties centred in a fall in employment or a depression in one or in a group of countries which caused balance of payment difficulties for other groups of countries which were not yet affected by the depression other than through their balance of payments. In those circumstances it seemed to us that if the restrictions had to be non-discriminatory then those countries applying restrictions would have to cut down their trade with everyone and thus spread the depression round the world. In these circumstances it might be better to allow discrimination. A particular case might be if a number of countries wore applying restrictions on balance of pay- ment grounds, and it seems unfortunate they should have to add to each other' s difficulties by restricting imports from each other, and we realise that there are dangers in that. You could not have an indiscriminate use of discrimination; but we could suggest that in some circumstances the ITO might be able to find that discrimination was desirable and ought to be provided for. l7A. C1 E/PC/T/C.II/QR/PV/2 MR GUNTER (USA): Mr Chairman, I would like to suggest that that type of situation might very well show up if the balance of payments was taken care of by the Scarce Currency Commission. MR PHILLIPS (Australia): I would like to add to that that it might be taken care of by the Scarce Currency Commission. I do not think it is sure that it would. MR GUNTER (USA): What other grounds would there be for discriminating against a country? MR PHILLIPS (Australia): The fact that you would have to cut your imports from everyone, not merely from the country affected. MR LOKANATHAN (India): As long as the multilateral convertibility of currencies is absolutely unsure I think the difficulty, as pointed cut by the Australian delegate, can be met, because when any particular country has difficulties with any other country the International Monetary Fund is there to provide multilateral currency. It is only when the Fund is unable to do so that the currency becomes a scarce currency; so that the real question there is really the same point as I had in mind when I raised this question. There may be occasions when, before the Fund itself provides complete convertibility, a country may feel that it is likely to run into a deficit with a particular country and it would like for sone reason to take note of that and then use discrimination for the purpose of reducing its imports from that country. That is the sort of situation that may arise. Whether it is desirable to use the provision under this Article for this purpose is the real question. THE CHAIRMAN: I am not sure whether this is the proper place to discuss this problem. It arises out of one of the proposed escape clauses, and I think on this it has been agreed that we should take out all these escape clauses and put them all together on one sheet of paper and then examine them in the light of the situations which they are designed to meet, to see whether they are all necessary or, taken. together, whether they are adequate. But, at the same time I do feel that there is some problem here. While it is true that the scarce currency provisions of the International Monetary Fund were designed to deal with just this type of situation, so far as I can see it is possible for a country whose currency is in danger of becoming scarce 18. C2 E/PC//T/C.II/QR/PV/2 avoiding their currency becoming scarce; by taking action which does not in fact correct the type of situation which is the cause of the trouble. You have particularly a situation where employment is being maintained in one country by the development of exports and thus leading to an accumulation of iternational reserves. It would be possible for the country to prevent its currency becoming scarce by lending to .the Fund, for instance, and that in itself would not correct the situation for the countries experiencing the corresponding adverse balances. It is true they could, so long as their quotas lasted, go on borrowing, but the longer they do that the more heavily they have to pay for the privilege of borrowing, and, furthermore, there is nothing in the situation which checks the situation itself, and it could presumably continue. So I do feel that it is not entirely satisfactory to rely upon the scarce currency provisions for this matter, but it is a question whether we should discuss this here or leave it until we are taking those escape clauses all together. That is the position. Would you like to leave it? MR GUNTER: It is up to the rest of the Committee. MR LUTHRINGER (IMF): Mr Chairman, I would like, without wishing to suggest that this discusssion be prolonged, if that is not the will of the Committee, to add just one thing to the statement you have made, and that is that there is provision in the Articles of Agreement for discussion of a disequilibrium of this sort before a currency actually becomes scarce. That is not, of course, a compulsery solution, but the point I would wish to emphasise is that under the clear intent of the Articles of Agreement and their provisions this whole situation would be discussed - and seriously discussed - with the country that seemed to be the chief contributing cause of this situation in advance of actual declaration of currency becoming scarce; and secondly, of course, the country experiencing the disequilibrium would presumably be in discussion with the Fund too, so I think for what it is worth it would get a very general airing in advance of the currency actually becoming scarce. THE CHAIRMAN: What are the views of delegates? MR CLARKE (U.K.) I think we would sooner leave this. THE CHAIRMAN: I think we would, too. It is a matter on which we have some interest, and I do not feel it is quite proper for me to participate in that 19. C3 E/PC/T/C.II/QR/PV/2 discussion as I may like to do, from the Chair, so, if it is acceptable to the rest of the Committee, I suggest we defer it until dealing with the escape clauses together. THE RAPPORTEUR (Mr Meade): In a craft I was preparing and hoping to have ready for tomorrow I had put something on these lines in square brackets. Shall I strike then out? THE CHAIRMAN: That is between you and your conscience! THE RAPPORTEUR: Actually they were from the Australian draft. If you are going to bring them up elsewhere I will strike them out. MR PHILLIPS (Australia): I would think they ought to be left in in square brackets! THE CHAIRMAN: Are there any other matters arising out of 21 and 22? MR SHACKLE (U.K.): There are two small points, I think, arising on Article 22. Some of the points in that Article , as I have already mentioned, are covered in paragraphs in our re-draft of our balance of payments Article but possibly should be removed to a more general context. First of all, there is the provision in Article 22(1)(b) of the United States draft about the currencies of territories having a common quota in the Monetary Fund. The drafting of that passage in the American draft seems to us obscure and there is a reference to Article 20(4)(g) of the Articles of Agreement of the Monetary Fund on common par value. We do not understand what is the significance of those references, and it appears to us the matter would be better covered in the way it is covered in paragraph 4 of our draft, which roads like this: "Quantitative import restrictions shall be deemed non-discriminatory if they are applied in a manner otherwise consistent with paragraph 3" (that being the definition of non-discrimination) "by a group of territories which have a common quota in the International Monetary Fund against imports from other countries." That is what we take the significance of this provision to be, and we feel the draft we have suggested is perhaps clearer. she other point is on 2(c) of our re-draft. This is a matter which is not covered in the United States draft. It is the question of a ocunt y whose economy has been disrupted by the war, and in paragraph 2(c) of our draft we contemplate an exception from the rule of discrimination in favour 20. C4 E/PC/T/C.II/QR/PV/2 of "restrictions to assist by measures not involving a substantial departure from the general rule of non-discrimination, a country whose economy has been disrupted by war. The provision of this sub-paragraph will cease to operate at 31 December 1949." The idea of that paragraph is taken actually from a paragraph in the United Kingdom and United States Financial Agreement - the Loan Agreement. I would like to call attention to those two differences. THE CHAIRMAN: Would the United States delegate like to comment on the first point - the alternative wording for the idea at present embodied in 22(1)(b)? MR GUNTER (USA): The U.K. draft is acceptable - on both points. MR BARADUC (France)(Interpretation): Mr Chairman, I quite agree with the two points which were mentioned by the United Kingdom delegate and I should like to ask whether we could not adopt a more simple draft for paragraph 4, worded as follows: "For the application of the principle of non-discrimination exchanges existing between territories with a common quota in the International Monetary Fund shall not be taken into account." THE CHAIRMAN: By exchanges you moan transactions? MR CLARKE (U.K.): There is a point there, that that particular form of non- discrimination should only apply where the quantitative restrictions are being applied on balance of payments grounds. If the quantitative restrictions are for other purposes the question of whether the countries are in a common unit in the Monetary Fund is irrelevant. THE CHAIRMAN: However, we could get the Rapporteur to take that alternative into account, I think. MR BARADUC (France)(Interpretation): I should also like to say that, as far as the British proposal is concerned, to include in the charter a provision which already exists in the Anglo-American Agreement that there may be a possibility of discrimination in order to assist countries which have suffered on account of the war, we think that the charter should include such a provision, but we are rather doubtful about the date of 31 December 1949, and here I thihk I interpret the feelings of all the countries which are in the same position as France, and I think it is not possible to mention any date; and therefore I think that should be omitted from the draft, or we could choose another date more remote. 21. C5 E/PC/T/C.II/QR/PV/2 MR CLARKE (U.K.): Mr Chairman, we do not think we should put this in without a concluding date at all, because that might logically mean up to 1970 or 1980 a country whose economy had been disrupted by the war could receive this particular kind of assistance; but it would soon appropriate to put it on the same basis as the basis we my ultimately determine for the transitional period of that particular country. MR BARADUC (France)(Interpretation): I quite agree with that proposal; it seems to be logical. MR RODRIGUES (Brazil): Mr Chairman, we have presented an almost identical suggestion to that put forward by the representative of the United Kingdom, and on which the delegate of France has commented, but we feel that this restriction should be permitted also during the transiticnal period for the orderly liquidation of the surplus of reserves owned by the Government to any member country during or in consequence of the war as well as to permit the readjustment of the conditions of production to normal times. My country has not taken part in the war in the same way as England and France, but restrictions caused our production to suffer in such a way that we need also to have a period for the readjustment of the conditions of production, and we believe we should not give an exact date but leave it to the Organisation to decide on the date. MR VIDELA (Chile): Mr Chairman, I wanted also to refer to the point just made by the Brazilian delegate, because I see that the amendment proposed by the UK. which is under discussion says "a country whose economy has been disrupted by the war"; and I want to make it clear that, although we were not in the war, this applies also to Chile, because we suffered the consequence of the war.In this connection I would refer you to a statement made by the Minister of Finance in Chile in connection with the foreign exchange and imports situation. This appears in the Fortnightly Review issued by the Bank of London and South America. It is in the last number, and I will hand it in to the Committee. THE CHAIRMAN: Thank you. MR GUNTER: Mr Chairman, I am not sure I got precisely the points the Brazilian and Chilean delegates were making. I believe they were getting into the 22. C6 E/PC/T/C.II/QR/PV/2 question of the right to discriminate during the transitional period, and I would suggest we postpone the discussion of that question until we have disposed of the more basic question of the right to impose restrictions for balance of payments reasons. THE CHAIRMAN: Very well. MR BARADUC (France)(Interpretation): I should like to add that we have not heard the defence of sub-paragraph (d) of the British proposal; and in our opinion it is very important because it completes Article 22. I suppose the Rapporteur will take it into account in drafting his report. MR GUNTER (USA): That is the one I was suggesting we postpone until after we settle this other more basic question. MR BARADUC (France)(Interpretation): I should like to add a comment to the british proposal. This is acceptable to us as a whole, but there is one point on which we disagree. We do not think it is actually possible to compel a member to abandon the practice of discrimination as long as it is not in a position to meet all the obligations under Article 8 of the Articles of Agreement of the Fund. THE CHAIRMAN: Has anybody else got anything to raise affecting the content of the American draft Articles, or could we turn to any additional matters that are covered in the United Kingdom draft to see what the views of theCommittee are on those matters? PROF. GANGULI (India): I wish to raise a small point. I would draw your attention to Article 22, paragraph 2. Here a reference is made to "inconvertible currencies accumulated up to December 31, 1948". The point I wish to make is that inconvertibility of currencies is sometimes a matter of degree. There may be certain currencies which may be entirely inconvertible. There may be others which may be subject to complete multilateral inconvertibility, and at the sane time there may be currencies which may not be subject to full multilateral. convertibility; and I think in respect of currencies which are not subject to full multilateral convertibility this escape clause ought to apply as well. Here you come across only one significant word, "inconvertible" currencies, but there are currencies of, other types, too. I wonder if we should not take into account currencies which are not subject to full multilateral convertibility. 23. C7 E/PC/T/C.II/QR/PV/2 THE CHAIRMAN: I would suggest that the word "inconvertible" should be taken to that the currencies are inconvertible unless they are freely convertible into all other currencies. PROF. GANGULI (India.): We could either say that or "currencies which are not subject to full multilateral convertibility". THE CHAIRMAN: Are there any comments on that? MR GUNTER (USA): I am not quite sure that I understand the point. A currency, it seems to me, is either convertible or it is not. I do not quite understand the idea of partial convertibility. Do you mean by that that it is convertible into some currencies and not into other currencies? PROF. GUNGULI (India): If by "inconvertible currencies" you mean currencies which are not subject to full multilateral convertibility, I shall be content; otherwise we shall have to make provision for that. MR LOTHRINGER (IMF): I think under the Fund situation the currency would either be convertible or inconvertible; that is speaking of currencies arising from current transactions. Either it would not be convertible or else it would be convertible through the Fund. MR GUNTER (USA): Unless it was a scarce currency. It might not be converted into a scarce currency. But that would be taken care of. PROF. GANGULI (India): If that is the position, I have nothing to say. THE CHAIRMAN: Are there any matters arising out of the United Kingdom draft which affect the general content of non-discriminatory administration and the exceptions thereto which have not been covered in our discussions so far? MR CLARKE (U.K.): We have not yet discussed the position of the transitional period. THE CHAIRMAN: I think if delegates agree we night take this question of the transitional period and perhaps take the United Kingdom draft Article 2(d) as a basis for discussion. Would you like to comment on this first? MR CLARKE (U.K.): I think it is fairly straightforward. We feel that the right to discriminate is a necessary one during the period before the currencies are generally convertible; and therefore we have set out the proposals on this basis. We have sought to provide that a country taking advantage of this provision should take advantage of it as little as possible. We have also 24. C8 E/PC/T/C.II/QR/PV/2 provided hero that this right shall come to an end at December 31, 1949 unless the period for the individual member in extended beyond that date with the approval of the Organisation after consultation with the IMF. I believe this meets the point made by the French delegate a few moments go of the linking up of this transitional period with the transitional period under the Fund, We are not in the least bit committed to this particular way of putting it. If it is the general feeling that it is better to say, "for a period of six months after the country has accepted the obligations of Article 8 of the Fund", we should be entirely happy about that proposal; but we thought this one would be helpful to certain other delegations. THE CHAIRMAN: The United States delegate suggests that it might be wise to leave a final consideration of this question of the transition period until we are clearer on the criteria under which a country will be permitted to impose quantitative restrictions for balance of payments reasons. Is that suggestion agreeable to the delegates? THE RAPPORTEUR: Perhaps I could attempt to put up in any alternative draft about those criteria possibly alternative directions on the transitional period; that is to say, to postpone discussion now, but we might have certain alternatives before us to discuss later. 25. D.1. E/PC/T/C.I I/QR/PV/2 THE CHIRMAN: Is that agreeable) MR DARADUC (France): Yes. THE CHAIRMAN: I assume that discussion of Exchange Control is in the same position; it is very closely linked with the balance of payments question so you might care to discuss Article 24 at this stage. M GUNTER(USA): There is then the question of common membership in the I.T.O, and I see no reason why we should not discuss that, Mr Chairman. Mr. CLARK (UK): We are prepared to discuss that. THE CHAIRMAN :I understand the position in relation te common membership is that there is no provision in the draft Charter for common membership. I think it was the United Kingdom delegation that expressed the view in their statement that there appeare to be some god reason for common membership and if that were not provided for that other modifications of the provisions regarding Exchange Control might be necessary. Would you like to add to what was said? MR CLARK (UK): Yes, Mr Chairman we feel of the UK Delegation that common membership is of great iimportance; we attach imoportance to it for two man reasons. The first reason is that if one does not impose upon members of the I.TO. obligations regarding their exchange practices, then the whole purpose of the I.T.O. may be frustrated by action by a membre in the exchange field. It is equally possible -and we have been discussing here about the prcedure for quantitative import restrictions - that a country might carry out precisely the same operations by exchange licensing which if that country were not a member of the I.M.F and if there were not suitable provision in the I.T.O. Charter would be frus- trating the whole purpose of the Chrater. Then there is a second point to which the Canadian delegate attached great importance at the meeting in full Committee, of the purposes being frustrated by exchange depreciation by a country which is not a membe of the I.M.F. Countries which are members of the I.M.F. commit themselves only to depreciate their currencies under certain conditions, with the approval of the I.M.F. A country 26. D.2 E/PC/T/C.II/QR/PV/2 which is not a member of the I.M.F., therefore, is at a great advantage compared with countries who are members. That is the first broad series of reasons why we consider it is necessary to have common membership, avoiding a frustration of the purposes of the I.T.O. The second series of reasons is that we attach great importence to their being no over- lapping in this field between the international organization deeling with trade matters, the I T.O., and the international organisation deling with exchange matters, that is to say, the I.M.F. Once one gets a dual jurisdiction in this exchange field one is, from the point of view of orderly international management, in very serious difficulties indeed. Therefore, we feel that every effort should be made to secure common membership. If we could not secure common membership, we should want to write into the ITO Charter pretty well precise obligations of the IMF, in order to prevent the purposes of the ITO from being frustrated by exchange practices. We should want provision for prevention of exchange restrictions on imports, for convertibility, for exchange depreciation ard for the avoidance of multiple currency practices, and we feel that article 23 of the Draft Charter is not nearly comprehensive enough if you assume that you have to write all these obligations in. There is one difficulty, and that is the most serious difficulty, which we see of our proposal of common membership is the one raised by the Australian Delegate in the full Committee last time, Under the IMF, a country is able to get out of the IMF at a moment's notice. It is impossible to write a similar provision into the ITO for various reasons, which are being discussed on Committee V. Therefore, it can be argued that if we requir constitutionally that members of the ITO should be members of the IMF, we should in fact be taking away the right of a country under the IMF to resign from it at a moment's notice. This we feel to be a very serious difficulty. We said in the full Committee that we were prepared to examine any suggestion which could be put forward to meet it. We feel ourselves that there is a possibility by covering this contingency of a special agreement between a member withdrawing from the IMF, and the ITO, by which 27. D. 3 E/PC/T/C.II/QR/PV/2 that member would make certain undertakings about certein exchange matters and would accept jurisdiction of the Fund, and whether it was carrying out those undertaking to the ITO on exchange matterrs. That is the sort of possibility which we in mind as a last resort to meet this constitutional difficulty and the fact that a country has a right to get out of the IMF straightaway but cannnot be given that right under the ITO. That is the sort of line which we should like to develop: the principle on common membership to provide a special let-out of this kind. MR LUXFORD (International Bank): Mr Chairman, it might help a little on this discussion to recall that the Bank have exactly that some problem, because we have a condition stipulating common membership with the Fund and that the Bank handle the matter by providing that the country concerned shall automatically case after three months to be a member of the Bank, if it loses membership in the Fund, provided that the Bank by a three-fourths vote my continue tile country in its membership. That means that in that period you could work out the alternative conditions to take care of the fact that the country had dropped out of the Fund and I think the Sub- Committee might want to consider that as one way of dealing with a difficult problem, rather than trying to define it in advance, leaving it for the time when it occurs. M. BARADUC (France) (Interpretation): Mr Chairman, I would like to say that Mr Clarke has raised what is, in our opinion, an extremely important point, and he has exactly expressed the views of the Franch delegation with so much clarity and so well that I would only be taking up the time of the Sub- Committee if I were to repeat, in French what he has so well said in hnso MR GUNTER (USA): I think Mr Clarke made a very excellent statement, and dxcc:lent -tc'. ".' very inclined to agree with the UK position. MR LOTHRINGER (IMF): Mr Chairman, the International Monetary Fund agrees entirely with the view stated by the United Kingdom Delegate, and it is our earnest hope that every effort will be made here to see if some pIan which provide for common membership cannot be worked out. MR PHILLIPS (Australia): Mr Chairman. I think I had gone into Australia's 28. D.4 E/PC/T/C.II/QR/PV/2. position fairly fully before. We realise the points raised by the Delegate of the United Kingdom and we are glad that he appreciates the difficulty, particularly regarding withdrawal from the Fund. I think that is an import- ant point, but I am not at all sure that his suggestion for a special agreement with the organisation in the event of a member withdrawring from the Fund would be a satisfactory Solution. It would put the member concerned in a very difficult position, it seems. to us. Then, on the second point that he raised, there is one argument in favour of there being less necessity for restrictions or for the full restriction of the Fund and the organisation, that is, in the members of the organisation who are not members of the Fund, which would also not have the benefits of the Fund, and I think that is the same argument for them being subject to some qualifica- tion. The Delegate of the United Kingdom suggested that under the Draft Charter as it is drafted at present, there is no protection for a member who depreciates his currency, which does not seem to me to be correct, because I take it that particle 30 of the Draft Charter would take care of those cases where another member felt that the benefits it had under the. Charter had been nullified by a movement in exchange rates of another member, but there is a procedure for complaint and, if the organisation upholds the member's complaint, there is a procedure for sanctions. I do not think I want to say anything more than that except that we still feel that joint membership is not essential. THE CHAIRMAN: Does anybody else wish to comment upon this? It would appear, Mr Rapporteur, that the, majority of the Committee favour the general point of view outlined by Mr Clarke and it would also appear that you will have to make special provision for recording the observations by Australia. THE RAPPORTEUR: Yes. What I am trying to do at the moment, Mr Chairman, is to try to get certain draft Articles, not a report, expressing the reservations.. If I try to get by tomorrow the draft Articles which I am trying to do, Articles 20 and 22 anyhow, and if I do one for Article 23 on the lines which the members of the Sub-Committee seem to favour, it would be clear that Australia's position would be reserved, but I would not also be able to draft one which would meet Australia, as an alternative, to be ready at the same time. I hope that would be understood; I hope it would be under- 29. D.5 E/PC/T/C.II/QR/PV/2. stood that I was not forgetting Australia's position, because the only draft that came forward tomorrow was the majority view. Is that satisfact- ory to the Sub-Committee, do you thiink, Mr Chairman? THE CHAIRMAN: It is satisfactory to the Australian Delegate. Is there any- thing further on this point? If not, I suggest we might adjourn. THE REPPORTEUR: May I make this suggestion, that I try to get ready something on these lines. I woud like to suggest a programme of work for the Rapport- eur, that I have beford you by tomorrow afternoon a redraft of Articles 20 and 22, and then there would be the majority view on the exchange control Article, and I think probably Article 20 would have two alternative versions, and possibly Article 21, but I am in a muddle about Article 21, and I wondered whether I might make a suggestion -- perhaps it is rather an informal suggestion - that the United Kingdom Delegate, Mr Shackle, should get together with certain Delegates from the United States, because the arguments seemed to be mainly between the United States and the United Kingdom, taking into account the suggestions made by the Czecho-slovak Delegate, and hammer out something, and, if it is ready by tomorrow, we would have it for tomorrow at some time. If not, I think we can do Articles 20 and 22, without 21; I think Article 22 is in a sense an exception; articlee 21 we can deal with on the exceptions without knowing what are the exceptions, what they are exceptions to, because we have a broad idea. MR GUNTER (USA): I think probably Mr Hawkins or Mr Leddy would be the ones who would be best able to work on Article 21, because they are also involved in this Procedures Sub-Committee. I do not know what its schedule is so that I cannot commit them, but I am sure they will deal with it if they are able to work it in. THE CHAIRMAN: That raises the problem of our own schedule. We are scheduled to meet tomorrow afternoon so that tomorrow is all right. MR GUNTER (USA): We are talking about Articles 20 and 22? THE CHAIRMAN: Yes, but there is some difficulty about the proposed meeting on Thursday, which clashes with the Procedures Sub-Committee. Also, if we meet in the afternoon, can we carry on without the people from the Procedures Sub-Committee?. 30. D. 6 E/PC/T/C.II/QR/PV/2. MR GUNTER (USA): Well, I will leave that question until tomorrow for decision. THE CHAIRMAN: Very well. Tomorrow we will deal at least with Articles 20 and 22 and possibly a redraft of Article 21, if the United Kingdom and United Staes Delegates can produce an alternative. THE RAPPORTEUR: Yes; I am afraid I am working under some pressuree and I may leave out some points. THE CHAIRMAN: If you do, we will tell you. Thank you very much. (The meeting rose at 4.50 p.m.) 31.

GATT Library

ns213rq7871

Verbatim Report of the Second Plenary Meeting held at Church House, Westminster, S.W.l, on Thursday, 17th October, 1946. at 11.00 a.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/PV/2 and E/PC/T/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/ns213rq7871

ns213rq7871_90210002.xml

GATT_157

UNITED NATIONS 2/PC/T/PV/2 ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Repert of the SECOND PLENARY MEETING held at Church House, Westminster, S.W.1, on Thursday, 17th October, 1946. at 11.00 a.m. Chairman: M. P. SUETENS (Belgium). (From the Shorthand Notes of (W.B. Gurney, Sons & Funnell, (58, Vietoria Street, (Westminster, London, S.W. 1. (Spoaking in French: interpretation): THE CHAIRMAN : / Before we start the discussion, I should like to draw the attention of Members of the Committee to the first item of the agenda which has been dIstributed and give the summary of our first meetings. Gentleman, the agenda for to-day includes the Declaration made by every one of the Delegations -- I mean, the ones who wished to do so -on the subject of this conference. It is likely-that there will be no debate in the course of this E/PC/T/PV/2. Meeting, but only declarationss. I suggest, therefore, that we once more try the simultaneous system of interpretation. If the system is found to be not entirely satisfaectry undor the circum- stances, Delegations will notify the Chair. If the systems is fouI to be satisfactory, it rmay be continued. If it is found to be unatissfaetory, we sall revert to the systarm of direct Intorpre- totion It will probably be useful for Delegations to know the preclsetimes of out meetings. I gget tha we cloe the meeting this morning at. 12.30 shàrp, and that we resume at 3 o'clock this arternoon. Since later in tha day we are all to be the uests of the British Government, I suggest re adjourn at 5.45. I first call on the Deiegate from the. United States. Mr. CLAIR WILCX (USA) Mr Presient, when a dog bites a man, a ccord- ing to a saying that is comnon in my country, the every, the event goes unre corded in the press; but when a man bites a dog, the story is good for a headieng on page one. So it is wlth the popular apprasal of the progress that has been made, since the war, towrd the reconstruction of a word order. The dlifficulties that have boen encountered and the persisting threat of fajlure are upperwest in avery in. the Solid successes. that have been achleve are taen for grante, as if they were a matter of routi This attitue is unerstanbble: conflict is exciting; agreament is dull. But it is saly lacing in perspective; the big new the. important news, is not that nations have encountered difficul- ties, but that they have surmounted them; not that their efforts are threatened with faillure, but that they have been attended by so large a measure of success. The werld hasss gone a long way, in the last few years, toward binding itselfitogether in a network of agencies for international- co-operation. The organistion of the United Natfions has been estalishe: the General Assemly, the Security Council, and the Economie and Secial Council, with their several commissions and sub commissions, are now geing coneerns. The United Nations Relief an E/PC/T/PV/ 2 and Rehabilitation Administration, the Food and Agreculture Organisations, the International Monetary Fund, the International Bank for Reconstruction and Development, the Civil Aviation Organ- isation, the United Nations Educational, Seinentific and Cultural Organisation, and the World Health Organisation, have Joined the International Labeur Craganisation as speciallised international ageneies. The nations are developing the programmes and organis- ing the institutions through which they can work together, side by side, te reconstruct accomplishment, in se shatiered world. For so much in the way of concrete accomplishment, in se short a time, there is no precedent in histery. Much has been dene; much remains to done. The General Assembly, meeting this month in kow York, will act upen the recomnendation of the Economie and Social Council for the esiab- lishment of an international organisation for refugees. The United Maritime Consultative Concal, meeting in Wasuington, will consider the creation of a world - wide intergevernmental organsation for maritme affairs. A reconsitituted international telecomuni- eations organisation is now unde discussion in Mosscow, and a conference to plan for such a body may be held in the spring of 1947. And finally, our won Committee has been charged with the responsibility of wrting a constution for an organsation in the field of international trade. of the many tasks of economic recostruction that remain, curs is by all odds the most important. Unless we bring this work to completion, the hepes of those builders who preceded us can never be fulfilled. If the peopes who now depend upon relief are soon to become self-supporting, if these who now must borrow are eventue- lly to rpay, if currencies are permanentily to be statlised, if, workers on farms and in factries are to anjoy the highest possible levels of real income, if standards of nutrition and health are to bearased, if cultural interehange is to bear fruit in daily 3 E/PC/T/PV/ 2. life, the world must be frced in large measure, of the barriers that new cbstruct the flow of goods and services. if political and economic order is to be rebuilt, we must provide, in our world trade charter, the soli foundation on upon which the superstructures of international co-cperation is to stand. From the project of ostmblishing an international trade organisation, I take it, there is no dissent. But with regard to detatils, 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 yor perimssion, I shall state them, dogmati cally, and comment briefly pon oach. The firest principle is that existing barriers to to international trade should be substantially reduced, so that the volume of such trade may be large- larger, certanaly, tha it was between the two werld wars, Readuer access ti foreign markets is neededd if nations are to earn the foreign exchange that will enable them to pay for the imports that they require. Inereased trade, with greater specialsation and active competition, should enhance the productivity of labour, out the costs of production, enlarge the output of industry, and add to the richness and diversit of daily living. More goods should flow form less efferert and levels of consumption should be heightend all around the world. A renewed sense of well-being should contribute, in turn, to domestie stability and to international peasce. Abundant trade is not an and in itself; it is a meeans to ends that should be held in common by all mankind. The second priciple is that International trade shuld be multilateral rather than bilateral. Paticular transacticans, of course, are always bilateral; one seller deals with one buyer. But under multillateralism the pattern of trade in general is many- sided, Sellers are not complled to confine their sales to buyers who will deliver then eqquivalent values in other goods. Buyers are not requied to find seleers who accept payment in goods that the buyers have produced. Traders sell where they please, exchangin 4. E/PC/T/PT/2 goods for money, and buy where they please, exchanging meney for goods. Bilateratism, by contast, is alkin to barter. Under this . system, you may sell for money, but you cannot use your money to buy where you please, Your coustomer insists that you must buy buy where please your coustomer insists that you from hill if he is to buy from you. Imports are diretly 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 raducing the number and the size of the tansaetions that can be offiected, it helds down the volume of world trade. By restricting the scope of available market and sources of supply, it limits the possible exonomies of international specialisation. By freezing trade into riggid patterns, it hinders accommodation to chanigng couditions. Multlateralism follows market opportunities in a search for purely economic advantage; bilateralish invites the intrusion of pitical considerations. It will be agreeid, I trust, that nations living in the middle of the twentieth century should not be thrown back to the primitivism of barter, with of the inconvenience, all of the costs, and all of the risks which a system entelis. The third principle is that that international should be non diseriminatory. This principle would require that every nation give equal treatment to the commerce of all friendly states. It should be evident that discrimanation obstructs the flow of trade, that it distorts normal relationship and prevents the most degirable division of labour, that it tends to perpetuate itself oy canalising trade and establishing vested interests, and, finally, that it shifts the amphasis in commecial relations frem economics to politics. Disciminations begets bilataralism as bilateealism begets discerimination. If we are to rid ourselves of either one of them, we must ride ourseleves of both. E/PC/T/PV/2, The fourth principle is that prossperity and stablity, both in industry and agriculture, and so intinately related to internat- fonal trade tha stablisation plicies and trade policies must be consistent, each with the other, It shoud be recognisedthat the survival of progressive thrade plicies will depend upon the ablity of nations to ancheve and maintain high and stablie levels of employment and upon their willingess to proteet the producers of stable commodites against the sudden impact violent change. It should be recognised, too, that the advantages of abundant trade connot be relised if nations seek to slove their own employment problems by exporting unemployment to their neighbours, or if they attempt, over long periods, to held the production and prices of staple commodities at leyel that cannot be sustained by word demand. Programes that are directed toward the objectives of prosperity and stablity on the one hand, and abundant trade, on the other, will not often be in confict. But when they are, they must be compromised. The fifth and final principle is that the rules that gevern international 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 econmies are erganised upon the basis of individualism, collectivism, or some combination of the two. The United states, among other countries, will continue to antrust the mangement 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 varyiing patterns of control. There can be no question concerning the right of every nation to adopt and to maintain, without external interference, the fore of economic organisation that it prefers. But it should be agreed that this 6. E/PC/T/PV/2. diverstily of economic systems need not and cannot be permitted to sprit the wordl into exclusive trading blocs. Every nation satnds to gain form the widest possible movement of goods and services. Every nation should recognise an obligatio to buy and sell abroad, wherever muthal advantage is to be obtained. The rules that apply to diverse trading systems must differ in detall. But they should not differ in principle. That international trade should be abun- dant, that it should be multalateral, that it should be non-discris- inatory, that stablisi tion policies and trade policies should be consistent - these are propesitions on which all nations, whatever their forms of economie organisation, can agree. There are the principles that the United States has sought to embody in the proposals for Expansion of werld Trade and Employment that it published in December of last year, and to elaborato in the Suggested Charter for an International Trade Organisation that it cireulated to other members of tow committes during the past summer and published on September 20th. The latter draft, in accordance with resolution of the Economic and Social Council, has been submitted to the Councl's seeretariat for transmission to this Committee. We hepe that it will be accepted as a working documen, that it will afford a useful basis for discussion, and that it will facilaitate the precess of arriving at agreement on a final draft. The impertance which my Government attaches to this enterprise is evideneed by the years of incour it has put into the writing of the Propasals and Suggested Charter, As they stand, these cuments give expression, in principle, to the policy of the United States. But they are not to be taken, in detail, as precsenting a formulation which we regards as fixed or final. We have seught, threugh consulto tion 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 industriallsed or relatively . E/PC/T/PV/2. undeveloped, eapitalist, scelalist, or counist.But we do not or eressed the final "t". It we have not suecceded in meeting legitinate requirements, we shall be ready to consider further modificati ns. It would not be in our interest to insist upon provisi ns that may be detriment to the intersts of other States. As far as we are concerned, hewever, our cards are on the table. The suggested Charter expresses, in general outline, The present draft is net a preduct of pure altruism. we ecneive the principles which it emberes to the be in the interest of the United States. We want large experts. An Impertant part of our agricultral activity has leng been directed toward sales abread. And now our heavy mass-production industries are also geared to a level of output which exceeds the normal, peace-time demands of our domestic market. We want large imports. The war has made great inroads on our natural resoures; we have become and may increasingly become dependent upon foreign supplies of basic materials. The quantity and they variety of our demand for consumers' goods are capable of indefinite expansien Abunant trade is essential t our industrial strength, to our economic health, to the well-being of our people. But surely it is true that this interest is one that is shared, in greatter or lesser egree, by every other nation in the werld. Indesd. if the importance of untrammeled trade to the United Satated is great, its importance to many other nations must be compelling. Countries that are small, populcus, and highly industrialised must have access to fereign markets if they are to earn the exchange with which to pay for foodstuffs and raw materials countries that specialies in the production of a small number of staple commodities must have accdess to such markets if they are to 8. E/PC/T/PV/2 maintain the basis of their economic life Countries that have beem devastated by the enemy must be enabled to sell abread if they are to obtain materials for their reconstruction. Countries that are rolatively undeveloped must as enabled to make such sales if they are to acquire equipment for thier industriali sation Countries that have borrewed for of their of thes purposes must be permitted to earn exchange if they are to service their debts If the trade of the werd were to be geverned by rules the oppos- ite of these contained in the suggested Charter, the United States would deoply regret it, but it could adapt itsalf to the resulting situation; its economy would survive the strain. But other nations, in this respect, are less fertunately endowed than we are. For us, the strangulation of trade would necessitate a difficult readjustment. For others, it would spell catastrophe It will doubtless be rewarked, in the course of these preceed- Ings, that the United states has not always practised the gospel that it new 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 harm. Certainly, it should not be inferred that the economic strength of the United States can be attributed to the restrictions that we have impossed on our external trade. We have withn our borders an area of 3,000,000 square miles, diverse reseures, 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 poposals should demenstrate that we can learn form histoy. It will probably be said, too, that the provisions of the Suggested Charter, particularly these that deal with commercial policies and restrictive 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 9. E/PC/T/PV/2. appendx is negative. But for proposing an operataion that is required to restore the body econmie to full health, we offer no apologies. The other chapters of the Chartor, however, particularly those that deal with employment policy, commodity arrangements, and the framework of an international trade organi- sation, are seareely to be described as negative. And the Charter as a whele is designed to make affirmative provision for the expansion of world trade. The draft recogin ses that provision must be made to enable . undeveloped countres to achieve a greater diversification of their economies. And, in this connection, I wish to make it clear that the United states affirmatively seeks the early indus- trijalisation of the less developed acetions of the world. we know, form experience, that more highly industrialised nations generate greater purchasing power, afferd better makets, and attain higher levels of living, we have seught to promote industrialistion by exprting plant, equipment, and know-how; by epening makets to counties that are in the early stages of their industial development; by extending leans 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 beilieve that such. aid should be bonfined to enterprises that will eventually be able to stand alone and that it should be provided directly, by public contributions, rather than indirectly by restratints on trade. The interests of undeveloped contries in sound industriallsation cannot be served, effectively, by imposing arbitrary restrictions on the flow of go ds services. We believe, finally, that the Economic and Social Council and some of the speecialised agenecles of the United Nations, including the prosed international Trade Organisation, may make affirmative contributions to the process of industrial 10. E/PC/T/PV/2 development, and we stand ready to consider all sericus propesals that are directed toward this end. Every nation,of course, will feel that its own situsticn is in some respect peculiar; that some special prevision 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 particularised, limited in extent and time, and set ferth in terms of texed crijterisa. Mutuality of benefit and of obigation on must be preserved. No special interest, however worthy, can justify a sweeping exemption form general principles. exceptions must be made, but they bannot be made in terms so broad. as to emaseulate the charter as a whole. we have been called together to create an organisation that will liberate world trade. If our efforts are to succeed, it will be by virtue of the fact that each of us has cone prepared to make his contribution to the common enterprise, In conclusion, let me repent thant my ecountry seeks a Charter and an Orgainsation that will apply with equal fairness to the trade of every natJon in thne iorld., If ift. s5na.l be shbia thats any one of the detailed provisions of the present draft is really detrimental to the essential interests of another state, we shall recommend that it be withdrawn or modified. I remarked, at the cutset, that couficts is exciting and agreement dull. It is the hope of my Delegation that the precedings of this Committee will be dull. We shall do everything in our power to make them so. 11. E/PC/T/PV/2 THE CHAIRMAN; I should like to thank sincerely the delegate of the United States for his most interesting exposition The French delegation spoke yesterady of the great interest which this declaration will have for us, in view of the cnormous labour whihc the United States have given to the preparation of this charter. I recognize the Brazilian delegate. MR. MOREIRA da SILVA (Brazil) (Speaking in French: interpretation): Mr. Chairman, the international Trade Organiztion, based as it is on free exchange between nations, has the aims which have coused us to be united here in this venerable hall in a preparatory meeting- a group of countries interested in the establishment of world principles. Brazil has sent to this meeting a delegation, the aim of which and the duty of which is to express the fecling of tis government and the general feeling of thepeclo of its country. The first duty of its envoys is to eaffirm the hope that the result of our labours here will he the establishmant of new means of ensuring the wellbeing and wolfare of all people, based on justic. Brazil would likae to bring to theso objcctivos. cvery effort at her disponal during this period of readjustment folloing peace, just as it did during the period of vary when it contributed ' ith all its rar, materials and with its resourees of youth. Having contributed with material resourees and human resourees to the world offorts, it finds itself with its economig system displaced and troubled, but it is prepared to work for the good of tho organization of peace. 12 E/PC/T/PV/2 Brazil does not havc these intorcsts at heart which are not the interests of all countries here united. These can be expressed in a word - the most equitable possible distribution of the riches of nature as can be prepared by manor. The objectives at which we are aiming in this re-union are to. achieve the moans of obtaining the expansion of world tràdca and the econoinic dovelopment of all countries. In ordr to achiovc this result, tho best way is the revision of tariff larvs and other commercial barriers and the elimination of all forms of discriminatory treatment between countries. Brasil feels perfeetly happy facing these proposals, as Brazil itself has no high tariffs and is one of the nations which do s not base its national budget upon taxation. Its deep knowledge of the needs of countries the structure of which and the industrial means of which are based upon the production of raw matrials and foodstuffs - gives it a deep conviction of the insufficiency of any solution which is limited. only to opening ways of export and to the distribution of masterials. It would be important, above all to have the greatest possible international co-oreration, basod on comuplote and deep knowledge of the structure of every one of the countries of the world. .Intcrnational trade mecan. .more than just one aim. It has. not just the aim of increasing indefinitely the production of goods, it has also the aim of augmenting the welfare of peoples by means of correcting and levelling economic ingqualities. International trade has the duty and the tack of contributing to the diminution of different levels among nations - nations .not equally ondowed by nature and differing in historical fact.. Brazil agrees that an increase in the volume f international 13 E/PC/T/PV/2 exchange is most desirable. This could be arrived at by two means, One, the reduction and possibly the elimination of trade barriers, or secondly, an increase of the buying capacities of the peoples, These two procedures. hava as. their aim the same result. One is negative and the other positilve. We are convinced that the positive measure will bring to orid trade a greater incrcase than the negative measures would bring to it. As it is a dynamic measure, it can create new consumers. Based on this condition, Brazil; intends to support ali measures -,hich may be adopted to bring about groater industrialization of the countries which. are at present less developed. In this sons the Brazilian delegation. believes it is its duty to offer certain proposals rhich ould express faithfully the wishes of its people, and it has no.doubt that these proposes will bo favourably reecived and adopted by this conference, robulting in an agre,emt based on realities of fact, as those arc the onl things which can be followed and respected. The Brazilian delegation salutes the representatives of thc countries r-hà are r akineg efforts in:ordor to construct. and build an economic foundation for world pease; It is appropriat., that this Preparatory Committee of tha International Conference on Trade and Employment should hold its- sittings in this City of London, which has suffered the greatest tortures and the greatest disaters which war can bring, but which will ccrtainly live on, greater and stronger than it has ever been, for the happiness of its people and the bleassing of humanity (Upplauso ). THE CHAIRMAN: (Specakirig in French: interpretation): I would like to thank the delegate of Brazi for his/peech, and I no call on the delegate of Australia. 14. E/PC/T/PV/2 DR . M. C. COOMBS (Australia): Mr. Chairman, Australia, like thc Unitod Statcs, appreaches the subjcct-matter of this Confence with certain basic principals in mind, and they, too, number five, but since they are somewhat different from thesc stated by Mr. Wilcox it might be of interest to tho Cominrittcc if I enumerated them. Our first -rinciplc is that coach m ob r government should. do ail in its pocr to onsuro to ovory man living ithin its borders thio opportunity of employment from which he call arn income ith hich to buy the goods and services produoed by others in his on and Othor countries. Unless this is donc it will be futile to cIcar the charnnls of trade, since -ithout employmont and incomc the wants of most non must go unsatisfied and there will be no demand for goods to flow through the chamels of trade. The second principle. is that member governments should undertake that they will make it possible for their people to use their incomes to buy goods form other countries or to invest in the devolopment of these countries up to the limit of thoir currently available international resources. Only if this is donc will high employment and incomes have their full éffeet on intcr- national trede. The third principle is that member governments will do all in their power, by developing their economic resourees, to opon out for their people new and more varied opportun- ites for comployment and the hopc of steadily inereasing rewards for their labours. Upon this principle depends the hepe of an expanding volume of orId trade and the hope of higher living standards for ail peupl The fourth principle is that member govornmonts should 15. E/PC/T/PV/2 jointly and severally take action to protect primary producers of their own and other countries from the violent fluctuations in prices and incomes to which they heve been exposod in the past. Which this threat of insecurity overhangs tho primary producer he cannot hepe .to achiove proper levels of officioncy or reasonable standards of living. The fifth and final principle is that the rules which are to govern international commecrce and the structure of the international organization to be estab- lished to deal with it should, bo such as to assist membor governments to fulfil these obligations. Only if this is done and these rules be accopted as just can their organizatian build for itself an effeetive place in the world as an instrument of planned and intolligent change, rather than a defender of established interests. I would not suggst that the principles I have outlined are necessarily in conflict ith those cnunciated by Mr.wilcok. indeed, on many points we are in fuil agreement. It is, however, clear that there is btween them at least soma difference aI emphasis. For tha Austalian delegation I can say that we aro lookingfor, forward to the task of reconcilin- them. While I can promise Mr. wilcox that the process will not be dull, I do not despair of success. However, unlike the United States a cannot comfort ourselves ith the belief thaat can face failure to build a rational orld order -ithout serious harm, to our economic -welfae, we are too conscious of our exposure to the economic blizzards of. the world for us to have anything out the strongest sease of urgency about the task.which lies ahead of us. 16 . E/PC/T/PV/2 This does not mean that we will not hold firmly to what we believe to bec right. Theore is told among the natives of the part of theorld from hich I came a legend which expresses well out attitude, and, I believe, the attitude of many of the representatives of smallor nations. Once, the legond runs, a young native set out to sea in a frail canoe. The journey ras long, and hil he was yat at sea night fell. During the night the sky became overcast, the wind swelled to a gale and the seas came mountains high. It seeded certain that the tiny craft and its master would be overholmed. Finally, the native prayed to the gods of his people for aid, buthis prayor ras the prayer of a man. for he payed, not that the ind ould fall or the seas subside, but that the gods would clear away the clouds, that he might see the stars by which to plet his course. So we, too, do not come here. in the hope that all will be made smooth, but lot the groat natiosi of tha world romombor that the vagaries of their economic systems can make mockery of all our plans and endeavour s, and will they measura their offering on th alta of co-operation according to their strongth and their responsibility We may then hope that by our combined oblations we will dispel the clouds of insecurity, so thet e shall all see the stars and find our way, however willd and unyielding the nature from which ring our living, into a orld whero the limits of our achievements will be set by our own skill our on wisedom and our on courage. (Appleause). THE GHAIRMAN. (Speaking in French: interpretation) I woud like to thank the delegate of Australia for his speech, and will now call on the Chief of the Belgian-Luxembourg delegation. 17. E/PC/T/PV/2 MR. LEBON (Belgium-Puxmbourg) (Sppalking in French: interpretation): Mr. Chairman, as early as September 1945, in the course of financial negotia tions ith the Unitad Stetoe Government, the Beligin Govcrnment expressed its accord on tha establish- ment of a Conference on Trade and Employmcnt. A fow months later the joint proposalsarc submitted to examination and the Bolgian Government expressed its accord with what the Unitod States Governmont had previously said. In general the Belge-Luxcribourg Govornmcnt are in agreementt with the aims which are to be reached. That is to say, prosperity and economic stability can only be seen as the re-cstablishment of economic exchanges between countries, which would d require a loosening of tariff restrictions between countries. In ordor that this should bc maintained it is neccsary that difforent nations should agree to co-operate and to maintain that co-opcration- and it is in this spirit that the Belego-Luxembourg Govern- ment approve the majority of the proposals contained in the project of the United States. The Belgo-Luxembourg Economic Unian is the first organization which, since the liberation, has re-establishcd freedom of export and impert of a large member of products. One-third of the exports are free. This is, of cours, only an experiment, and we do not yet kncw whether this stato can be maintained, but it is orth following this experiment. Morcever, the Tariff Agrecment which was established on September 5th, 1944, between the Belgo-Puxombourg Goverr- ment and the Government' of the Netherlands is also in the spirit of thc Amcrican proposal. All this indicates the spirit in which the Bolgian- Luxombourg delegation comes to this Confcrenceo. We are convinced of the intorosts that exist, both for the Belegian- 18. E/PC/T/PV/ 2 Luxembourg Union and for thoe whole world, in the success of this Conference. We consider it essential that economic union should be standa rdised on the basis of the principles proposed. However, this standardisation will not be enough to normalise cconomic stability, Discrimination will have to be abolished. Tariffs will have to be made easier and restrictions eliminated. we will also have to ensure, either by this Conforonce or other organizations, a maximum of co-oporation and co-ordination between the economic policies of various .2 countries. The absence of co-ordination between the policies of export and import risks thrring the world back into a chaotic situation. Morever, we see that international organizations such. as the F.A.O. and the E.E.C.E. and others, have the purvoso of brnging inot co-ordination important sectors of economic matters, and in order to achieve these objectives the Belegian- Luxembour delegation is no ready to come to the detailed study of the Amorican draft. (Appclause). THE. CELIRMAN (Spoaking in French: intorpretaion): I now call on the delegate of Canada. MR. H. B. McKINNON (Canada): Mr. Chairman, the statoment'oI the Canadian delegation at this point will be short. The Government of Canada welcomes the apportunity it hopes will be afforded by this meeting of makings its contribution to the attainment of hat appear to be thea general objectives of all the nations represented here today. My colleagues and myself have conme this meeting of the Proparatory Committeo as officials, not to undertake comitments, but to assist in exploring the moans for the achievement of the commen objectives relative to trade and employment. Our country has a vital concern in connection 19. E/PC/T/PV/2 With every a spect of those objectives, as sitness the words used by the: Prime Minister of Canada in tabling in Parlament the United Statos proposals in these matters which were at that time the only proposals which had. been made. I quote as follows:- The Government of the United States has pro[osed that all contries should coneert their offorts in the spere of their international economic relations with a view to exapandinc the volume of word trade and maintaining high and stable levels of national comployment. The specific suggestions for achieving these ends, set forth in the document which is now being tabled for the consideration of Members of . Parliment, deserve our most careful study, for no country has a greater interest thean Canada in the realistation of these objectives." it may be contended, Mr, Chairman, by somo of the countries here reprecsented, that expanding trade is the source and the basis of over increasing omploymont - and by "employment" I mean the entire field of productive effort, from that of the primary producer to that of the highly skilled artisan. By others it may be contended that a high level of employment is a pre-resquisito to and a guarantor of creater and greator trado. Surelv these two should work together tp the common end. That, at least, has been and is the beliof of my Government, which in its white paper on Employment and income has stated as follows;- In pressing for international arrangements which would permit and ancourago the.expansion of world trade the Government is impressed not only with the importance of . trado from the point of view of the Canadian economy, but is alse convinced that a high dogrce of froodom of trade is thoiour-hly compatible with annecessary to a bnlancod programe for permitting a high levol of omployment and income. Mr. Chairman, th task entrusted to this Committee is to examine the subjoct-mattor placed befere it, not ith a view to fermmulating rigid decisions, which is a task for governments, but rather te assess as experts tho aim and 20. 3/PC/T/PV/2 content of the various proposals placed before us, and to discover, if we can, the broadest area of mutual agreement therein. Until we hava dono thent in reasonable doitail we are not in position to pass a competent opinion as to their respoctive rcrits. Indc. d, until we have done that we have not diachrged the obligation laid upon us by the Economic and Social Council, of which, Sir, we are a Committee. In this spirit, Mr. Chairman, the view of the Ganadina delegation is that we should, without unduc delay, address ourselves to the very heavy duties that await us in the various working Committees. Thank you. THE CHAIRMAN (Speaking in Frcnch: intorprotatÏon): I would like to thailk the delegate of Canada, and I mow call upen the delegate of Chile. h.e. senor don manuel bianchi (Chile): Mr. Chairman, the Chilean delegation wighes to express through my intermediary their greeat satisafaction at the holding of this Conference, the object of which is to strengthen and enlarge the economic and comorc al relations between the Unitod. Nations. I wish to recall to mind teday that as long age as 1855, at the drafting of our Civil cede, Chile upheld the principle of equal treatment in civil law for her own nationals and for these of othor countries. From that time on sho weleomed and encouraged co-ocration with all nations and has in fact manifested at avery opportunity the. desire to collaborate in ail plans for the moral and material benefit of humanity. . It is therfere ith groat pleasure that the Chilcan delegation attends the present Conference, and is confident that its decisions will for towards selving the many 21 E/PC/T/PV/2 obstacles which at the moment hinder the expansion of world trade. Our presence here is of particular importnnce to us, and, we venture to think, to the United Nations organization, since Chilc is one of the countries os. economic stability depends fundamentally on its foreign commeree. chile, by reason of her method of production and the problema. sho faces in he international trade, forms part, only geographically, but also on account of the eircumstanees alrccdy mentioned, of one economic aorup, in which are includod to a greater or lesser degree ail the Latin- American. nations zand other countries of similar economic development. The factor which most influences the conditions of these countries is their exports. They provide the means, of payment for and determine the volume of imports; they place these Ropublics in a position to roct their forciga financial commitments and service Stalt and private loans; they furnish a considerable part of Government and private revenue, and, finally, constitute the most important factor in the monetary stability of thosc/ations. The experts of these countries, hich consist principlly of raw materials and scrii-manufacturod products, are thus thc dynamic factor in their economy, and their value greatly influences the internal conditions of the nations coneerned and is mainly responsible for a state of national prosperity or depression. From the forogoing it will be clear that the principal factor in the raintcnancc and dovelopment of the economies of this group of countries lies in thc assurance that prices for rar materils will not suffer the fluctuations that took place between the yenrs 1930 and 1940, and that prices are 22. E/PC/T/PV/2 maintained at reasonable levels, with the double object of, firstly, stabilisin their balance of payments, and, secondly, to facilitate an State capitalization. We arc thereforo desirous cfcontributing to all measures designed to brin about this casier international trade, and believe that these aspirations should bc studied frorm a realistic point of view, taking into account the circumstances and features of the trade of those nations hosa economy is still undeveloped, and, therefore, whose balance of payments is generally adverse. In our opinnion an offeective solution of these problems cannot be achieved if the elimination of international trade restrictions is not accompanied by an incerease of production and the industrialisation of the countries coneernod. To this offect I should like to citcrato what I said yesterday at the meeting of the Executiv Cormittoc of this Confercnoe,. when I made reference to the text of Article 4 of the Resolution adopted by thc Economic and Social Council of thceUnitod Nations- at their session in London-on tho l8th Fcbruary last. Chile hopes that in harmony ith the spirt of this Reselution an appropriate solution of the abovd problem will be established in such a way as to permit these countries of undeveloped economy to obtain full development through various methods of international co-oporation. In this way a level of consumption rould be assured which would allord an effective inerease in inteonationa trade. With regard to full eomploymont, we believe that this should be closoly:allnked with that of the bettorment of tha standard of living of theorkin classes. wethink that the Arorican proposal, o-f hich tha United States delate has given us such an intorestiag-expIanat.in, is a vory good 23. E/PC/T/PV/2 basis for discussion, but the Chilean delegation reserves to itself some observations when this proposal comes to be chile was eleeted for a period of three years a members of the Economic and Social Council of the United Navions in the first part of the First Assombly held in Lpndon, This election was made not only on account of our comtribution to warious basic industries and the characters- tics of chilears prodetion, but also because Chile has always lent pesitiye and sinmeas supprt to all international plans which tond to the bettement of the econorniic and social conditions of the world. I can assare you that our collaboration is and will be of the utomost loyalty, not in this Prcparatory conference, but also in any other future activity of the orgeniations which the United Nations may entrust the study of these wital problems humanity. (Applausc). the chapreal ( interpretation) Therc are only our dclho have a skod to spcak this afterboon: they are the wepresentatives of cub, czechoslovakia, Francc and the United Kingdom Are there any further delegatas who would like to speak afternoon? I racognisc Lcbanon, IndiPanc hc lcthcrlancs. Gentlomen, as we still hava a quarter of an hour ahcad of us,. if there is any delegato who wishes to speak now I will gladly invite him to speak. I invite the delegate of Czecheslovakia to speak. mr. agenthaler (Czechoslovaka) : Mr. Chairman, gentleman: Ib is very well known that czecholsovakia, which has fow raw matciiale, As by resason of her conomic structure and her goograpical exsition in Europe to a large extent dependent on formeign amade already, after her liberation in 1918, 24. E/PC/T/PV/2 Czechaslovakia 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 -ithout saying that Czechoslovakia does not regard foreign t.rade.as a .thing by itself, but as a means-to raise -the general standard oif living. and to assure. fill employment and social security, all of which means an avoid- ance of economic fluctuations and crises. Czechoslovakia 1as the first country occupied in Europe and the last to be liberated, Undor German and Hungarian occupation she sufered economic losses for rhich there is no example in ur history. These losses hrd a profound influence on the whole econoinic and financial structure of lifo in Czechoslovakia, and a certain period for recuperation and for areturn to more normal conditions ill be neodedd. It is difficult to forosec now the length of this poripd, b cause the economic recovery of Czochoslovakia dcpcnds not only on holp hich she might got from outside, but also on the economic development in neighbouring countries. on this occasion I should liko to acknowledge gratefully all help which up till now has bon givon to Czechoslovakia,. and especially I should likce to mention the splendid work of UNRRA, which helped us to evoreome thc first and worst difficulties. It is a natural consequence of the geo-raphical position of Czechoslova' ia that hor foreign trade ras a nd shall be again mainly ith countries hich are Czechoslovakia's neighbours or in her proeiimity. For this roacon tho economic stability of our market depends very much on developments in. those countries. A substantial extension of. tradq refeations with the Soviet Union and countries of Central and South-eastern Europe is natural. Yet that does not mean that Czechoslovakia intends to neglect her trade relations -ith the United States, 25. E/PC/T/PV/2 the British Commonwealth, France and all other democratic countries. Therefore, Czochoslovakia welcomed the invitation to an international conference on Tri dc and Empiloyment, and agrecsith the gencial toncr oif, the proposals presented for the consideration. of the representatives of the country cs hich arc members of this Committec, We are fully conscious of the fact that our labours here are only a preliminary meeting for a future conference where many more, countries .will be : represented, and .whose deliberations may decide thc final fate of our work. That is why we wish that the outcome of its -ork may be a besis, for the future conferenco and acceptable to all. I think that we can achieve this even if we have to bear in mind the natural difficulties which will have to be overcome and - which are a consequence of the fact that we deal not -ith tro or three, but with a series of economic structures substnntiailly differing roem each other. I hope that, payin- duc respect to the natur interestseof all countries and toethzir economic structure, we shall be able to achieve an ngroment rhich is necessary irn the interests of neace and the economic and social prosperity of the whele world. Because -e rant this prosperity for the hole world wish good luck from the bottom of our hearts -to all those countries -hich took the.road towards industrialisation. We have full understanding for their striding, especially since we grapple with the same issue in a slovakia the castern half of our country. I car nssure, you, gentlemen, that Czechoslovakia -will do hàr bost for the sucesse of this meeting . (Apelause) . THE CHkIRMAI (Speaking in French: interpretation) Gentlomen, I wish to thank the delegate of Czecheslovakia for his spech Before the and of tho meeting I wish to make tro 26. E/PC/T/PV/2 statements. The first concerns thesimultanoous interpreting system. We have made several experiments, and another one todny, and I rcrot to sac that it docs not give entire satisfaction. This does not dpepnd on the success of science or the. goodwill of these who hsava ostablishod the system. It depmenrls on the small size of this room and its acoustics, and my on cxpcrianco is that wehoar both the original text and the translation at the samrntimc, hich is deplorabla. So this afternoon we will come back for the rest of the speeches to the system which we used yesterday; that is to say, the simultaneous system for those -ho are satisfied -ith it, with the subsequant intaroratation for thosc who profer it. I wish to thank the intorprotors who have to do the extra task. The second statnmcnt -hich I hrvo to make to you is concorning; the Con-nittocs. The Sccrctarint hns asked me to say to you that it -ould be glad to raceivo as soon as possible from cach dalgagtion the names of the dolegatas ich the dcloagtions ,are sending to cach Committoc. This is nacossary bacausc savcail dolagations will have to send the same doleate to several Committocs, and conscqucntly it will bo neaossary to establish tha schcdulos of. the meetings of tha various Comraittecs accordingly. At the samo timc, tha Sacrctariat ill ba vory plcascd to hear proposals from thc dalagations for tho Oihairman and Vica-Chairman of cach Commrittucc. Thsca candidatures -ill bc submitted, to thc various Committcas as soon as thay arc astablishod and rorking Gentlcmen, we will tharefoar mat again at 3 olclock, and rill thon follow. the alphabotica.l ordar again, because the ordcr in --hich tha delegations have given in thoir names 27. E/PC/T/PV/2 follows the alphabetical order, and we shall begin with the delegate of China. The meeting rose at 12.25 p.m. 28.

GATT Library

kf675mn0685

Verbatim Report of the Seventh Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S. W. 1. on Friday, 1 November 1946 at 3.0.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.II/PV/7 and E/PC/T/C.II/PV/7-9

https://exhibits.stanford.edu/gatt/catalog/kf675mn0685

kf675mn0685_90220009.xml

GATT_157

E/PC/T/C.II/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 COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S. W. 1. on Friday, 1st November, 1946 at CHAIRMAN: DR H. C. COOMBES (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/7 THE CHAIRMAN: Gentlemen, you will recall that it was our intention at this meeting to consider the remaining items, Emergency Provisions, etc., and Territorial Application; and also to make a start on the Quantitative Restrictions and Exchange Control, in so far as they were necessary for the protection of the balance of payments. Since that meeting several delegations have appreached me and they have pointed out that they are in the process of re-examining the views that they have expressed on these matters and that it is possible that fairly substantial modifications may be made of a kind which would, they believe, facilitate agreement on what may well be one of the most difficult sections of our work. They have therefore asked that we defer consideration of that matter until they have had time to complete a review of the positions which they have taken up. As I said yesterday, I am unwilling to defer any matter longer than is absolutely necessary, but I have been convinced that we do stand to gain by some deley in this matter. It would, I believe, facilitate our subsequent work if the views as stated in full Committee, when we come to consider this matter, are views which have taken into account fully the possibilities of compromise. I have therefore, subject to your concurrence, agreed to leave until next week consideration in this Committee of the matters relating to the protection of the balance of payments. I shall be glad to know whether that is acceptable to the Committee. MR SHACKLE (UK): Mr Chairman, does that also cover exchange control and quantitative restrictions, because the two subjects are fairly closely connected? THE CHAIRMAN: Yes; I take it that it is not worth while discussing exchange control except in relation to the general balance of payments proper. If that is acceptable to the Committee, we will defer consideration of the matters arising out of the protection of the balance of payments and we will consider this afternoon only the remaining items which deal with emergency provisions, etc., and territorial application. We will take first the section dealing with emergency provisions. This is covered in the 2. E/PC/T/C. II/PV/7 United States draft Charter by Articles 29 and 30. We might usefully begin by again asking the United States delegate to outline the views of his experts on this matter. MR HAWKINS (USA): Mr Chairman, I will discuss first Article 29, which provides for emergency action on imports of particular products. The purpose of the Article, generally speaking, is to give some flexibility to the commitments undertaken in Chapter IV. Some provision of this kind seems necessary in order that countries in such a rigid position that they could not will not find themselves deal with situations of an emergency character. Therefore, the Article would provide for a modification of commitments to meet such temporary situations. In order to safeguard the right given and in order to prevent abuse of it, the Article would provide that before any action is taken under an exception, the member concerned would have to notify the Organization, and consult with them, and with any other interested members. 3. B.1. It provides, further, that, if no agreement were reached on the proposed action, any Member who was decisive could take compensatory action by withdrawing concessions from the Member that had involved the clause. That, in essence, is the character of the Article. As I said, it seems to us to be a necessary provision in a document or an agreement or charter of this kind. Mr Chairman, shall I go on with the next article? THE CHAIRMAN: Article 30? MR HAWKINS (U.S....) Yes. THE CHAIRMAN: I think they are fairly close together, and it might be as well to deal with them. MR HAWKINS (U.S.A.): Article 30 provides for consultation, nullification or impairment: the first part of that article is simply a general obligation to consult regarding any of the undertakings in chapter 4. The second part, or the so-called impairment clause, would give any Member a right to complain of the action of any other Member who it thinks is failing to meet the commitments laid down in the Charter, either in letter or in spirit. Provision is made whereby a Member whose complaints are unsatisfied, who feels that another Member is not acting in accordance with the letter or the spirit of the Charter, could take compensatory measures. I think that is all I have to say on those two articles. THE CHAIRMAN: The subject matter of these two articles is now open for discussion. Will Delegates who wish to speak on this please indicate? MR AUGENTHALER (Czechoslovakia): Mr Chairman and gentlemen, I have only a few words to say about Articles 29 and 30. I am pleased to state (and I hope Mr Hawkins will not mind) that we are in full agreement with the United States suggested text. I would just like to draw the attention of the Members of this Committee to the fact that Article 30 refers also to State trading operations, and that the Members should bind themselves to give sympathetic consideration to representations or proposals made, with a £ view to effecting a mutually satisfactory adjustment of the matter. If no such adjustment can be effected, every Member would be free to refer the matter to the Organisation. These dispositions, I think, speak even more in favour of the proposition we had the honour to make lately, that Article 26, about 4. E/PC/T/C .II/PV/7. B.2. E/PC/T/C .II/PV/7. State trading, should be restricted to an announcement of a general principle of non-discrimination, and that any further details should be left out; particularly is this so, as in Article 30 full opportunity is given to any Member to settle this extremely complicated matter in a just and reasonable way. I thank you. MR SHACKLE (United Kingdom): Mr Chairman, I think I will first address my remarks to Article 29, the Article on emergency actions. The United Kingdom Delegation recognise that the inclusion of an escape provision on these general lines is likely to be necessary. At the same time, they are definitely apprehensive of the possible consequences of drawing it too widely, since excessive use of thelatitude which it would give might seriously impair the value of the Charter as a whole, and might, we think, undermine the confidence in its effectiveness. The right to withdraw or modify a negotiated tariff concession will be rendered the less necessary, we feel, if it is recognised, as we think it must be recognised, that provision will have to be made permitting tariff bindings negotiated at the outset of the negotiations to be subsequently revised by agreement. If we assume, for example, that these bindings will, in the first place, remain effective for, let us say, three years, and that after that they will be subject to six months' possible notice of withdrawal, then it seems to us that considerable room will have been left for changes to meet changed conditions; and to that extent a sudden emergency action should be the less necessary, though the need for it may not be entirely eliminated. In any case, we feel that the scope of the clause should be more narrowly drawn than it is in the present draft. The present draft covers not only tariffs but also quantitative restrictions, subsidies, State trading, and indeed it seems, all the commercial policy obligations of the Charter. We feel that this liberty would be unduly wide and, moreover, we find it difficult to see what, in many cases, it would mean in practice. We assume the intention to be that in availing itself of the Article, no Member would be entitled to impose loss favourable treatment or more severe restrictions than it was applying before the Charter is signed. It seems sufficiently clear what this would mean in the case of 5. E/PC/T/C.II/PV/7. tariffs; it would mean, we take it, a complete or partial reversion to the rates that ruled before the tariff agreement came into effect, but what will it mean in the case of quantitative restrictions or of subsidies, for example? How can we precisely define what was the actual treatment accorded to other countries before the agreement came into force? And how can we ensure that the withdrawal of concessions granted under the Charter in these respects does not result in treatment of imports even more unfavourable than than which was given before the Charter came into force? I have one other point relating to tariffs: One of the methods of emergency action to be recognised as legitimate might, I suppose, consist in limiting the application of the reduced duty to a specified quantity of imports. If that were so, then it is a point which I think deserves consideration, whether it could be stipulated that that specified quantity of imports should not be less than the aggregate imports in a previous representative period. The United Kingdom Delegation has another and rather more substantial objection to the inclusion of quantatitative restrictions within the scope of this article, since it seems that this would involve a recognition of the use of quantitative restrictions definitely for protective purposes, which, it seems to us, is in general alien to the scheme and objectives of the draft as it stands. In that connection, I do not need to repeat our objections to the general use of quantitative restrictions for protective purposes. To sum up, then, the United Kingdom would wish to see the scope of this Article confined to emergency action in the tariff field. But whatever scope it may ultimately be decided to give to this Article, we think that the escape which it affords in respect of, let us say, the most-favoured-nation tariff rates, or in respect of other forms of protection, should be equally applicable to preferences already afforded by any of these methods, for it is clear that equally serious disturbances to the established pattern of trade may result from sudden influxes of imports in regard to which a preference has been reduced, as in the case of imports upon which a tariff rate has been reduced. The United Kingdom Delegation will be prepared, at the proper time, 6. B.3 E/PC/T/C.II/PV/7. to suggest a form of words for this purpose. My remarks, so far, have related to the first paragraph of this Article. I have another point on the second paragraph: it is that we have doubts about the provision for prior notice of the emergency measures to be taken. It is precisely in the case of sudden influxes of imports, such as those which are envisaged in this Article, that prior notice and procedural delays would be most difficult to contemplate. Not only is almost immediate action likely to be needed in such cases, but any prior publicity with regard to the intended action would be likely to lead to forestalling and an accelerated rate of importation, and so would tend to defeat the object of the action. We do not, of course, oppose the requirement of notification, nor that of consultation, nor the arrangement for possible subsequent measures to deal with unjustified use of this procedure. C.fs. 7. C. 1 E/PC/T/C.II./PV/7. But we think that it may fairly often be necessary for the notification to be simultaneous with, and not prior, to the taking of action under this Article. I would like to finish with one or two words about Article 30, nullification or impairment. We are b in agreement with the sustance and also generally with the drafting of this article, and we think that it is needed. MR. LE BON (Belgium-Luxembourg) (Interpretation): This Article talks about the supposition that the imports of a product may be unduly increased to such a degree that it may injure or threaten to injure seriously national producers of similar products. Such an increase in quantity may occur at any moment, and it is not mentioned in this Article to what norms or standards such an increase can be compared or against which it can be measured. Secondly, this way of determining an increase in imports may be seriously injurious to comparative producers. There are frequently cases where such restrictive are brought about and have the effect of lowering the imports of a specific product. In the first case, it is good to put into practice temporary economic systems here considered. In the second case, all injured states ought to enter into consultation and examine the situation together, Would it not be proper in this last possibility to leave to the international trade organisation the duty of deciding whether certain sacrifices should not be offered by everyone for the good of the world? ln any case, it would be at least reasonable to submit every situation of every particular product to the provisions of Article 30. We are entirely in agreement with the remarks made by the Delegate of the United Kingdom. It does, however, seem impossible to find a proper type period. That is why we believe that common mutual examination of the situation is necessary, and the only way of arriving at an equitable and just decision. -8- C.2 E/PC/T/C .II./PV/7 MR. SPEEKENBRINK (Netherlands): To a great extent we can agree with this Article even as it is worded now, but I would like only to make one or two remarks. One is with regard to the use of quantitative restrictions, and here again, I should like to refer to what I said earlier in these meetings, that there is a difference between a country which has given concessions with regard to the height of its former tariffs and a country which starts these negotiations from a lower tariff basis. I think it is extremely difficult to restrict this Article only to tariff reductions which can be withdrawn, and I think that certain possibilities should be left for countries, which I mentioned in the latter category, to use quantitative restrictions instead. I would like to agree with the Delegate of the United Kingdom that prior notice may not always be practicable. MR. LOKANATHAN (India): On the whole we are in favour of Articles 29 and 30 in their present form. we should like, however, to add that so far as prior notice is concerned, we agree with the United Kingdom Delegate that in cases where sudden injury is likely to be inflicted upon a country it may not be possible to give long notice. We are also in agreement with the United Kingdom Delegate in regard to preferences being included. If they are there; I think they should also be treated on the same rooting as tariffs. But we are not in agreement with the views put forward by the United Kingdom Delegate in regard to the limitation to be imposed upon this Article, that is to say, the attempt to narrow the scope of this provision by excluding a quantitative restriction. That should be treated exactly like every other form of restrictions. I think the purpose of this Article is intended to cover all cases of injury, and I do not think it is possible for us to agree to anything by which any restriction upon our action, whether it refers to tariffs or to quantitative restrictions. Subject to these remarks, we are in sympathy with Article 29, and on Article 30 I have no comments to make. -9- C. 3 E/PC/T/C. IT/PV/7. MR. McKINNON (Canada): Regardirg the point raised by Mr. Hawkins, in which he expressed the fear that action taken by a Member because of threatened or real injury might mean a complete reversion to the rates that existed prior to the agreement, I should like to ask Mr. Hawkins whether or not the last ten or twelve words about modifying the concession could be construed as meaning that the rate might not only revert to the pre-agreement rate, but to any figure at all. Is that the meaning of those words? MR. HAWKINS (United States): That is correct. MR. JOHNSEN (New Zealand): I would like to support the view put forward by the United Kingdom Delegate to the effect that preferences should be considered along with any other tariff concessions that might be involved in this particular article, but I could not agree with him when he wants to limit those concessions merely to tariffs and preferences. It seems to me that this deals purely with the modification or withdrawal of concessions, and it would be quite wrong to differentiate between one type of concession and another. It would mean that there would be discrimination between the countries that might be affected. We know that the United Kingdom has put up certain views regarding quantitative restriction. We would prefer to use the term "quantitative regulation". I think that we can make a case for the use of "quantitative regulation" and we hope that we will be able to convince some of the Delegates here that that can be justified. MR. MELANDER (Norway): We are a bit in doubt as to the wisdom of having such an exception clause as the one outlined in Article 29, (1). We feel that this exception is probably so formulated that it leaves rather a big gap in the whole scheme which we have so far discussed relating to all the rules proposed under the Chapter dealing with -10- C.4 E/PC/T/C.II./PV/7 general commercial policy. We think that if it should be necessary to have such an exception, such an escape clause as the one here put forward, it would be necessary to have it so formulated that only in strictly necessary and very strictly defined cases should it be allowed to revert to the fort of exceptions of the kind here indicated. MR. NATHAN (France) (Interpretation): I have no remarks to offer on the subject of Article 30. The French Delegation believes that the more consultations take place between the Members, the better the work will go. As far as article 29 is concerned, I believe that at the same time as we are doing it, Committee No. 5, which is concerned with organisation, is also studying the conditions under which a Member might ask to have certain obligations suspended in his favour. I an afraid that if we do not know what is at the moment being discussed by Committee No. 5, the Committee which will have the task of drafting a proposed Charter will find itself facing an impossible task because of the divergencies which any occur between what is said here and what is being said in Committee No. 5. Therefore, I think it is indispensable that we should be informed of what is going on in Committee No. 5 before we go on with our discussion. THE CHAIRMAN: I think we can take it, in regard to the point raised by the Delegate for France, that Committee No. 5 would be concerned solely with the procedural aspects of the operation of any escape clause. I have not been in touch closely with the work of Committee No. 5, but I think the relevant clause is probably clause 2 of Article 55, in by which it says that the Conference of the Organisation may/a vote of two-thirds of its Members determine criteria and set up procedures for -11- C.5 E/PC/T/C.II./PV/7. waiving in exceptional circumstances the obligations of Members undertaken pursuant to Chapter 4. The emphasis there, I take it, is on the procedural aspects of any such waiving of obligations. However, I will take up the point raised by the Delegate for France with the Chairman of Committee No. 5, and if it is necessary to advise Delegates of anything to the contrary, I will see that that is done. However, that does raise a question of a matter which is being discussed in another Committee, which it had been my intention to refer to here, so that Mr. Hawkins could perhaps refer to it. As I pointed out, there is that clause in article 55, which indicates that the Conference, by a certain majority, can determine criteria and set up procedures for waiving in exceptional circumstances obligations of members undertaken pursuant to Chapter 4. In Committee No. 1, a proposal has been advanced which does have some bearing on this. Committee No. 1, you will recall, is concerned primarily with the problems of the Maintenance of employment, economic activity and effective demand, and it has been suggested there that, in the event of a failure, for whatever reason, of effective demand to be maintained, and in the event of that failure adversely affecting the economic conditions of a Member country, it should be possible to have obligations accepted under Chapter 4 of the Charter reviewed. -12- D fols. E/PC/T/C.II/PV/7 I do not think it is desirable that we should discuss that here since it is preferable that Committee I should reach finality on the matter in the first instance; but I think we do need to note that discussion is taking place and that if Committee I reaches the conclusion that some such pro- vision or modification is desirable it would be necessary for this Committee to consider the insertion of an appropriate clause, perhaps, in this section. That does lead to another point on which we might, I think, seek clarification from Committee V, or in consultation with committee V, and that is in relation to the wording of paragraph 2 of Article 55, where it says that "The Conference may....determine criteria and set up procedures for waiving, in exceptional circumstan- ces..." It does need, I think, to be clear whether that phrase, "in exceptional circumstances", refers only to the various provisions of Article 4, where the nature of the circumstances is prescribed, or whether it is a more general provision covering not only those exceptional circumstances but such other exceptional circumstances as may not be specifically referred to in the Charter. Are there any further comments from delegates? MR McCARTHY (Australia): Mr Chairman, under the heading of tariffs and preferences we raised a matter of the applica- tion of this clause to preferences the reductions in the margins of which had been negotiated to be treated in the same way as tariffs. I should be glad if that were noted for the information of the Drafting Committee under this heading also. DR SPEEKENBRINK (Netherlands): While we are referring to other Articles, perhaps I might draw your attention also to paragraph 4 of Article 50, which says that one of the functions of the Organisation will be "To consult with Members regarding disputes growing out of the provisions of ' ' . * .~~~~~13 D.1 D.2 E/PC/T/C.II/PV/7 this Charter and to provide a mechanism for the settlement of such disputes." On this point we have rather definite views, and we feel that as this is such an important document and most of these provisions can have such an important bearing on economic conditions in the various countries, we should as a rule provide for an impartial body in a last effort to settle such disputes. Further on in the draft the International Court of Justice is mentioned. I do not want to start a discussion on this point now, but I would like to propose that when we deal with Articles 29 and 30 we should take this possibility into consideration. THE CHAIRMAN: We will take a note of that as a point for discussion at the appropriate time. If no other delegate wishes to speak, we might ask the delegate for the United States whether he has anything he wishes to add in the light of the various comments that have been made by the different delegations. MR HAWKINS (USA): Mr Chairman, the comments of the United Kingdom delegate I think covered a good deal of the discussion, since a number of other delegates commented on them; and I should like to say a few words on his suggestions also. His first point, as I understood it, was that the provision for revision of tariff commitments after, say, three years (which is what has been talked of) might take care of the situation with which Article 29 is intended to deal. I think the answer to that is that the type of situation envisaged in Article 29 might occur at any time within three years as regards some particular product owing to some special and temporary circumstances. The purpose of Article 29 is not to give an opportunity for a permanent revision of a commitment; it is a temporary relaxation of the commitment. His second suggestion was that the clause should be narrowed down. As it is, it covers everything in 14. D.3 E/PC/T/C.II/PV/7 Chapter IV, that is to say, all commitments in Chapter IV, or undertaken pursuant to Chapter IV. He thinks that too much latitude is given when it would be permitted to impose quantitative restrictions. I must say that I have a great deal of sympathy with his viewpoint, but if you are going to provide latitude to deal with an emergency the means to be used to deal with it should not be limited. It seems to us, therefore, that the let-out should relate to all of the obligations in that article. Incidentally, in that connection I would point out to Mr McCarthy that tariff preferences would be obligations undertaken pursuant to Chapter IV, and hence I believe would be covered by the article. Whether that is wise or not is another question. Now, as to the danger of abuse which several delegates mentioned, that is, of course, a matter about which we should all be concerned. In preparing the draft we had that in mind. That is the reason for the sanction given in the last part of the Article. A country will certainly be somewhat restrained in making undue use of the provision if it may cost it something. Moreover, in the consultations which are con- templated the fact thatother countries can withdraw con- cessions would give them something of a negotiating position, so to speak; it would make their representations carry more weight. That was the purpose of the provision for the compensatory withdrawal of concessions in the last part of the Article. A further point made by the delegate of the United Kingdom was that advance notice should not be required for taking the emergency action provided for. He makes the point that if the emergency arises there will be no opportunity for prior notice. He also makes the point, which has some merit, that if too much advance notice is given it may stimulate a flood of imports which would aggravate the 15. D.4 E/PC/T/C.II/PV/7 situation. All those are cogent points which the Committee ought to consider. I would only say that in the draft as it is now framed it does provide for prior notice, but does not stipulate that it should be very long. It is as long as practicable. In some circumstances it might have to be very short. I think I have already answered the New Zealand delegate's point. The Norwegian delegation expressed doubt about the Article, I think, on the same ground that some other delegates had doubts about it, namely, that it leaves too big a gap. I have already commented on that to the best of my ability. The point is - and the point that the Committee has to answer is - should there be some relaxation to deal with emergency situations? Is it desirable that commitments should be absolutely rigid? There was another question with which I have some difficulty, and I think it needs further consideration. The Chairman mentioned Article 55, paragraph 2. The question that arises there - and it is only a question because I have not thought it through - is whether it would net be necessary to have a provision coming into operation before the organisation and the procedures can be set up - given the fact that negotiations are contemplated for next year. I think, Mr Chairman, that about covers the question. The delegate of Czechoslovakia did make a suggestion, I think: he felt that there should be more reliance on consultation to cover particular cases rather than so much specification as appears, he said, in Article 26. My only comment on that particular Article would be - if that is the only one he has in mind - that that does lay down only a pretty general principles so that it would seem to meet his 16. D.5 E/PC/T/C.II/PV/7 point. I think that is about all. THE CHAIRMAN: Gentlemen, I think this matter has reached a stage where we can refer it to a Drafting Committee. There seems to be general agreement as to the need for provision for emergency action. 17. E.1. E /PC/T/C. II/PV/7 There are some doubts as to how wide that provision should be, whether it should cover all types of obligations except under Chapter IV. or arising out of Chapter IV, or whether it should more properly be limited to specific parts of those obligations. Generally, I think the majority of countries apparently feel that the need for action along these lines might arise in relation to the removal or the modification of any ex- isting protective practices, and that since that is so the provision for emergency action should be applicable to all forms of protective action which may be removed or modified and so lead to the emergency situation. I think that there is a mechanical difficulty in relation to the problem of prior notice which may be overcome by the point which the United States delegate has referred to, that the period of notice is not specified, and it can only, therefore, be inter-i ted as re- quiring notice as early as practicable, which might in fact almost co- incide with the imposition of the changed rates. I do not think there are any other basic issues which face our drafting committee, and I suggest that in view of the fact that this relates very closely to the work of the sub-committee dealing with tariffs and preferences, we might refer it to the same committee. That will bring about the diffi- culty, of course, that that Committee is not the Committee dealing with quantitative restrictions, but I should thank that the operation of the provisions for emergency action would net differ from one case to the other, and we might reasonably, therefore, leave it to the same sub- committee. Would that be acceptable to the Committee? (Agreed) Very well, I suggest we refer the matter to the Committee dealing with procedures, tariffs and preferences. I suggest we pass now to a consideration of the section of the Agenda dealing with Territorial Application, which is covered in the United States Charter by Article 33, which coupIes with territorial application in this chapter customs unions and frontier traffic. MR HAWKINS (USA): Mr Chairman, Section J, Article 33, deals with certain technical matters, although they are matters of some importance. The first 18. E/PC/T/C. II/PV/7 paragraph is intended to make it clear that the provisions of Chapter IV are to be applied by each separate customs territory vis-a-vis all other customs territories. For example, to illustrate it, the Virgin Islands territory of the United States with a separate tariff would apply its trade regulations for example in a non-discriminatory manner, that being one of the stipulations in Chapter IV. The second paragraph sets out certain basic exceptions, first of which relates to frontier traffic. That exception does not relate, as I am sure you understand, to regional preferential arrangements; it is a technical matter to facilitate trade between bordering countries in situations where a frontier may run through the middle of a city. It is normally limited in treaties to a narrow zone, I think normally fifteen kilometers. The exception for customs unions is to the effect that, in general, it carries out the idea that in general customs unions are desirable, with the limitation there which has to do with the height of the tariffs surrounding the Union and has to take account of the fact that if the tariffs around the customs union were too high the ad- vantaes to outside countries which cause them to recognize the customs union as a proper exception would be largely destroyed - in other words, the greater amount of trade generated by a largely free trade area would not accrue to the advantage of foreign countries if the customs barriers around the customs unions were made so high that they could not share in it. Again, that is a practical standard exception in commercial treaties and agreements. The third paragraph merely relates to reports to the Organization on proposed customs unions and I >snk is self-explanatory. The final paragraph contains a definition of what we mean by a customs territory. If the tariff of one area is fully assimilated to the tariff of another area, the first area is not a customs territory within the meaning of this Charter. If it is not fully assimi- lated, that is to say, if the first area has a number of rates of its own for the protection of domestic producers in the area, then it would be considered a separate customs territory for the purpose of this chapter. 19. E/PC/T/C.II/PV/7 THE CHAIRMAN: The subject matter of this section is now open for discussion. MR SPEENBRINK (Netherlands). Mr Chairman, this is a subject about which we have not thought at great length, and there are a few questions I should like to ask, also with regard to another point in paragraph 1 of this Article, and perhaps I may refer to that first. The Article as it stands at present, in the second sentence, reads: "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" and so on. Now the Netherlands kingdom is, as you know, at this moment, in a state of evolution. We have certain important dis- cussions in the political field with the Netherlands Indies, and we are to have a conference later on at which all the oversea parts of the kingdom will be present and take part, in which will be defined the status of those parts of the kingdom. Now, in that case, as far as we can see at the moment, they would have a common Sovereign, and then they would have a kind of dominion status. It is therefore rather difficult for me, at this moment, to judge the full consequences of this article with regard to the future status of these overseas parts of the kingdom, so that I would only mention it at this moment and say that we have to reserve to a certain extent our attitude here. The second point is about the customs unions, which are dealt with in paragraph 2 (b): "the 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, " and so on. Here I would like to receive some clarification on this part of Article 33. When you conclude a customs union you have to combine two different sorts of tariff systems, and it may be that one country will have no duty at all and the other will have about 10 per cent; another agreement may be the difference, say, between 14 and 20. Now also between those two countries it is often a matter of negotiation, how you will apply the duty and which duty should be applicable after the formation of the customs union, and it will not be a question of 20. split the difference; and I am inclined to read from this article that they should split the difference; so that I would like to hear from Mr Hawkins as to whether that would really be the case. He will remember that in the exchange of Notes with his Government we have already referred to this point and found that we could not accept the Article as it is framed now. In the third place, paragraph 4 of Article 33, we find the sentence: "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" and so on. Now, we know by experience that to conclude a customs union is something that you do not do in two or three months. You first start with a common tariff system and later on you have to try to combine all these regulations as well as possible. As it reads here, I think this article is too definite and we should at least have the word "ultimately" included here some- where. Thank you. MR NATHAN (France) (Interpretation): Mr Chairman, I should like to begin by saying something about paragraph 1 of Article 33. Several statements have already been made here in order to recall to us the fact that the French Government represent all the French colonial territories, including Indo-China, which has at the moment Dominion status. I should like to say it once more in regard to the statements which were made a moment age by the Netherlands delegate on the subject of sub-paragraph (b) of paragraph 2, and I should like to offer a remark on the same subject. To institute a customs union may bring about grave and many difficulties; such difficulties may last for a long time; and it might be useful to foresee in this case also an interim period, for such a period would allow a customs union to be prepared and perhaps experie mented with, before some definite form for it is decided and legally fixed. I think that such a matter should be mentioned in the proposed Charter and I submit this idea for examination by my colleagues. 21. E/PC/T/C. II/PV/7 E/PC/T/C .II/FV/7. MR SHACKLE (United Kingdom): I have only a few small points to put forward on this Article. First of all, on the question which comes up in paragraph 2.b. If this principle of the average level of the pro-existing tariffs is to be accepted, and we should not wish to dispute its desirability, I think one has to recognise that it is a thing which may in practice be rather difficult to apply. A particular point which might not be considered is whether, in attempting to assess the average, one should have regard to the relative shares of trade of the constituent areas, so that it would be, so to speak, a weighted average. My second point relates to paragraph 4. I should like to ask a question in regard to the last sentence. The last sentence provides that in a customs union"all tariffs and other restrictive regulations of commerce as between the territories of members of the Union are substantially eliminated and 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." If I understand that correctly, it means that what I may call the internal customs barrier as between the component parts of the union is to be only substantially and not necessarily fully eliminated. But as regards the tariff which the union applies to imports from other countries, that has to be absolutely and completely uniform. I am not sure whether that is the intention or not, or whether it was intended that the qualification implied by the word "substantially" should apply to both limbs of the sentence, that is to say that you may require only substantial abolition of the internal barrier and only substantial uniformity of the internal tariff. I think perhaps there may be a good case for reading it that way, because I believe there are certain cases where territories which are effectively in a customs union, while they have tariffs which, as regards all protective purposes, are entirely uniform, there nevertheless are certain variations as regards duties which are purely for revenue purposes. There are certain cases of that kind. I think it is only the protective element in tariffs which is likely to interest us, and it may 22. F.2. E/PC/T/C. II/PV/7. well be, therefore, that a certain measure of latitude for differences in revenue duties might reasonably be regarded as permissible. In that case, the word "substantially" might apply to both limbs of that sentence. MR McCARTHY (Australia): There is one small item that we would like to refer to in this discussion, He would like the terms of this article so drawn that it would admit of the continuance of special tariffs and other arrangements which operate between Australia and certain neighbouring islands which come under Australian jurisdiction. Normally, it could be said that they would come under a customs union, or they would be included, as they could be, from any legal point of view under the conditions of our tariff; they could be part of it. This, however, might impose hardship on them, and we would like them to be treated, or the wording so arranged, that they would not be disturbed. It is not very great and, as I say, it is purely in the interests of these small territories that our present arrangements exist. We will submit a note giving the detail, and we would ask that the Drafting Committee consider it. MR LE BON (Belgium) :(interpretation): I would just like to say that the Belgian Delegation has taken everything that has been said by the French and by the Netherlands Delegations into consideration. MR LOCKANATHAN (India): There are only two points which I should like to mention at this stage. The first is this: The scope of paragraph 1 of Article 33: . this refers to the customs territories of the Member countries. Reading that paragraph 4, it seems that this might apply to certain Indian States which are customs territories as defined in paragraph 4, namely that they are territories which have "separate tariffs or other regulations of commerce .... with respect to a substantial part of the trade of such area". I quote a specific case of the State of Kashmir, from which I originated. Kashmir is a separate customs territory, but it is not under the jurisdiction of the Member country, namely India. The relationship between Kashmir and India, I do not think, would be covered by the phrase "under the jurisdiction of the Member". That might create some difficulty, and I think we would have to go further into this matter before we commit ourselves to 23. F. 3. this Article. The second point is about the regional arrangements which were discussed not some time ago. I am not sure that this is/the appropriate Article where we should have a separate provision, let us say a subparagraph c. to paragraph 2, to cover advantages afforded by any Member country to adjacent countries, provided these advantages are consistent with the general purposes of the Organisation, namely, to develop production and expansion. MR BRENNAN (South Africa): Mr Chairman, we feel that the definition, as it is drawn up at the moment, is somewhat too rigid, that is, the definition in paragraph 4 of Article 33, In that, it prescribes that the same tariffs and other regulations are applied to each territory of the union. South Africa has had a customs union with Northern Rhodesia for quite some time. The tariffs of both countries resemble each other substantially, in classification, but the levels of the tariffs, and, owing to the independent policies of each of them, the tariff structures of these territories, differ to some extent. The main criterion of a customs union, however, namely, the substantial elimination of a customs carrier between the two territories, exists, and satisfactory arrangements are in operation and have been in operation for some time, whereby the division of customs revenue kxt on imported goods is divided between territories in proportion to the consumption of such goods consumed in each territory. For many years prior to 1935, a customs union existed between South Africa and Southern Rhodesia. During that year it was substituted by a preferential trade agreement, and it is not impossible that the customs union will be re-established. The South African Delegation therefore supports the views which have been expressed in one form or another, that a period of grace should be given for the evolution from the aftxkz intermediate stage to a customs union. Such union may not be formed at short notice; there may possibly never be a decision arrived at in regard to a date, a period. We think the difficulty could be overcome. In our case, for example, where these operations have been in course of negotiation and do operate in various forms and degrees, it could be quite finalised, say, over a period of whatever is 24. E/PC/T/C.II/PV/ 7. E/PC/T/C .II/PV/7. decided on by the Organisation: it may be 5, 10 or 15 years. We feel we would like to have that taken on record, as we feel we must reserve our position in case it is not taken on record. THE CHAIRMAN: Is there any further discussion? Does the United States Delegate wish to reply to the one or two questions which were put to him? MR HAWKINS (U.S.A.): The point male by the Delegate of the Netherlands, that the exact status of the East Indies is not yet worked out, is of course a pertinent point. I can only say that you cannot decide what the application of the Article is until that has been clarified. It is simply in process. The second point regarding the level of tariffs surrounding a customs union: the question was whether that required that he took the two tariffs involved on any two particular items, and split the difference. That is not the intention. The language of the Article is: "Provided: That the duties and other regulations of commerce imposed by any such union respect of trade with other Member countries shall not on the whole be higher or more stringent". In other words, what is sought there, I should say, is a rough average of the level. I do not think it would yield to mathematical treatment. It is not precise treatment of the kind which .e mentioned. There were two or three currents to the effect that it takes time to complete a customs union and that some period of grace ought to be allowed for working it out. I think that is a reasonable position. It obviously is a complicated matter, and as long as the definite decision has been made to have the customs union, as long as the working out of the details is actually in process, it seems to me that there should be no rigid application of the most-favoured-nations clause in that case. There is a related question, which was raised by the Delegate of India, which is: should not there be a general exception of the most-favoured-nation clause which would permit preferences leading up to a customs union? I commented on that the other day, the comment being that I had doubts whether many regional preferential arrangements which had in view an ultimate customs union would ever get out of the transitional stage. I think the question becomes a little different when there is a definite decision to establish the customs 25. E/PC/T/C.II/PV/7. union. That would not be covered by our present draft, and I think it is a proper subject for consideration by the Committee. THE CHAIRMAN: I think this is a matter which we might also refer to the Drafting Committee dealing with tariffs and procedure. The provisions are substantially machinery provisions, although they do involve, in certain cases, problems of principle which have arisen already elsewhere in discussion on tariffs and other matters. The main problems which will face the drafting committee on this matter arise from two factors. 26. F.5. E/PC/T/C.II/PV/7 Firstly, the complexity of the relationships which do exist between different territories and communities, particularly in a political sense. There are relationships between countries which go right through the whole possible range from complete Colonial dependence to practical independence, but with common recognition of a single sovereign, or some such arrangement. There are, indeed, others where there is an association which has no formal point of focus even to the extent of a common sovereign. It is fairly clear that the nature of the tariff relationships between countries or neighbours related to one another in this very great variety of political relationships will not be easy to deal with in a few simple clauses. I took it to be the feeling of the meeting that while in general in that relation the principles underlying these provisions seemed reasonable, their impact on associated countries or territories in differing political relationships would require to be fairly carefully examined to see that their results were in accordance with the intentions of the drafters. That really is associated with the other point that, short of a customs union, there are a great variety of relationships from a purely customs point of view which may exist between two territories, and that too rigid a phrasing of those provisions may awake difficult existing arrangements which are beneficial in their trade effects. There remain a number of purely mechanical problems which I think the Delegate for the United States has dealt with adequately, and which, I think, should not present great difficulty to the Drafting Committee. If it is your opinion that that sets out the nature of the problems, I would suggest that we refer the matter to the same Committee which is dealing with tariffs, since these matters are -27- G. 2 E/PC/T/C.II./PV/7. very closely related to tariff forms and administration. Is that acceptable to the Committee? That concludes our programme for this stage of the work of the Committee, with the exception of the problems associated with the protection of the balance of payments, which we have agreed to defer. We had arranged for a meeting of this Committee tomorrow morning. I gather that it would not be possible to proceed with the questions relating to the balance of payments at such a meeting, and therefore, I think we might substitute a meeting of one of the Drafting Com- mittees tomorrow morning, so that we do not lose the time thus saved. It seems to me that the Committee on Procedures and Tariffs has already taken over a fairly heavy burden, and that, while it proposes to meet tonight, it would also be desirable for them to continue tomorrow. MR. McKINNON (Canada): That is a very heavy Committee, I have one suggestion to make. We continually refer to it as the Committee on Procedures and Tariffs. I think we might drop the reference to Procedure, since it has its hands pretty full with tariffs. THE CHAIRMAN: The place of the meeting will be announced in the Journal in the morning. I presume it will meet in accordance with the suggested time for the starting of Committee No. 2, at 10.30. a.m. If there are no other ratters which Delegates wish to raise, I suggest that the meeting be adjourned until you are informed that we are ready to meet again. -28- G. 3 E/PC/T/C. II./PV/7. MR. BRENNAN (Union of South Africa): Do I understand rightly that there is an 8 o'clock meeting this evening of the Sub-Committee, and that additionally there is a meeting of the Joint Committee of Committees Nos. 1 and 2 at 8 o'clock? THE CHAIRMAN: It is a Drafting Committee of the Joint Committee. The meetings tonight are both meetings of Sub-Committees, a Sub-Committee of this Committee dealing with tariffs, and a Drafting Committee of the joint body dealing with industrial development. You will be informed when the Committee will reassemble to discuss matters arising out of the protection of the balance of payments. The meeting adjourned at 4.37 p.m. -29-

GATT Library

bq372vs9863

Verbatim Report of the Seventh Meeting of Committee III : Held in the Hoare Memorial Hall Church House, Westminster on Friday, 8 November 1946 at 3.0 p.m

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

https://exhibits.stanford.edu/gatt/catalog/bq372vs9863

bq372vs9863_90220062.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL of the INTERNATIONAL CONFERENCE ON TRADE.AND EMPLOYMENT. Verbatim Report of the SEVENTH MEETING of COMMITTEE III held in The Hoare Memorial Hall Church House, Westminster on Friday, 8th November, 1946 CHAIRMAN: M. PIERRE DIETERLIN (France) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1) A.1 PREPARATORY COMMITTEE E/PC/T/C.III/PV/7. A. 2 E/PC/T/C. III/PV/7. THE CHAIRMAN (Interpretation): The meeting is open. I would like to begin by giving Delegates some information regarding the simultaneous interpretation system. In order to avoid too great speed in the delivery of speeches which would prevent the interpretors from following the speech and translating it properly, a red light has been placed at the central table. when the light goes on, it will go on twice in quick succession, one long and one short light. If that happens, it means that the speaker is asked to speak more slowly. It has been demonstrated so far that the interpreters are able to follow the speeches and that the system is satisfactory. However, in the name of the Secretariat I once more inform you how important it is for speakers to watch the red light. I shall now pass to the agenda. I owe the Committee some explanations and apologies. Twice the Committee has been called together and has not been able to discuss matters as I had hoped. Once more I apologise. I have sinned by being too optimistic. Before submitting to you a proposed draft of Chapter V, Mr. McGregor has found it necessary to get not only the advice of the experts who had been named to assist him during our last meeting, but also to have more contact with the Delegations. Therefore, the final preparation of the text in the light of the explanations given at our last meeting took longer than I had thought it would. That is why we have not been able to hold the meetings which had been planned for Wednesday morning and yesterday afternoon. Nevertheless, a plan of work has been circulated to you this morning. This basis of work is a new text of Chapter V, which is submitted for your approval. As you will have seen, this draft is submitted for your approval by our rapporteur and by the experts who had been named to assist him. I would have liked this text to be distributed to you earlier so as to give you more time to examine it at 2. A.3 E/PC/T/C. III/PV.7. your leisure. I hope that you have had time to read the text through rapidly and to form some impression on it, an impression which might allow you to make such remarks as you judge useful. As regards the French text, this text could not be finally prepared until very late yesterday evening and has not yet been trans- lated. I hope that it will be circulated before the end of the meeting. I should like to inform the Committee that certain final wording of the French text still seems to me to be necessary. The English language and the French language have very often very different syntax, and it is not easy to express in French, both accurately and eloquently, an idea which was originally put in English. What is why I think that the French text which will be distributed to you still may contain certain imperfections as far as the form is concerned. Finally, I would like to remind you that the draft of Chapter V which we are to examine here and which is a basic element of the report which we ought to submit to the Plenary, Committee is not in any way an undertaking on the part of the Governments represented here. It is only a preliminary text, and therefore, your approval, which we request here, is approval in the light of instructions received from your respective Governments and the knowledge which you have of the position of your Governments. However, this will not in any way represent any undertaking of your Governments. You can therefore give your approval without undue precautions. Before opening the general discussion on the subject of this draft, I should like to ask the Rapporteur and the experts if they would be so kind as to give us short statements concerning this text, telling us at the same time their opinions as experts and their opinions as representatives of their respective Governments. I call on Mr. Wilcox, representative of the USA. A.4. E/PC/T/C. Ill/PV.7. MR. WILCOX (USA): I wonder whether it would not be wise to have an exposition of the text presented by the rapporteur before we express any opinion on it. THE CHAIRMAN: I think it would be as well to have that explanation after the statements of the three advisers. I think that would be the best method. Mr. WILCOX (USA): We have before us two draft documents, one dated 4th November and the other dated 7th November. It became apparent in the discussions in the Committee, that were based on the document dated 4th November, which was presented to us by a gentleman whose name l do not recall at the moment, that there were rather sharp differences of opinion and position between different delegations on some of the provisions of this document. The document dated 7th November, I think, succeeds almost completely, if not completely, in bringing these divergent views together, resulting in a draft that is, or should be, generally acceptable. In certain important respects this draft is not as strong as we would wish it to be. I shall not attempt to enumerate those Points now, but leave that to the statement by the rapporteur. It is, however, our view that it is highly, desirable that this Committee in particular and the Preparatory Committee in general should be able to report a programme which is generally acceptable to all Delegations rather than be enforced to report two or more separate and distinct chapters with different approaches to the problem. I think that the draft of Chapter V as now submitted follows, in general outline, the approach towards the problem that this Committee has been discussing all along. I think it is a practical and a workable approach towards the problem, that the principles as laid down are sound, and the procedures as out lined workable, and in general, from our point of view, we would regard it as acceptable. 4. A.5 E/PC/T/C.III/PV.7. THE CHAIRMAN: I thank Mr. Wilcox for his statement, and I call on Mr. Holmes, representative of the UK. MR. HOLMES (UK): I agree with almost every word which the Delegate of the United States has just said. We feel that the new document should be very helpful in enabling this Committee to reach a successful termination of its labours. I think there is only one thing which I should say in amplification of what has been said by Mr. Wilcox. I want to refer to an unfortunate mistake for which I do not think anybody is really to blame. It derives from the speed at which, among many other preoccupations, Members of this Committee have had to work. C fols. B.1. The mistake is that Article 36 Article in the new document W/2 has been in- correctly copied from some earlier version and that the intention of those who had been working on this new document had been otherwise; the intention had been to include as Article 36 in the new draft W/2 the text of the draft by the gentleman who shall remain anonymous, 3/12, subject to certian very minor alterations, but I imagine that the Secretariat would have very little difficulty in circulating the correct version of Article 36 within a very few minutes possibly in both languages. For the rest, I think I need only say that the new version does repres- ent a most honest and laborious attempt to give the Committee a document to work. on from which a number at any rate of the more important points of differences have been excluded and a document which represents, I think, a certain amount, of give and take, though all the time I bear in mind very closely the fact that this is a Preparatory Committee on which we are attempting to obtain the maximum amount of agreement, naturally, but in the deliberations of which it has always been I think our hope that people would make their own views known as freely as possible. That I think, Mr Chairman, is all I need. say, except that there may be one or two very minor drafting points which even we might wish to raise owing solely to the speed at which the work has been done. Those are not, however, points which I need mention at the moment, and indeed it was not until just before this meeting that I saw this document in its present form at all. THE CHAIRMAN (Interpretation): I thank Mr Holmes for his statement and more particularly for having pointed out to the Committee the states which are to be found in the redraft of Article 36. These mistakes have also been noticed by our Rapporteur, and he .had already brought them to my attention. I would like you to take note of the explanations given by Mr Holmes concerning this subject, and I hope that we shall really be able to have the proper and correct text of Article 36. I now call upon Mr Lecuyer, the Delegate of France. E VPC/T/C. III/PV/7. T% IE2CUJEP. (Prance (inter-pretation):' Iir Chairani, you have askea us to speak as ra-orteurs end at the se t~iie as delegates of our ,c-vernments. On the second point, and in thc second character, T shall not conceal that the draft as it is proposed to us does snot conform, exactly to the -opinions and views of thn French Govern~nt and that it ir. a-.1 proba.blity- does not re-:rsent the doctrine which we would -woish tt- see t-iu-oha.nt here. Nevertheless, in the text as .it is here, it1 is perfectly acceptc'ble to the French delegation -and I .q>-sel& would sort it entirely with a fer reservations concerning either details or wordin,, xtich one Tigh;t brin. up as the discussion goes al on. Now, .i z character as rapporteur I should like -to say that, before thing lse, 7 sh3ll accept entirely the statement of McGre -?or, 'vmo I believe is much. more .higtay qu if'ied than z cf us to exrpouna here, either in detail or from-'a ,eneral! ;ocint of -view ox, perhar` s thna "s ehs vichi he moky _ive to tn'e a-ierent questions asked by the Zloaittec, on h'o this text has been conceived. Never- theless, _ also vul lidk1: to say that, at least fori :V, part, I agree rather wzith Iir Wilcox and T believe that it xJcrnlas is not quite efficaciolus enough, but it has ?1aso one very :creat advan-tae which r nht con;rensa-te :or t:her shlortconings. Tnat dvantae- is that it ns -ut ot of the way ery-thing th-t might see-. to be in op-osition to the e:istin. 1 egsis_--tive systenis, not onl2y the --eser.t legislative sys'te.., but al -.- he jo-is-ls.tijve systems whoach -we knovw a ffer-cnt countries c e in co-use 3 at the moment. Tr. e nJ;; `eVe that this Is a text u-nr w.lich. vwe should, be _ble tc reach a-geenent. It has other advanr;taes besides this one. In thCe first ,lce, it gives much clearer references to the existinZ nation-a lelislantures; it draws closer to 'he existir., possibilities ossibl'ti-es of -uttin_ into fr'orce pro-'visions concerning restrictive business --ratices, ann that, -_t ra-'-, is a en.orsUs a=vantane. O h- otr hando, it -:ees moe --rer i-, ^s a aS I ha-,re been rbe , o see -0 e a £ irst readzin, to the interventions of the aranLation, or .tany rc.te, it@ describes them -with -7.- B.3 E/PC/T/C/C.III/PV/7 greater precision, which _ .- 't - ' r:,, ;. itsl ', - r, the *1h1_ -uroceeurc. .-:it;;rosct to tlht, is tecXt h-.as :nc 'theor rva.ta_, -W tha.t is that it, -ot s CA, 'rn I;s th ..e.rs into line iincraer est^'blish, 1' they have = nt zlre.-a-' ;¢.d so, ^. oD.of lewisi^.rc .hilCh; -.ill .ni o f useful -nd . c:fici.ont i nti-c-nation or tho ->ct of the Cr_.:anization. Oi,-o cou. :cerh-s s^z- tht th.c txt -.-C have C ef r us is corJ.ox-% :.nz oo*-- aotoa - -Ut _ ' ' . s - but t'e su stion t self iS Cs so C:-1i0ioa0C. z -t 7 :o n.ot believ- that one could, at his s tao, ;-re,'e a. te-ot or --rovisions vWheh would. bo. uore corncise or morm .Orecise. TWe should then. run th-.e d.-ar, in lock^i-r; -fr -reater ;>re- cision, of ncu.Cuntcrinz a ^c;rtain =-iount o:f hcs4.tion ].- ditY of iSUndcrst=ndin7. 'orcf ore, I bCliove that, ccaplext aS it m=.y be, this text shculd.-1 bC -icco-tca. TH CH:=-d2 (.tT retaion2: I -w-ish to tchank11c xr Lecuyer for 'his 9tatoment, ^aa Is shllno as-',,- -our ,syoorteur, Mr Mc~rer, in the ftrst 'lace, if; h will kindlyk in ive us certain ox:c1anatio-ns con-cernin2 this: txct in order to -oen thc ;enrrl discussion .'h-Ach will follow his statement. I cal IJ..uon ,-r -IcGre-or. .TE '.ITORMTM (Mr cGregor, Ca.nacda): Mr Ch-irma.a, before r speak as a member of the ,r-othat has bIeen neet, in t-he ,ast two or three days, may I s'ay one wvord about what ha-ened on last' Taesday afternoon? I confess thatI 'di not express adequately a.t tht h - meeting , hc oireci- sion, I would. hav7e ex-ressed if I ha re-alized. how -reat was the honour that wans boin2 conferred. T n Jreciate very znich the honcur and :lso the opportunity to ac a Little more work. I think I .mentioned that I did not -p-ropose to boe the obedient se--Tnt of any one of you; I hope that was not misunderstood; but as R -aoortour of the whole Committee I cnot express =1 attitude better than to use the old-fashlioned ending to letters in EnSlacznd a in Cancad. "I have the hlonour to be, Gentlermn, Your obedient so-7ant, ' but thhat it ls undcrstood that I a_ not going to do whaat %-ny individual here says I a^ to do, or to say .what z-A' indlividuci. says I nszvst say. I think you understand. - ~~~~8. Of course, the document before us is not exactly the way Canada would write it or the way Czcchoslovakia or Chile or any other country would Wite it. It is not the woY the Unitca Stactes araf-ted it; it is not the wv the tUnited Xinzdonhas put it in their d-.rft; -t 'but if 've zre goinr;to' -et agreee~rt .we cannot hope to }4avc it f fi- - <ferent e-afts; an&d, frankly, I think a magellous job has been.done in the las tvc or threc dacs by those Tou- ref erred to as experts. You, =enerred to the zaaoyrteiur arc th& experts '. ellous job ias 'be- *~~~~~~~~~~~~~~~e ,. =-i- * %. - - -nne ir. Duttiar toGether what we. thirk is the consensus of opinion .f the whole oup nd t he concessions that -have been made 1izw ihere, -=V." -there. 7 think a great t-ribute should be paid to the United Stetes :for its willin~iess iin the interests of getting a.-.comon :ageoeint n. T ^ document that vill work, to peLt of changes too 'violently about chang-es that have been rnad& Sinilarly, the Unitea Kirnzaom has --d 'very strong: feeli- ns u-or. certain points, ad it is ts their everlastinz credit a t- they h:ve ;ade concessions here that- I 'think ol f us will concur -i-n. -iow the Chairmanm h:s suggested that the Ropporte-i:r ZiGht answer o2. questions. May I suggest'L -tha--t the Rop-orteur will =aswer sC= of the questions to -which he knows the =:ewers or thinks he daoes, and ta.-t other me.ners eF the ex-ert ru n other meezers of tie whole Co-_ttee will assist in the answerin. of questions, some of r.a o.c are -r:t-. arly dicult. u ,r.7erst-nd that it is the Crmn's wis th:at V-re run throu:- t.he .`hole ofl the section q;ickly- ean .- shoui! oustv ir.^- cate hov.w the -w:or,-: differs fr=n the ocu-at *>._as belcre us cr. tihe 7th 7Xvenber. shell not bother about, s=l1 wrd s struck ot - the -;rd "restrictive" .or exle - a where Itt does not mear anythimnZ; but ":av I confine -tself to the im.ocrtat things? In -arabraoh 2 Cf articlee 34 You-wll see th-t an attert nas ocen mze to cl-ify thne ocrds, -.- 7 will re--a fr-'. the d-aft f, 2+th, w-..hich say.~s ir 2 (a) " rr.te-rnationa CD inztion, :.greszicn tr other arr-. me:.t, inclui.n- such a_ arang cement .-o^. ;n-rl-v;te cO:a-n3rcoil e-te;eise . " Then ( ) refers tn '-ublic ooanercial enterjrises, an- then ^a definition O. is given: "trading agencies of government or entorprises in which there is effective government control." That latter phrase is changed from "government interest." Then the third group is a mixed one between private and public commercial enterprises.You will recall that the United Kingdom pressed strongly in our earlier sessions for the elimination of the public enterprise aspect of that particular sub-section. I believe the United Kingdom is prepared to acqscc in clause (a) as we have it now. In (b) you will notice that the word "private" has been inserted. We had "one or more commercial enterprise." Now the word "private" is inserted; but we excluded public enterprises from this particular section, assuring that the state trading section in Article 26 is more appropriate and wlll make adequate provision. Ycu will observe that in the typescript the words "when such" follow under (b); that should come out right to the end of the line, to the other margin, since it applies to both (a) and (b). But there is one slight change. We had in the earlier draft "in a particular area, or generally." That is part of the Canadian draft. The United Kingdom, and some others, have pointed out the inadequacy - and we admit the in- adeqnuacy - of that expression. It has been changed, then, to "among a number of countries." If it should apply to a particular small area, I do not think that it is the kind of thing that the I.T.O. should. be concerned. about. Then you go on, three lines further down: "if they appear to have or to be likely to have such harmful effects.." The words "or-to be likely to have" are retained there,.and there may be some argument upon that but I just call your attention to the fact that it. is still there. In paragraph 3 of Article 34, at the end of the third. line, the words "or services" have been eliminated, and that point will come up also in the discussion on ArticIe 40. The word "services" appeared also in (f) of that paragraph 3, where we said., "or to products or services which are not the imediate subjects of the authorized grant." It was thought that if we were going .to eliminate "services" from the whole Chapter it would be necessary to change the paragraph and so it 10. E/PC/T/C. III/PV/7 has been changed, "or to products or conditions of production or use which are not the immediate subjects, of the authorized grant." That in our opninon is an adoquae synonym for the word "services." In Article 35 there is no change in the first paragraph, but in the second pragraph there is a very considerable chane, and perhaps if I read the old draft then you will be able to follow it in the new; that.might be the best way of recogniizing the changes that have been made: "Consider each written complaint submitted by any member or, with the permission of such member, submitted by any other" - I think the "other" should be omitted - it is a clerical error there - "by any affected persons, business entities, or other.organizations within that member's juris- diction claiming that any practices have or are likely to have" - that is omitted again by mistake and it should be in your draft - "the effect described in paragraph 1/of Article 34 " There is there- fore no change in substance in that paragraph of the Article , nor I think in the next "and prescribe the minimum information to be included in such ccmplaints." There is no change there, except in te warding of paragrarh 3: "Request each member concerned" (it was "call upon") ''to obtain such information as the orgnization may deem necessary, including, for example and so on. Perhaps I need not. bother with that. Tne order of the wording has been changed round there; there is no real change in effect; but it is an improvement from. the drafting point cf vierw. There is no change in paragraphs 4 or 5. In paragraph 6, which wlas the subject of a great deal discussion, you will see that a compromise has been reached there, which I think will prove satisfactory to all of us. Canada accepted, although it is not what Canada wanted; the United States yields, perhaps grudgingly, because it is not what the United States wanted. It does not go as far as I think the United kingdom wanted, but I think that we have something.when we say that the 0rganiz- ation shall ''request each member concerned to obtain such information as the organization may deem necessary, including, for example, statements from commercial enterprises within its j-is ci; and then determine whether further investigation is justified" 11 Then it is: "request each member concerned to take every possible action to prevent the continuance or the recurrence of the practices and, at its discretion, recommend to the members concerned remedial measures to be carried out in accordance with their respective laws and procedures. " All that we have before us. We did make provision for recommendation as to the abregation in termination of agreements, and in the original United States draft it went considerably further than that in giving a number of other illustrations. What we have done here is to eliminate the illustrations, and to insert the paragraph I have just read. That, of course, was in the earlier part of that paragraph. 12. E/PC/T/C.III/PV/7 In 8 there is no change. The Rapporteur accepts responsibil- ity for the unfortunate error that has appeared in submitting 36 in the form in which you see it .now. As Mr Holmes has already indicated, this work was done at top speed last evening in the hope of getting in into the hands of the mimeographers. so that you could have copies of this docuint to-day. The typist apparently secured the wrong copy. of 36. There is no change in 36 in our recomrmendatlon with the exception of the addition of the words after "request of any member" "or of the United Nations Organisation or specialised agency under the United Nations". That is the only significant change. A correction wIll have to bemade by the corrigenda technique, I understand. May I Suggest to you, Mr Chairman, that you might say a word of reproof to the Rapporteur for his carelessness in permitting thaI to go through. in this fashion, and a little stiff talk .with him I thank would be very appropriate. In 37 delegatilons and members will see that a substantial change has been made in 37 (1). 35 (6) and 37 (1). will probably be the subject of more heated d iscussions than any other paragraphs except perhaps those in 34, but I think we have achieved a solution here that is reasonaoly satisfactory to all of us. The principal chnge is in (b). The old (b) ran in this way: "to prevent the continuance or recurrence within its jurisdiction of any practices which the Organisation finds to have had such effect". Now all those words are retained, but it is to be prefaced by the words you sec there: "to take the fullest account of the recommendations of the organisation, in the light of its obligations under article 34, in considering the initiation of action in accordance with its system of law and economic organisation" -. I was told yesterday that I should probably see the light if I had a night's sleep; and I confess that I find the section as re-drafted now more reasonable than I thought late last night. 13. E/PC/T/C. III/PV/7 the United Kingdom delegate the French delegate, as our Rapporteur who was at the same time behaving in his capacity as Canadian delegate. In views of all these remarks, this text which he has submitted to us may not perhaps answer completely to the desires and views of every delegate round this table.' I have a feeling also that this text presents the most reasona- ble compromise which could be arrived at between the different remarks and opinions presented here since the beginning of our discussion; and so it seems to me that the debate which is about to open should not have as its aim to re-open again dis- cussion of the items discussed in this draft. I would rather suggest to the delegates who will speak that they.might not expound once more the position of their Governments, but rather to try to bring out certain suggestIons which might constltute an improvement of the text. These suggestions, if they are really inspired by the motive I have dust mentioned certainly will meet with the approval of the .Committee as a whole, and might allow us at least in certain respects to achieve a better draft . I shall conside r also and on the other hand that all opinions which might be expressed here in too negative a sense must be presented: as reservations which naturally every dele- gaztion may express at any time, and will be so placed in our Report. In the light of this information I open the discussion now. Who wishes the floor? Mr NAUDE (South Africa): Mr Chairman, I should like to be the fIrst of those who are sitting at the feet of the Rapporteurs to thank them for their work an to pay a compliment to Mr McGregor in particular. I would only lke to ask this question: Could Mr McGregor, nerely for the record, explain why (c) of Article THE CHAIRMAN: I think I shall be able to answer you myself. All this is the logical outcome of the position which was taken in .this respect during our last meeting. At the last meeting 15. I did not spend a sleepless night, but I can see where it is not desirable for us to expect on every occasion that they will do what ITC tells them to do regardless. At the same time, cnorn 4 s a, undlertk^;:J- i t. I' - i-rst partr o :.r.ra - '. ( ) to t-.ke tn3a f'ullest account o-' t.. recor-::en 7ati-ons anJ. in tho li-.'h of solemn JJ-latl-onsrs tha<t ;^x -aen undaer Art I-le 34, Of course, i n; I ati-ons ar- no; -r to ,. ,e itin -n C. ; e t ^ s eff ct iv=, . c no -OwL t i-Oat i onse . 1l. ,e to do d .o _O teils hem .i-ll er have that result, _ r 00 Si-flcs tea tC do somethingn: t.at wi-1i 1 ..:.re it :Qrett di- f C u1t later or- to Zee- us all to-.etr c go on from -,,arantraph. 1: i-n 2 Zhorv is o5 chrane fror2 the ear-ier draft; nor 1i-n 3; nor i-n ; but there is i-n 5; 5 is -s it was down to t"!e words parcnragraph 6 o-L Arti-cle 35"1; 'out this additi-on i-s made: Uand, i. cass i-n whi ch no acti-on i-S taken, to explain to the organisa.;iion the reasons therefor an u di scuss t'r e ma.ttuer fu7- i ;eri --,h-, QW 1 C-; ani a -st i o n f raqueasted to do so,", That you -.-.ll fi-n1 i-n a recoYU i.n i that i-s made by the United Xi-ngdom i-n one of 'the >a -.pers that-, was sub-, mitted aLter they had f-led t1ei-I, rhole ra ts Ir. Article 38 t, is no. change.. Nor is there an y c'.h'ance in 39. In Art .clo 40 th, only chanire: is to delete the .-olo off sub-pa.<grC::r (Cc) of nara- graph 1.. That refers to agreemzents or uniorst~Cn1inps concerning : rai.lay trransportat-on, auv.iation, shi-pping and, telecomm.unica- tions service.. :T.HE CHAIREAN (Interpretatiorn(: I thank Mr Mcf-rafcr for the very precise, clear and complete-explanation that -he hat Just i-Iven- to thiss.CommIttee concernin,; the work done. in the course of the last three days under his di-rection; and I should. like at the same ti-me to thank hrl-n once more and to thank thae experts who hav been named to assist himn for the useful effort whi-ch they have c0ccmplilshed. Now- I sh.all open discussion o.- triE draft whic you have in front of you, in thn_ light f the remarks which have been offered here as uc' by t-h1e U nfite d States doleat,:.zon a-s 1by C-3 E/PC/T/C.III/PV/7 the United Kingdom delegate, the French delegate, as our Rapporteur who was at the same time behaving in his capacity as Canadia delegate. In view of all these remarks, this text which he has submitted to us may not perhaps answer completely to the desires and views of every delegate round this table.. I have a feeling also that this text presents the most reasona.- ble compromise which could be arrived at between the different remarks and opinions presented here since the beginning of our discussion; and so it seems to me that the debate which is about to open should not have as its aim to re-open again dis- cussion of the items discussed in this draft. I would rather suggest to the delegates who will speak that they might not expound once more the position of their Governments, but rather to try to braing out certain suggestions which might ccnstlitute an improvement of the text. These suggestions, if they are really inspired by the motive I have just mentioned certainly will meet with the approval of the Committee as a whole, and might allow us at least in certain respects to achieve a better draft. I shall conside r also and on the other hand that all opinions which might be expressed here in too negative a sense must be presented as reservations which naturally every dele- gation may express at any time, and wiIl be. so placed in our Report. In the light of this information I open the discussion now. Who wishes the floor? Mr NAUDE (South Africa) : Mr Chairman, I should like to be the first of those who are sitting at the feet of the Rapporteurs to. thank them for their work. and to pay a compliment to Mr McGregor in particular. r would. only like tuo ask this question: 6ould Mr McGregor, merely for the record, explain wihy (c) of Article 40 (I) is eliminated? THE CHAIRMAN: I think I shall be able to answer you myself, All this is the logical outcome of the position which was taken in this respect during. our last meeting. At the last meeting 15. r..s albi to 'Do-t out to you t:h n j_ * t se_... o z - o - -It'i-n tlie Coraiot-peence of our Coi::itt-ce to discuss thea zuestl o, It Is outside 'our- co,:: te noce and too vr^st for cur ocn tco I repeat that ^ he auestl3on of servJ cs -;;is I-J the oenaer-^i terms f: reference of -zrhe Corzjj.-ttee and '.-i C erta- ly- be dJ soussed, but T z.hink :;lll be better .,:at such, a discussJi on sh;.oiul;d t ,E; place in h course f a Bienar- . eti-n j or 3.ny perhaps be made in t-;o suggesti-0n * s or prop-osals of fred by the . eds of Del=,ations. It i-s v-orth beari.;nf i n,-r.i that th~e ;o~d ' servl-ce ', as .r 1'GreEor saidi, has been deleted fror -Arti-cle 34, and t hat i-s a1Sc why, .1aVir.,- deleted the .!ord- Iiserv-tces" from Article 34,(o) o Article 34 -no lonr.er had any reason_ -lO w shall call upon i^, Arundt, representati v of the B 3 1-o- uxeiobcuivg -.delegatu. on, M* ARU-W-TU (3el-iuzu (Interpreta-61on) 'r Presidenr, ' should like In the i'Irst lace to welcome thea effort ;dhIc:h -as made by the Draf tng Comn ittee I-n order to reconci-le our -zvsew-s, I should like to welcome above---lL ar.d. before allI ths eff ort to recon- cile, U.3 which has formed the &asis of all dIscusslonis, Sn above all the concessions whirlch have bte'm granted by the delegation of the UnI-ted- States -where this matter J.s concerned. 1 also want to express m. - apreciJat on of cthe effort ln the direction of understandlng. whl-ch has been made by the United'States delegatea, who. is the- author of the basis. oLf -'hs Charter_ I believe also that the dzaft which he has submitted to us may be consil-ered by =y Government as an acceptable draft as far as - princile -Is concerned.; However, there are certain points to which T should llke to draw your attention. _I..should like to draw the Darticu.r a.ttnti-on o. the Draftiin-g Committee which - will have to prepare the final draft. before .,oing into detail on these one or tv:o that Interest me, I should. like to ask one que t n off the Rapporteur, I do -ot k n O-l .-hether I understood the Rapporteur -,er: v3 el, but he seems to have intoned oGne 6 E/PC/T/C.III/PV/7 point in Article 35 (2). I have here. only the English text, but if I have understood the Rapporteur well, it seems that Mr. McGregor has said that the word "likely" should be retained in paragraph 2 of Articlie 35. I do not know if I have under- stood him well as far as that is concerned. D.1 MR. GCGREGOR (rapporteur): The words "or likely to have" did appear in paragraph 2 of Article 35. It was a typographical error last night, and was respensible for the elimination of it.It has been discussed by the Committee back and forward, and the final conclusion reached was that it should.be rettined. You wiill see that the phrase is retained. in Article 34, paragraph 2 in the latter part. If it is retained in paragraph 2, it should be in the other articles, wherever the phrase appears. Did you want to discuss the argument for the retention of it? I discussed that with you, Mr. Arendt, and with Mr. Jussiant, for an hour, and put up a very brilliant argument for it. THE CHAIRMAN (Interpretation): I should. like to draw Mr. Arendt's attention to the French text, where the phrase is not literally translated, but where it has exactly the same meaning. I think it carries out the spirit of the authors of the draft, which might have been modified in using the English expression "likely to have". MR. ARENDT (Belgium) (Interpretation): thank you for your explanation,. Mr. Chairman. However, I should. like to reserve the opinion of my Government on this particular subject, as it seems to me that the mere possibility or likelihood of being the cause of.a detrimental influence should. not be sufficient to start an investigation. THE CHAIRMAN (Interpetation): I am sorry to interrupt you, Mr: Arendt, but your Government has been able to express, through you predecessor, its opinion, and that opinion has been noted. MR. ARENDT (Belgium) (Interpretation): The second point on which I would like to speak to the Drafting Committee is the word "private" which has been added to Article 35. It would seem that state monopolies are. excluded from Article 34. The Rapporteur has shown us that it was foreseen that state monopolies would be provided for under.Article 26.. I hope it is clear that Article 26 will give full satisfaction in that regard and will not constitute the possibility of being an. escape clause for a state monopoly. I hope 17. D.2 E/PC/T/C.III/PV/7. it will not make it possible for a state monopoly to find some way of being free of those regulations, and that. it will subject state monopolies to the same obligations under the Charter. Thirdly, ' would like to bring up the possibility of justifying the existence of an enterprise and the activities of an enterprise which is being investigated. Lastly -- and this is a pure detail of wording, on which Mr. MicGregor has already spoken -- it seems necessary to clear up the drafting of paragraph 2, in regard to the paragraph which seems to be lacking after "to be", as applied to paragraphs (a), (f) and (b) of paragraph 2. THE CHAIRMAN (Interpretation): As far as your second point is. concerned, Mr. Arendt, this is a question of proecdure, and I shall be able to answer you directly. Article 26 comes under the term of reference of another Committtee, and therefore, I can form no opinion on the decision of that Committee. The representative of your Government within that Committee will have the duty of taking up the position he may deem useful when Article 26 is discussed and to make such reservations as he considers necessary. I do not think that in this Committee we are called upon to express an opinion or this subject. I would ask you. Mr. Arendt, whether the remarks you have just made were made jointly in the ne of the Belgium-Luxembourg Delegation, or should I call or. your colleague. I should also like to ask whether the reservation you have just made means that you do agree on the text as such, or whether you want to change it. MR. ARENDT (Belgium) (Interpretation): Except for the remarks I have just made, I agree to the acceptance of the text submitted. I was speaking as the repesentative of Belgium-Luxembourg. THE CHAIRMAN (Interpretation): I now call on Dr. Leendertz, Delegate of the Netherlands. MR. LEEND-. -;--I-TZ (Netherlands): I want also to express my admiration for the text which has been put before us, and I must say that I appreciate very 18. D.3 much the spirit of reconciliation which iS evident fr:= this dccui.ent P.nd a! so the very thzvuzh .work ,-1-ich has aeen 'one in con- n.ection with it. It is a c ity, from the; -oint of view of the author of the d-^ft, that .ve have such ^a, short ttme to wiork through it, 'becauS thee a2re Ve -many subtle 7-cints that ouht to be .recia ted better tl=-b. we have tie to `c nc-. I voy la d t -e --able to say that :=ai of the difficulties wre h.d have now aois-,oecred either wNhclly or in Ocart, -=d at any rate to a large degree. I wcant to put a f e-w 'Oits -Tos briefl. I am directed to :=k-e one srm.ll reservation, .;hich is not a vexy serious one, and is only for the time being, as to ticle 34., 2, (a), about pOublic cozmercial enterprises. L- Oo-.-=it tee II these matters of state tradig a.nd so on have been considered, and it was resolved to leave them- for the moment in order thet theay n-ight be discussed at a later ccnferenor. Therefoxe, the :Netherlands Delegation do not want nfow to take up any position on that matter. That, however, does not mean that we shall make. any difficulty about it. We want only to ake that reservation. -s to the word k "likely", we also feel the same apprehension as -as already been expressed.. I should think that if we went further into that Matter, it might be possible after all to comne to an understanding about it, but it does not soe)m :ossible to do it now, and therefore, now I make the snoe reserVation as hzas been m.de by -the Delegate oi' Belgiun-Luxembourg, expressing the hope, however, * that it might be possible to come to tn understanding on it. .s to ilrticle 34(f), extending the use of the rights of.patents, and so forth, this -atter has o ay technical sides to it vhich ought to be gone into further and for the moment, i must almost make scme reservation,. but not in the spirit that we would make any difficulties about it. We have seae experts ho ha-ve to be consulted on it. 1. D.4 E/.-C/T/C. IIT/PV/7. It is, of course, especially for article 37, 1(b), that I am very grateful. I note vith satisfaction the cateations.that. have been introduced. On this Article, I want on2y Ato raise once more the question whether it woula 'be in-the interests .of the ITO, if some difficulties might -arise after the Organisation had done everything possible -to come to an agreement between the different parties and members, to hive some hody -which could decide on the matter in an impartial anad consultative mm-aner. I - - thin kinz of' -the International Court of Justice.. -That point, however, is to be brought forwardain the Thifth Committee, Lndi . mention it now only to have it on. records - --.. - - LastLy, at one of our former meetings 1i e-<to. articlee 34. whether the commodity nrrangements -couuld be -considered tc be included under _.rt-iclk 4, aznd you tola me that the point would be discussed on ,article 40. .4s article 4^ stands now. it is clear that they do not come into the matter at all. what is so much the case that really the question arises :as to how the point ever became a -ocint of discussion here. I will not go further-, into the.,matter now, but if Article 2,0 is left as it is, 7 shall be fully content. ; (-Intezretation): I will answer the various points raised by the Delewate cf the Netherla=nds and which raise problems of troce-ure or of powers. As re-ards the. pint about Aticle 3 2, 2(a), I repeat that the report which we are nov: dliscussiln J s of a preliminaz-y nature, n-d. the question _-_sed by the Delegate of the Net-herlans couLd, of course, be taken up again in the course Of a later meetin, or conference. it loes not seem necessax at the moment to o"C en discussion of this points ageain. _s regards the wFor- Ii kely", _ w-aLl rnote the Nctherlands DIel_7atc's rese-ration. L- Kewaise. -ithn *ztiIcle 34, 3(f). ,ith regard t_ the su:-zestion c-1out the part which t;e Intentional Cc-ut might zlay, we have already had cause to examine, in the course of our discussions, thre reasons for which this su~-est,-n did nct seem toc be one that could be 20. discussed within this Committee. Therefore, I ask whether the Netherlands Delegate wishes that this should be mentioned in the report as coming from his Delegation in the course of this session, or would he prefer that the matter should be brought up again in the course of a later conference? MR. LEENDERTZ (Netherlands): The latter, Mr. Chairman. THE CHAIRMAN (Interpretation): Concerning Article 40 and especially the matter raised by the Netherlands Delepate concerning commodity agreements, in view of the fact that this matter comes within the scope of another Committee, I do not think we can discuss it here. It might be necessary to have some liaison orgnism between the two Committees, and I will discuss that later in this meeting. It might be necessary to establish contacts with Committee IV on this matter, but I do not think it would be in conformity with the procedure and powers givern to Co5.ittee III ±o discuss this matter direetly,.-'except in a joint Committee with Committee IV. '-ay I ask ycu, ;Mr.. Leendertz, concerning your last question but one, What£ is your suggestion rgardiInG the International Court. Woull you like to see 'that suggestion brought into our report, or do -you. think it preferable to' raise' the matter again at t later _ conference. TRI&. (Netherlands): I do not want to discuss it any further here. It can be discussed in Committee V. ISR. McGREC-OR (Raxporteur)': I a a little puzzled -'bout the meaning of the reservations. I have certain reservations in my own mind about certain sect-ions in 'the document. By that I mean that I would prefer them to be worded 'in some different way. But that would not interfere w-ith mr expressing approval of the whole document as it is shaped. now. It is 'a good, workable document, and one on which I think we might vey -well -agree. I would like to ask Dele-ates h,;nther in e:corcssingZ rezervacions they mean that they 'are nct willinz- to let things go in the document _an that thcy are .ot ready to take next in an-y u-r-~a-cus al'DrcVal of the document as a whole. E/PC/T/C/III/PV/7. E/PC/T/C. III/FV/7. MR. I^DEP TZ (Netherlands): May I answer that question? The question put by M!r. McGregor is really one that puzzled ne little bit. We are n)t committing our Govermnents at all. It seems perhaps rather superfluous to make any reservation, because our Govenents are not bound by arYt1hing we express, but sinoe. eser'-ations have been made by many D-legates, I only e--.. by mQy remarks that I think these points .might .be -nrought forwvard at another time. It is really an announcement that we have these things in mind in order to discuss .them. again. I thought I had already made it clear that, as - whole ve-, content with-the document vmich has been d-rawn up; and hink that on the wh6le t is avey satisfactoxry Zocumaent., -except that there are some points which Ishould like to -be discussed Prther. . T; MJYVIK2 (Lnte:pretation): I think I can irterpret.your thought, Lr. Leendertz, an-d there might be a general conclusion which could be drawn from it by saying that tho reservations which have.been . expressed in the course of this discussion -ndwhich. still nay be exressed by Delegates who will speak-- unless the Delegate say.s so specifically, will have the value of a desire- that a- position stated in these discussions sho-il& be put in the repor' which will be s admitted to the Plenary Committe. ..t the same time, they do no"-ot reject the doc,.rent m,.ich -has been submitted to the Comittlee, it is in this way th;at I interoret the reservations. The -word "reseoration" is perhaps too strong a ter, but I use it in' the - weaker sense I have just indicateJ. i WC5X (tJS): on two of the points that have een raised i should like to say a word in explanation. with frspect to state monopolies, I think that cuestior. is largely academic. The exoress:S;°on as it -s used here doos not mean 2 monoDoly writhin ar. individual sta-tc-, Out a-state-owred nonopclvy wehic2- has a colmlete world Monoplyv o0c the trade. 22. E fois. E. 1. E/PC/T/C III/PV/7 I do not know of any instance of that at the moment. With respect to the related question of whether -,:reea-ents corio state-owned enter- ;,rises in aifferont countries, -ree..'cnts which io not .include in tihir :,articijrants -zrivate ontcrprises :.t all, thc q7ucstion was, raised; as to whether they belocr; in this Chr.-ter or in Cha.-tar II of .-tcla 26 o.n Stata Tradi- I. o not believe that that ..rticla wil rel-ate to this ]?roblem in any wczy, that is, that the .-rticle, however it finally emeres from the 'ozaL-ititee, rill dea. w-ith the con~luctof a stats e.nter;rise in one country in its purchases or sales abroad, and. what is. involved, here is an agreement lbet'.nocna two or izcre state :rntex--rises .vhich ;-.uld. fic :ainia prices or 21ocate iarkcts so on; =1 it does seea to r that that prdblea is wroerly to be included. here; that is to so'r, -as the document is Iow drted it _n~lies to any con- spiracies rcgr, ccmercio1 entorxrises, whether they are entirely nrivate or entirely public or t ained, and the. cnaism rere is _rely one of complaint, hearing, discussion and. reco=.cndvation. The other cin-tw hich I would like to- menti.6n concerns the sinificance of the' phrase "Ilicelry' t. have. I-a all cases. where there emistsa agreement amonj a number of ent'?prises a;rI st which 'che co.,1laint wczl be brought, I do aot think there is necessity for the phrase, lrikely- to h.ave." T.o.t is, if, such agxree:=ent has injurio~as effects,. it x 77l be possible to- 2ciiit to those effects. Bu3t the one thing that- is. addec. by the phrase- "likely' to havey" : should. think is the possibility that complaint might be brought when a cartel arrange- ment is set up, that is, if a cartel arrangement were to be set up on a.certain day,. instead of waiting for injurious consequences to develop t would be possibIe under th phrase likelyy to- have" for someone to lodge a complaint arn sry: "Tf. this -particular arrn ement; persists it will hare injurious effects, because by its 'nature it is likely to have such effects. That- is the case that is covered. by the ;phrase "likely to have"; nd if the phrase w-rc to be ro-,-,-ed it would then be necessary to wait for the injury before bringing a complaint, and 23. E/PC/T/C. III/PV/7 if the phrase is retained it is not necessay to wait for the injury before lodging a complaint. T i-All-UZ (interpretatior.): I trh.nk- Pr Wilcox, and I will now cail up on our Ra:porteur to s-eodc, as he has a suggestion to make to .the Com:nrittee. T:E; F223RTELU (1:ir= McGre-or): ,ar Chai 1rma I hDoe no one *; 11 accuse Canada of -ry=irng t drag t.he 'United States around.; but 1,~r Wilcox, un-*fortunately, did not have an3 oportunitv to hear the speech that I raade yesterday t-o !srr -rendt and" :iL- Thiltges; but the ;-oint I was zaaking I thinIk wa.s t.hzt this is an opportunity for preventive work. The other ns that "harmful effects" had already ap,-peared, anxd 1 used the illustration of a cartel that might -meet next rech in I rondon in the Dorchester :iotel. shape u- an agreement that haa tthe effect of fi n. prices, oloc--i-.7 territory, boy' cutting ndall the things that are listed there, and noth-in coulL bo 4 ne 'feoht it under this, not even an investigation; it w-;,ould not be subject to investig-'tion; and, we would have o- wrait until somL harmful effects w.re proveoole, for w;hich we nght very well have oc t-,t for tw. or three years before we cola re that they hLd had harmful effects. I su,;est that t-fe all should be f=vouraoble to a nroarome that will prevent har-mful effects instead o f main. it necessa:- to put peole in jeopardy of takin" harsher treat In-.t I t a late- stage. --so used the il lustratior o ' c.r ai e defectiv- br_ .kcs. A ca with efeQtie ;rakes in oGlr coUntry is not -h-rtte& on thCe road aa an tnat way we -,=event accidents. That 1 suggest here is that the cartel -o- the grorp of commercial enterprises tat V_1 enter intol the kind of arranecments that r-e described in Articie 3L are not only o- ^--le of dcng :harmul things, 'ut the;- ae likely t_ ,o it, and it is, of course, gig- - .- be a diffiUlt mattert ove -'.t they are like>-7 . to do itt. e c -.t le st. i :-n _ 'oz- t in an2. o orha--s provide some Lieterrent to tahe o ir . of t oe_ i.<.tios, an-;dnVroidc something that 'wil-l rent the harmfSul effects. Tht is all a foot-not 24. E. 3 tc the comment that Mr Wilcox has : ust zmic. I.^s s z.ccn ?zr^r-h k2, I suCs't thCt tn.r- s;ule. 'e -a C:".. .-.., the .wor "rornventicn" should .c .- the v.__; "n tr." There have eere rcfere.ces - to this acz.o.. that *-. rU 1f^' . th- o,:,r te r -th. e , rtec . t. _ tha 'cnent; X >.:___r "e. tv_4. ._"D There .are sc -reaty sour2A rer s t. t 1 tins: .-st oyou .k.ov; whyr it trculd be More rasi-le to refer to tais _a:curw.netn as a Charter d th-erefore I su,:j;est tChat -;.e =-i4:ht :et the Cor;itteets a-rcv=J to that chane in :;ticle 36 (2), ana that the last .-;ora in it ttcn=vention` should be '-l ^gee to charterer" YMR RMCOX (USA): On t__t last poi-.t daie by ' 2c-re~or, 7 should think that the inter raftinG committee will h:-vre t -o through the whole document an, -re the- te:-ri.oi:y consistent in that res-oct .after a final decisionr. -n the r-atter is taken ;ircsubl:y by t.he Cora- n-dttee as a whole. M CH ML-N (interpretation): I thnk Ir 'Jilcox and. Ir LcGregtr for the ewlanations which they have ,,u-st ir. us concernin, the i-nsertion of the word. "likely" in the d&ft whicLh is sub.-itted I you. 7 io not think that it vould be useful to began a discussion orn this -cint now as it would be very if ficult to -roach bgo.ent, but the Belgiuzn- Luxemcurg del e-ate h-s expressed. some reservations on this,. as has also the TNTetherlandz c.ele ate, nra I th`i'- thatl other aele5aticns Will perhaps wish to associate themselves with those :eservations. In those circumstances, as it seems to be difficult for us to come to agreement of a reasonable nature in the little time that nwe hae left to- us, r propose to come back to this point izi our dscussion. E M KU1MR (India): -) r Chaiean, I h vealre aty recorded my reservation on a previous occasion with -re-ard to the -whole of Cha-ter V of the draft Charter relating to the ters of reference -f the resolution passed by the UTnited trt .ions -,oromic acd Socia^ Council, an. T . record that reservation, that this oha-tnr -ill have no eoning for 25. E/PC/T/C. III/PV/7 India if the question of restrictive business practices relating to services such as shipping insurance and banking is excluded from the examination under this chapter.. I hose due note -iml be taken. of this I reservation on behalf of India. With regard to the other clause , I '> -would rather not hazard WT comments, _.earticulrly .vhen the represen- *tantives of the U. S. Z. and of Cananda hav ex ;resse& entire aee _nt K with the revised draft that is before us. lir Wilcox has celled this a practical and workable dtrat, while our friend ir L4cGrcpor hos paid tribute to the U.S.SL in getting common agreement in ;tting for- v~ra d document that Vould.work; so that have nothing to spy -s the various clauses which are before us. .As -regards the revised rt M have, however, -one small susgestion to ke. I..do. jnot -know whether it is already covered by the phraseolo' .of, zsub-clause (41) ort-ce.0 :-- 35, Th:r- it sas .oi . . 35, ~ere it soys, ". . . . notion all members of each such mlaint;. call u-pon the co= lainant or any member to provride such information relevant te the coirplaint as it nay dee- necessary. : .Does ts par ticular phrase cover the rio;rht of any member to submit arny- informtion or. his own initiative or does it man that unless it is cnl" ed upon by the 10T.C. no member will be in 2der if-it. submits- any information relevant to the comlaint? THE RFPOP=M:R (Hr McGregor): I think that cany member .can ds tL t; T do not think you would have to indicate secificel2y that it may. 7ndia may write into the Organization at any time. Ti MUS: (ITnia): The ;',rase that is used hder is "cell u on'; so that unless the -,articular :-.e:s-cr-govcrr-meot is cellad uolon by trh I.T.O. to submit inform-tion the member =.y not be in order in doin, so. TEE, P-POR.2ETR (M~sr M~icGregor): I think that a nation would be just as free to do that as is anr re-resenttive to sek :n tnhis meet ing without t the Qhairmarn calling u?:on him to s7eak. ISW }?.K'JLR (Tndia): I an waiting Ior the Chaidrmn' s instructions in the matter. TI:HE C2-H..; : Does -1-Ir luiherkar 1=ve anyw- further observt-: t make? 26. E. 5 E/PC/T/C.III/PV/7 -i.R ..#4vl~D_- (I ndi): N'!.72th rc~L , to thoe other r clause 7 h nVo t: ether ;bse tions to zake. TtS C'HLt_.'NI: (inter-eot-tor): Nte is being to:kbaen of the resorvaio.ns ex:qressedl by y)u concorrin-, this dvcu.oent, ..;.Cl e Z :ror.,ted by the fact that "serr4.es" =-a n.ot included; but 7 h-ave not follovweI -very clearl- the ezcch=r.e of iz_.s -.- C;1 tokc ,aco between. y,^u ana ..!r :.cG~regor concerninr te st oona sentence of 1-aragrc 4 'rticle 53. MAust I cornsider the irciJent e'-se_, _- 4 you have any further ob- servations to =,ake uon this tc-ic? Is LR'K2D2 (7ndi a): T mere' wanted. to have an e.mlan.ticn a.s to --att that -:1rase wiould aean. THE M ZMN interpretationon: I consider therefore you axe satis- fied. with the exnlanation that Mir '.IcC.retgr gve yo. .: D.E I ECUM (France) (inrterpretation: '& Chair.an, 1 'had asked rern.ission to speak before you h-ad imnvted us no't to -roorln the discussion on the last na ft of Article 35 (1) concerning h-e -words "likely to nrc- duce. " NcW I do not wissh to rec,,en this discussion, bsut i should like to say that in the opinion of the French delegation. the word, in the French text is not si=ly s oryr~ous v th intention - there u be something else in order to, constitute a likelihood, and it should be more of' a deffi ite. manif estation, wThether this comes from the Statutes themselves or from circulars. it is. rot necessary that thero should be a beginning, but there must be. sone manifest tendency. That is hcz the French. delegation had under3tood. the .-ord likelyy." ThT CI NLIZA (interretation): If I understand correctly, the example which Mr. McGregor rave to illustrate. his thought, the fact thaRt members of a cartel have reserved a table at the Dorch.ester,. might expressed a tenden.cy or intention. M =rrsTGES (Belgium): (inter;pretation): MIr Chairman,, I do not want to prolong the discussion, but as MrIr Mulnerkca- ,wanted; to give us ore example, I would like to say that wre make our reservations simrly because it re-establishes the suip-osition which. the Unit.ed. States 27. E/P0,/i /]V. 1114?V/7 delegate a few days ao sa id that he was Nvillin, to abandon ir± order to come to .n -agreement. I. cwcanble of killin;. Tf I am a vey rest- Ile ss man ana I ac quite -,e-crea that a policeman should be -,ut there aren I aree -to be ar rested if I kill or if I attezfrbqt to Id-, I1 do not want arybody else to come to my home and say to ", 'wYou are Ca-pa:le of killlinG and we ;are taking you off to -,rison.1 Ml LA&N (-nteraretation): 7 do not want to continue the Zdebate, but the illustrattion which you have just Ziven is an example of the Doint broughtzup here by 1L- Wilcox an1d Ir McGxregor, but even if it is not so, your reservations hav:e been noted. 3ut I-think this debate Las--.- object and so Tcall upon other delegates to ct arT other questions they: -wish to xrame., Des anyone else wish to spzenk? ITUPR AS (Cuba): t r nChairmn, the COfban daleg-ationr a=rees -i-th the suggestions contained inr the draft clause, but wsshes t make a -eser- vatQcn w-.th r3~ard tc the treatment of "services" in. this Chalpter. That-- is all I want to sayv. Tha-n you. T.f CilJN (internretation): Th=2: you. If uInerstood you correctly, you expressed agreement with the whole of the Ch-pter, -th - reser- vation concerning the non-inclusion of "services" irn 'this Chater, and iiffer from Mr It;M-herkar who does not agrce to the Ch--cter because servev ces" --ae n^t included` I therefore conclude that all the delegates 7ho nave s5ok-en s_ far, wth the exce-timn of the delegate Co Inaia, have ex-oressed their cmrovo. of the draft submitted to us, with some reservations, howe-vre-, cncernin-g som.e; etls, such as those Wnhich the de adte of Juba ha ust ment-one' _ cal' u-;ns the delegate of Brazil. DE R=2OS (Brazil) (iterretaticn): ..ir Chair.an, in a -ener:2 .manner, I, toot '-.uld liee t -et ;;ich h-s been submitted. I v-.ould a sk y o u, h:ow ever, to al me tc make a suggestion submitted f-o the consideratWion o the sub-co ttee, ;.ic i:.s to a^ aCt se cat _or other - tr-he text; t t: ; ar-ou criteria of the suo-Committee a Thrase whereby it wo-.-ull -e estalishe that ctes 28. E.7 E/PC/T/C.III/PV/7 should be registered previously in some section of the I.T. C. in order that there should be proper publicity and.that this formality should be foreseen. Before ending my speech, Mr Chairman, I would like to express some reservations which I would like to see in the report of the Committee concerning. the text of article 34 (2) (a), in regard. to commercial enterprises and the exclusion of "services." F. fols. 29. E/PC/T/C. III/PV /7 (Interpretation) THE CHAIRMAN: .Mr Monteiro de Barros, your reservations are noted, but I think your suggestion conflicts with a juridical principle. One cannot see-how, the obligation to register cartels can be demanded of countries which at the time have no legislation rwh-:ch-foresees. such xegistratIon. It seems to me that the point which you raise is covered by the passage in Article 35 and another passage in Article 37, where adopTion Ar. l 3. . .a.n in all member countrAes-is recommended of some leLi-slatlon wh'ch V.would allo-w. the Organisatl on to have It s full effect. Mrr L-OTEIRO DE BARROS (Brazil) (Interpretation') 1 would propose that the Organi-sation itself should. r_ -ster them, THE C-AITRKN (Interpretation): But I think frbm the point of view of legislation it is impossible because thi-s is a national probl em. (rl nterpretatwl on) 'Mr. M.ONITEnO DEE BARROS (Brazl): ivell, I think somc international publicity ffor cartels sho cd bD assured. T:-E C:;LHxAN (Tnterpreta ron",: But tlhis public ity can only be possible if each national legi-slatura sees to it; it seems to =e that; thlIs is le-ally evident, and that is vhy, in spi-te of my being Chairman. I al lowi myself to point it out to you. 3ut if the Commititee does not shar' my point of vlew, it is free, of co-urse, to adopt the suEg;stion wrilch. :r, ;onteiro de Barros has just made, Does C.y e-.:mber of the Committee vwish to second this suggest ion? consi-der, Uherefore, that th.e Committee has appro-ed the leglal point o0L view, ohich is no.¢t mine, becaulse lawdsc -uGa n'o belon: -o an one, ' 7 have simply reminded you osf itv I ask i'r, TKonteiro de Barros if he w ants h s SUZestlor to b e ported as coIng from hris delerjation. It w- 11be noted in th e Report, th-Drink 5-t v:will be necessary to say why-.xh,,- the Com-ittee di&d not t'ink it possible t retain the suggestion. ivr NAUDE (hSouth Afri-ca) : I had not intended tU-o r-ke ar.- resarva- tion here this afternoon, 'ut I notice that several delogations F-2 E/PC/T/C.III/PV/7 have O,"O SO. Ict. Z,,ua:t -uht rU eservat; ns 4 pc;.,usl- '-. * still cjli-ed. So that I sh¢o-ulJ ,just 1i-ke to -,:)eCet theat t.e South Afri-can CGover -;nr-nit hnave no c;eep :;.sl.ed of cartels; thev halove made no ivstis;ttiz-ons; anc. accorJ.n-i ^y they ha-v e not girven any instructions as to !v,.hat one can cor.:.;it oneself tc _ should d have thought i-n any event we v-ere office als an.i there- fore ,ere not como:i-toin: ourscl-ves to L-nyth. n. _ a: sure thea -ill note the certl- n thi, s I,, g sed fo r tl-h Consi-C!eroble .int.erest- and. especially the e.xclusi-on of s7i-pi- I undcer- stand the reason Peerfectly well for the exclus'on of shIpping; out J.t -i s a matte. on :h-.?h ch rm-y \-overnment is considernably i-ntei e stedd.. THE UURzLAN1 I tlna.s- you an. d your rer..;arks w-il be taken note oi Gentleren, It is pointed. out to me that It is the ti-me of the afternoon when it Is customary to partake of tea. In view of the 1-mportawce *'L today s meeting L thih-ni we should try to exhaust the subject of th-is deb-.to as ^ar as possible, and I see_ no possibil-ty of endi-ng our d-iscussi-on in so short a time as'itQ permit you to have tea af.terwards. Therefore I sugr-est we might; suspend. our meeting. for 15 minutes, 31. G. I (Altter a short adjcurnaent) M C=LIR~iZN (Interpretatic.: The meeting is reopened. I should like first to call u-con Mnr. McGregor, who wishes to give certain additional eplanat' ons ccnce:ming one of the questions whichh has been brought up by MEr. Mulierkar, and it seems that the example that vas given might have been misunderstood. 30.. McGREGOR (Rapportcvur): ' a. glad that you called on me, mr. C.hairnan, because I v--v.Old not dreami of speaking without consent. That points 'p the urtnate analogy I gave in :r! answer to YXr. IMuzlhcrkar. He asked if any 2;mbe- of ithe Organisation could address himself to the I'O inder one paragraph of article 35'. I told him 1 thought he ,as as free to do that as any member of - his Cornittee wv-as tL :se and aaddess this meeting. The analoor T should hav-,?e you ar.-e ,- , as free as any .janadian citizen is t- ad-e-s 1rn-_.°lf -'o the Prime 2ML-is er of Cannda. n citizen f--'-ee o s-. arn: represertations that ay be made to him. 7 s I sho u h o_ Z. tte -TO wo uld g;-oe the kind of consicderation tc FUC-h 1;. t the Prime ministerr of Cannada would give to a rescue t C.- r Igw to him. r: C.JLIL: (Iner.-e-.ioni: .ie hve ow come to the secon part of our disUsiz-.s. I s:nu'ld like to ask those of the Delezates whc -a; not yet spoken if -hey aVe any xeaservatiorns to formulate concernir.g the tenc sulziL .ed to us, either as .r. ulherkar has do.ne i t or. the -;;-hcie cL Tne text, cr ars other Deler-ates have done or. ce-tain -arts c+ft e text, In the l.tter case they would be living thair- _reement +e tlh tezt as a whole. I shall consider trhat tbosc Dele-:ats-..-:s ,o nct- a_ k for the floor are thereby expressing their agre'mnt with th, W*hole of thae te:t. L 'L. GONZ~L~Z (Chle) (I--1 } - ---- ~-<o - a.!i sOr to h.ave t cooze b=ck to the c p e:.-c. j-. rc-:--3. ;:a-, t- -he Tihe -.iaa-_ -'' bUan Delegations o. th-is buoject. One cannot deny the really close relations existiwnr bet-veen thossa tw-c subjects, Lnd I believe that G.2 E/PC/T/C.III/PV/T this Committee and the Conference will have to deal with trade as such, and services are in reality something which certainly is part of this problem. I wanted simply to make this remark, and I do not do so as a reservation on my part concerning the text. As far as the registration of cartels is concerned, such as was proposed by the Delegiate of Brazil, I believe that is a measure to be recommended. One might try to find a formula which l .~cuh woullow one to arrive at such a registration. Th^.t is all have tC Say, arnd I consider that the -remainder of the proposal which ha s -een submitted to us is perfectly well presented, ar.d I azree with it. 2 C EJ~T'S(mntw_;retatior): The remr.rks of the Delegate of Chile will be noted as far as the -crd "services" is cccerned. As far as the suggestion of the Delegate of Brazil is cncered, I think this will be one of the tasks of the Organisation -- to try to find a foarula -- but unhappily we do not have -.ime to bzirn ;;orkinz onr this question, which is a verxy couclica.>ted one. MR. ELSTD (Norway): 1 h-ve no objection to make to the new text, but in the same way as already mentioned by the Delegaate of 3razil, I would hasve preferred that it should have contained -a short paragraph about the registration of such agreements, cobinations a-nd enterprises as. are mentioned in A;rticle 34B, 2(a) and (b). Provisionally, I have to make.a. reserration on this point. (Intercretation) THE CHAIRMAN:/ I understand that the suEesticn of the Delegate of Norway is similar to that of Hr. Honteiro de Barrcs, and note -;-ill be taken of it, MR. FLETCHER. (Australia): In the sense that we axe accepting this text as one that we feel we' could conend to our Governrents for further study and possible acceptance, I think that I carn say, on behalf of the Australian Delegation, that we think it is a big improvement on the original text, and comes much closer towards h;;nct vwe ,2ay be able to 33. G. 3 accept and work to. I think you will understand me when I say that, with a subject of this kind, it is quite impossible to make any considered preciation of its Dractical implications within an hour or two. It is a very wide field. But this document is an improvement. There is one question I would like to raise just by way of clearing my own mind before I leave the Conference. If I interpret the new proposals correctly, I think the emphasis is now to bring the document back to what we commonly have in mind when we speak about international cartels, as distinct from the hundreds of practices that are engaged in by little groups, which do many of the things which are listed here. I would like to know, possibly from Mr McGregor, whether that is his interpretation of the new document. H. fols.ols. E/PC/^6/C. 77 1/7T7/7 T* -E OFTL (_ -: :ckre,,r): So as.,; 23 YOU i slucL. -n :atclS all crvat = c 'Iinations i.n i-. t `=-n. effocts, t_ ,ethe .vi-^th W. stlte-c-.-ec7L zabinations *a. 1'l the mixed va-riety. YhiuI: th.t your i-ter--retatio'.n is ri-ht. -J is. not -.roosed t4r work the small thi.n0s; it deals ; t Eh Dtt-s 'I irnter- nationa trade. W13 MEMTC:-: (:ustral-4): Yes - ie t..-. OrZU-inJs 27 a -e THE c.?(POEtIJR (to-- 11cu-reaor): Tlhzre may -_c smzall inteIrtional ,rc_.ings that v;zUl have to be considered; but it is international; it is nct affectinrg at allyr ur domestic c-. inations. . ': .OW (Chrina): --r ChnJrm.=, I ,-;ould like first of a11 to .-!-.cc n record that the -raft o- the -,hole as it is -:roscrtedt -to Us s acce-t- able ta the Chinese aele7ation adae 7re r--eoday to transit it to cur Gcv-s..-rment fbr consideration and t;en f'or finl acce-toAce. ?erhacs i may also avoil .rsel' of thrs Or-ortunity -to say that Ir I.cegOr has 3 ;2reat rerertory cf excellence and 1 thi.k thaIt at he sc.a ti-.e 'e is v vr=7 ,cod =eltinG-,ot because he has succeeded in outtin_ all these divergent ideas that hare been put forwqrd during the last couple of meetings in to a workable revised draft, atia I-. would like to take this op~orturity of tharking him on behalf of the mer.bers who served under him ard. -ith rai:m for turning out this draft. C: ' ((interpretation): I thank Ixr Bang Ho fo- his statement. Ino call u,,on r 'rkim of the Lebanon. M HI=& (Lebanon): 2'x Chair . since -il the dele gates h ave sroken and given their attitude to the :resent draft, I think that I should scy that the draft is general ly acceptable to the Lebranese dele-ation, although we would hive preferred. to have stronger provisions a nmore effective regulations for the control of cartels, arnd in this we rather agree with the United States' attitude on the subj ect. MI CEIA.N (inteapretation): Thnrk you, Mbr Hakim. Does =yone els'e ask for the floor? MP SOBOL (Czechosloevala): ..lr COnairman, the Ozechoslovak dcele-ation, in 35. E/PC/T/C.III/FV/7 general, agrees with the aocuint that has 'been submitted to us, and from this point of view it represents a sumestion f'or the r-encrnl dr2atir com'-_ttee in New, York. A IWIXNCE (New 7;ealana): ir Chair=n, the araIft we have bef re us this afternoon is in the 7iew ofI the New Zealand delegation an improvement on the text of the United States draft Charter, but there are one or two points on vhich vwe have not yet resolved our thoughts; they are, nowever, points that can be tak-en by the draf tinZ sub-committee or in the subsequent proceedings of the Pe aratc^r Comittee. Ona relates to the possible conflict between the Provisions of Section (f) of Chapter IV. ana certain of the poisions in Article 30, those pro- -visions about state tradi g; or the one hand and the Scomplaint which com be made anE, on ihe other han, the provisions of raraph 2 (a) of Article 34. Another point to which I think attention might be given is the use of' the word "possible" in -aragzraz:. 1 (a) of Article 37. It is a oueStion of: In- .iere or in Just whit sense a thing is "poss-ible. " But these are points of detail. As I mention earlier, 1 think there nay be questions 7--isinZ in respect of state trading aspects that hrve sone w7ider significance than points -of aetLil. But in the main we agree with the new te.xt an think that it .roviaes a vaeluable basis-: further consideration. TEI CHiatIOM : I thank you, lr Lauzrence. Gen-tlemon, dearlins wV-ith the text as it is prsoso e to you, certain. reom:ks h=ae Dean =-Ce M ir cer-tn cases dele-tes hve -resente_ res_-a-tions concer-nr;c i_ rtant pcits. Nevertheless, on a pOint of detail :11 these rerI. cor~cern mostly the use of the word "lkely" or the wcras ;showin- a tendency" in the French text, and I believe the F,_portour =iQ the eX2,ts Pr . assist hi-. will make eve-rTy ef fort, before our f-inal eetirn, the date of which I carnot ive at the moment, to -put fo- -jacrhaps better wiordinZ concerning ths one s3 rtenoe, a atran *-icn wh *;_I ' t loi Possible for us to agree. On the second D^_int certain ra.r. iam:s w--e-e 1aaa by a nz-er of delegates. Soc oz' them s:id that "services" ^e not 36. i-clutd. in t^he dra7t that rou .Cn ;U.cc su t ,_t .. :.-.ust ~once a-cr try to f-id., befcre cur fin z ~-, s ro solution which oih-,t pocssibly olc7w ^11 sf s to :. oe -t . c2. in hand a.nd rrive ^t a solution ;f tJhe --robln-. ..r :1J.ht 'se satiSfy the Indian dele-ate. I thinkC that L.r .-ilco.:, : is. likc 1.1 of uWS, zdous to arrive at such <,_r.erol -re:-.zont, nithave - su-,estizn to -.ace to th.e Ccr.-ittee conce-rin2 .:; this Dne cnt. t is not :^ere a -r=blem of res^ vin,-g these -irnts, .ric ^e So:Cwhat _el. .e; 'wut T believe that between ncw a a : ur fina ::eetizl dwele ,tes wall 'ac time tc reflect uor. the sUc.-estiz:ns tha;t -viiI e -Presente2 to them by r ?lilcox -a ,:erhaos we shall be -ole to arive t -e-z-- a,-reercnt. I coll u.,on ir Vilcox. lip wICOX `tS): '. C` - I c.n only nr caorsc ..r ~ -ou h-ve said. r n afraid. that I ha-e not a-ny racti,.- st;,stion to -a.:k at the mozrent. I only ho-oc that it -:-ay 'c -oss-_le for iele >tes to consider, before ^ur fina e1 teti -, -he .ssb _ili of X-rivin: at urn;.iity, since we are now so very eloso to it. ME CIiN (lnte r.ret-ation) I thanks Mr - ilcox for the -2romise he has just gZven us, a promise to brinj us later a 7ropcsa for J . solution, and knomwx;in his efficiency =nC. the i;ortant p-art he has played in our work so far, I :have no "VIt that, thanks to hi i nc thanks to the co- operationn of the rest of the dcle-tes, we shall be able to solve this problem. We still have on our ,gend.a one other prilble= to discuss. It has ser~d in the course of our discussions that there a=e certaIn coon problems Iretween our coi:'z:ittec a-nd scnc other comz ttees, I on not here thinking only of the question af servicess' which has been mentioned so often, but clsc of certain - - questions of procedure which are spoken of in ,.rticle 35 of the :roposed. Charter. Those. questions mi;ht be worked. u-on in connection vrth the other ccmmittees, the task of which it is to ex=Dine thema, =an. therefore I suggest to the ComLttee that we rmiht set up a vroy s=mll sub-com- mittee which -m-iht be c rxosed. of three or four me.-mes, with thIe task of estblisini l-ason 'beteen our connrittee and the others. I fols. 37. E. PC/'T/ C J III/PV/7 +enzlemen 2, Thiltges ha4 as'eeto ilake a proposal, ana there- fore I c0ll upon him*. i;, THILTG-ES (B el'Ez.)Um (Interpretati on,: ir CG i-rlz*an .n --should li-ke to Tnhicate the n-..:-es of hc persons . sugest for thIs Co:.rJittee, I shbold' like to propose once iore ,_rx :2cC-regor. IZ stoula nlot like to seeScoul-and tkr.en from out o-' our ha.rids. I sho then sugzest th. Del' g t es of Gr-reat Br!tCain, of ChIna and. our Vice Presi-dent, Zte Chl'!ean delegate. ::- CE w;:AIBJ2g (Interpreta^tion): Do'es anyone wTvrish szo ea upon tre rro-osa.l t-nat T., Tlltges has dust formulated? -IT. LECUYRF (France' (Th.zerpretati-on): t se e.:s to me that It would be very wi-se to a d-U to Ith is Co mit eeT ' T.L IlIltzes, who w.ron~uld be prepared to represent French--spealIin¢. countries Under the circumstancesX T c-~ C:-;I2A (T ntermrezat' c,: _ su- -t tC theCo ittee the su:-estg ..;n .: Leciu~- er. T:-- B.APORTEUR: 2&y I -su-ag§est tha thh-e name of I..: Thiltges snould replace the rc;=e o f the first nominee: t-It t"he name of 2. Thi-1 tges sholc replacC Zi-ne as .. neDmer o the Committ ee. TEE CB2--.i (T1terp'eta o-): If I h-ave correctly understood the propo s al of M ', Thi-ltgFes z^o 41_ Sal- 5. ,e hi-nz _ou >t ,Z r IoGrezor neave ' e back to .oc.- n -,O zaain- ' e I . oour propcsal re e L n ~ ze th ne nam:e of tha U ni-Le d Ki-ngd"'oZ ee:t or, ~& as Q; X :!^ U ;.S - -w &- . _ e -. >;_ Gt f 1 U .f,- UE. .. U U.- ~ ~ ~ ~ ~ ~~L ay, I:' ZO> -;u, I c nr: h j.. n- Z 'is z;,^ -c- :`Era > tcs; Does anOblody else wisIL tGo speak alout tu.is 30nt popos' of :. nhllges and :. Lecuyer? (After a pa-use:-) Therefore I t-ke it for granted -a -. ye: ed ilai-son Su ub ccm:tt ee t_ . 'i ot.er 'v_- :it'ees Cmpocd 0of I.>- ,iilc^: ' --^lmos, Lr Gorzr;s, Mrb -oa >r lt., Z. f -- I as: t:. secr tari at o I - a r -;<_e- . t :- ?,rt. _-er.;en. i t is 1C to 6 and we- have fPi -eh ed all th w-orh on he qu st enos 38. we have to exmine in the course of this day. The only thin that remains is for Mr McGregor and the experts to put the .ni t^~l t ouohs to th;e proposal yo - 0, n oancd a1 So to dr a ft the tvwo f irst ar ts of ta- R eort i-n a rre:-ri en W hh th r eat I1-s e.- ha v e reoei vef :: to c tti of :C.Ios of : eleat e -s. t 7 e s ; al11 - -;t - n n z s zs oD whih I b e I i i-i~l be cor.snlerec ans fi-nal c. a r" v. t- _n -1.-oh I hn to see convened as soon as pcs5i-&le, Hevert'f IeleOss as this wo'Crk o f 5i-nal preparationn must be d,, on h r " cre, > anc in order not to sin at,-In b;y too Creat apt.-s, .s . 1aav; done before by cnllin-r you together too early, I thlirl i-t v;o be better not to ,'i-ve you at thi-s ::cr.t the date of' our nex meeting. You will be notified cof thl-s meetir. through the Journal ?anf noti-ces wh-1hlc .w-;iI be posted in the e..tranoe '.i-l Nevert'eeiss I thi-nk I can tell -:ou tha-t this :et- wi-il t place sorme ti-me at the be:iInnin;,OL : of n:week. ;a s anyVbody any question to ask or ily remark" to -ake? (After a pause:* Oentlae en, thae meetinE i-s closed. (The meetIng rose at 5,51 I.m1) - --- - - - _____________- 39.

GATT Library

xc515xk3481

Verbatim Report of the Seventh Meeting of Committee IV : Held in The Hoare Memorial Hall, Church House, Westminstor. S.W.1. on Friday, 1 November 1946

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

https://exhibits.stanford.edu/gatt/catalog/xc515xk3481

xc515xk3481_90220092.xml

GATT_157

E/PC/T/C.IV/PV/7 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT - > 8 . . . > . . . ' _ smLEEn ' . Vr t Rept o the . , .- h. i The e :ri>=1 Ch . i;rs - S. . r - 1 v '->er, 6. (From the ShorthlNots of 58, Vi~tc,_.r; S, 58, Victri-tret es-:ste S.77 1_ ) 1. _' i0l?E, 0.::.G. (J-K) E/PC/T/C.IV/PV/7 THE CHAIRMAN: Perhaps, before we start the discussion, it might be allowed to the Chair to say a word on its suggstion or the work of the Com- mittee this morning. We have only not a little to do, I think, before the we part with the subject so far as the drafting committee is concerned, and I am extremely anxious that we should confine ourselves this morning - to those points on which it is necessary for this Committee to aocrss an opinion before the draftgin committeea cne ral lyget to work, and that we should leave more general points which have been raised in the discussion from mtie to mtie, such as relationshiwp i the F.th O.A. or what action might be taken bweeteno nw and the timeh wen the Charrtt mcoes into force, for discussion at later meetgins of this Committee, when we shall bae ble to do that on the basis of a complete, newly drafted Chapter, which we phoe to receive back fromhe t drafting com- mittee. If that would be generallyg areeable I think the discussion this morning might be fairlyap rid, and this Committee could then ad- journ until it receives theep rort fr om the draftgin committee. We should then have an pooprtunity of looking, in full mComittee, atw hat the drafting, committee will then have beean ble tpo preare for us on the basis of the discussion so fara; nd in the lighot f that report and on the basis of a fresh test, to return to the morge eneraalpe scts of ouwr orwk hich any degaletion wants to raise. f interrupted our proceedign: yesterday when we had I think almost finished the discussion of Itmes7 A and 7B, but we had left over a point raised by the South Afriacn Delegatoin in connection with shortages. There is a referenc eto cmmoodities in short supply in paragraph 49 of the United States draft Charter,s but it mgiht be con- venient if the South African deleate raised that pointw hen we cmoe on to the next item on the Agenda. RM McACRTHY (Australia): There is one question in rgeard to your proposal about procedure and that is this matter of relationshpi with the F A. O.. We have that problem before us, some of us ata ny rate, oftha t relation- ship; we have people at the F. A .O m.eetigns in Washington ta the present 2. E/PC/T/C.IV/PV/7 time, and some governments have to decide what they are going to do about it really. Even if no finality was reached I am inclined to think that some sort of an idea of what this meeting thinks would be helpful as soon as possible, particularly as we have come to it in the ordinary way of business, and it might mean that if we had to wait to discuss it for perhaps another week or so, when the drafting is finished, and we reach it again in the general committee work, that it might be so prolonged as perhaps to withhold that assistance that we might get in trying to decide what to do. THE-CHAIRMAN: Well, it is for the Committee to say. The only reason I made the suggestion I made was that it appeared to me from what I had heard of various people's ideas and so on on this, that, as we are in the process of changing the basis of our discussion from the United States draft Charter to the new Chapter which is to be produced for us by the drafting committee, it might be more sensible to have that discussion as soon as that new basis is produced. MR McCARTHY (Australia): I would agree with you on that, with that one exception. MR DE VRIES (Netherlands): If we proceed rapidly this morning, and have any half-an-hour or three-quarters of an hour this morning to discuss the subject, after we have dealt with the points we have to discuss this morning, maybe we shall be ready before half-past twelve. THE CHAIRMAN: That may be agreeable to the Committee; but I do not now whether other delegations will want to discuss it before they see the new draft. 3. B.1. E/PC/T/C.IV/PV/7 MR SCHWENGER (U.S.A.): The United Kingdom do not want to go very far on this matter until they have seen the new draft, and our idea was that we would do to it as little as was necessary for the work of the Drafting Committee, although we do agree with the Delegate from Australia that it is obviously going to be helpful, and indeed necessary, that the F.A.O. Comission should know what has been done by this Committee, but it seems to us that it is another reason for pushing on as fast as we can with the drafting of the Charter. MR McCARTHY (Australia): As far as the F.A.O. is concerned, in their present proceedings, all we are interested in is to know what this Committee thinks of the relationship. The drafting is another matter. By putting it on to the Drafting Committee, you are really asking the Drafting Committee to decide a principle. I do not think drafting is in a hurrry as far as that is concerned. The whole point is that, on two or three major issues with F.A.O., what is the view of this Committee? The main thing is this. I do not want to open the discussion on it, but the F.A.O. is discussing commodity agreements; we are discussing commodity agreements. What are we going to do about that? The Drafting Committee is not the body to decide that. VICE THE/CHAIRMAN: I had not the faintest intention of suggesting that the Drafting Committee should decide this. MR McCARTHY: (Australia): I do not think the Drafting Committee would know what to do with it. They would be coming back with a recommendation to the Committee on principle if they brought back anything. VICE THE/CHAIRMAN: I suggested that what we should discuss was the remainder of the instructions which we wish to give to the Drafting Committee. I do not think it is unfair to the Committee to say that its instructions to the Drafting Committee are not always very precise. MR McCARTHY (Australia): I misunderstood you. If that is so, that is the point I am interested in, of those that are left. I think we have got to discuss this F.A.O. question sufficiently to give the Drafting Committee an idea of what we think about it. If that is your intention, 4. - .? I . - I B.2. E/PC/T/C.IV/PV/7 that is all I have to say. VICE THE/CHAIRMAN: Then might I ask whether any Delegation wants to add to the discussion we had yesterday on Item 7 (a) and (b) ? MR DE VRIES (Netherlands): I should like to add one general point for the Drafting Committee, when establishing the relationship between commidity councils and the Organisation as a whole, that we should have to find yAs-ss- \ pnrowhccvedvuirelsog dwlahich enakinble prompt action ad h aodln ey in worg hout things. There is one ipoint whic I should like to ask the Unted Sltates Dloation about, that is .licLe 5, point 6. That is an article; on procedure for making the determinations provided for in Article 25 and rtnicle 45. I should like to ask the Urted States Delegation whether this consultation that is called here is the same thing as the study group r conference before it has been proposed, or w-ether it is still a consugrltatio. nM after the proposal of an aeement y second point is: Here it is said "embers having a"n important interest in the trade'only, while in all the other rtipcles it says "production, consumtion and etrade"f. re they trying to makca difIrence between those two, or is it just a matter of drafting? MR SCENGZE (U.S.... I confess that that is not very clear in this draft. We refer to the determination in article 45, as to the need for a regulatory agreement, h and I do not think that we ad thought that there would be an additional determination under Article 5 to that which is provided for in the articldes r--elating to commodity stuies commodity conferences -- that precede rArticle 45. The reason fo incAluding this paragraph 6 in rticle 55 was to make clear that the determination would not be by the Organisation as an dminiLtarative organ.sation, but th. it would be related to this consultation among members that is provided for in Chapter 6, and I feel, therefore, that thmis is a point which the Comittee which is working on the Organisation ch.apter ill hare to consider, VICE TKVHLIM-N: Consider, that is, in the light of any revised chapter that this Committee may adopt at a later stage. Are we then at liberty to pass .~~~~~~~~~~~~5 B.3. E/PC/T/C.IV/PV/7 on from this part of the Agenda? The next item was "Organisational relationships it other United Nations Agencies" . There is no section of the United States draft Charter'-' noted in tmhe argin. ;-."f'';'-"---' DE VRIE: S: There is one:. rticle 71, point 2, -thatComittee 5 yesterday - - f - -IV scratched.\ '.: , VICE TE/CEIRN: Iwzas sarchin for he refrence, n intending to tell this Committee what I think was the sense of the vew of Commttee 5, s0 hat they could have it in mind in discussing, this. s g aer; te point is that this rticle 71.2. reads at the moment "The Organiz.tion shall cooperate with other international organsations whxse interests an ctivities are related to its purposes, with particular reference to the importance o food and agriculture in r-latip to the subjects dealt with in Chapter VI. As I understandL t, sora Dlegations at Clomittee 5 pointed out that there were other subjects for inltance, la:our,.which .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Y had a particaarly close tie wdt some other pts of this drft Crter, an wondered whether there should not also be referUce to that; andC thinc other Delegied in mind the idea that ternational was also concerned. The general vie l(e hin o I toect in so reporting it) of Committee 5 .s hat it woula better not to specify inC .rit e 7.. any particular Organistion, but sisc to rey on the gaenralithy f the fist pot of the sentence, Vhic smys "The Orgnization shall cooerate wth other international oraganisations host interests", etc., and that that shuld apply right through the charter; and that it was unwise to piceout food n oagriculture, because then, in drafting e should be bond to pick out anything else that wseof interest, and we might miss one. Indeed, we haa miss cl because we Nwl. no know it was there. I think it is for, this Comittee to decide whether froidits own point of v-e, it wants to give ar nstructions to the Draftingt Comistte about special relationships ith the oni. y :EVRiE (Netherlands). I shld like lo or -thiscssion on the ~~~~~~~~~~6. B.4. E/PC/T/C.IV/PV/7. ~ relaAtionle ship with -.Orticularly, but if it is scrPtcheCi d £ic7, maybae the aDrafting Cittee coldu trto find something s it ws in t he first raft ar2 rC iter to Chapter 6. I ,.RTn(.ustrAia): 1anmMr Charman, iHt appears to the .ustri: Delation, froea pcrsal of the papers arisinog out of the recent Conference at Ccpehagen, an thQ_e -g tposals for t-zis metinz tt is takng place in _.1senmt tine, tehF.A.AOa0., in conidring teelsh- c a,me n1T1orlldFoo Boand, ad.rhan t hwat Borawoulad ddo, has in ind thamt it wo-vjldork t 'hirfhl cooondividuitmodiaore::tes. Imet is stated somevere twhat n=nnotl tlhe .i rm;.[pns ofv psioresent ar,metg,e ormn of agreements contem- plate< by tdhe l..Cte Oirac are olua n _de such areonngs,e but additional :oasrn~oi, s,chw a re th particeular rnzern eof F.-O. 0 picn Inlrar, thuey __ozref.e to fi-nnce iolae- irv.vdhihn, ie7o fd stgocks, and they refer, in the omcuzsadiss at an atc,y _-heor rec _ othde iscussdins, to obuffer stks on several 0000s. tocca seners Ito u tha; whsatver the circumstance put fonsard by ...,t faF.A.Oct i s clear that . -antwosati ng, thAt is, thea C siono,m tht is siin.a n katshginzon Wat theg reser.t"pr,n nd thmis P reparatory Comittee, amre contemplatin coroigy areemm- nts;g _- it doesa sdeem tat if some attetis not mamopde to reconcile nt onl;the odvffeyret --nts onf viaw that iit arise orutg of those discussins, but recooncile the vies as tchow these coocif roarismaiorty, gar nc-.t..nbicouncilmmods,when they are set up, shoul be aiinisterde`-imicultofds nd ff possiblye s.a.dconfusionom wil arise. uvew is thaOuytu co=D_4ireeemmods must bge linmmeked up with the I.T.O., for the falowing .i ra:s os mai scl--e-. g%-;agel menvcw-1 CvCrnmenallt g_aseures affecting te r iclarh rp.a pruodcts, s uchcututies, u_;sqci,_ preferent ditonsial , and oso n. "_ J1 DC oCUiT cTher a Dee cf o=romis i - the ecumliar coentd.it.rs.p:inii;ua1coonti pof es andd in drecloncilng these conidt ;sth thesevdetralon o;sns f the ._.er. In w OI.T.CorkingO out thei rs ofhenzreiivid codutalo nr .:n,dthose othgere as,mpects f internal r tr-iew-a tl ade be contrll-- y the I.T... weill have to be taken in- ratio. to coshideo" Fert-inT gneral puldrincbeiples aplicable to 1coLo_.p,igreemor ts wmmhdotr for ,11 1de'suff eohr otherwise; and these greraLprovisions shocl.be adminilstered by one buoddy. The problem, thn, sexoto be to reconciee the J;points of view, nlamely, () that flo- =..ityagremaents shouldd. no bmmeo d ivoced from,,ther ^coodityd agreements an, for t is am- he t. h rcasd Ihav stted,d shoulod. be ssoc-ted with the I.T.C; nd (b athaithe utions of F..O.0. r uch that they are teresten. namoant ee comindity agreemeants, and shdl h-av at least a V-ce -n h;ir -o.,ttin and dministratiioc tthinL it can be -ce-tod ha F . -;willhor isisI on s v c, even - thy do -t isit in cnctro1ir.- c-,ctytst a, major deg . 7 G-1 AE E/PC/T/C.IV/PV/7 Helving given that view, we have given some thought to what might be done by way or reconciliation, and I just put this forward as a suggestoon which I do not desire to be considered as a final one - perhaps it could be called a tentative suggestion: that early next year an Interim or Provisional Commodity Committee be set up to work under the aegis of the Preparatory Committee on Trade and Employment (that is this) to decide upon the commodities which might be the subject of immediate institution of negotia- tions for agreements, and to arrange the prompt commencement of those negotiations. Secondly, that F.A.O. ci de onG, the food mcodmoitiewhs h itic considers suhold be the subject of imeid-te egnoQiations for commndiyt.gajeements; to drawlup he conditioos w.nchait onsidc s shouldSbeoiIncluded from t-e F.A.C. point of view in such agreements; and, further, that in the course of the negotiations for the agreements - that is the negotiations under the I.T.O. Preparatory Committee -F.A.O. be represented. I would further suggest at this stage though it is perhaps a little premature, that when a Food Commodity Council is set up finally, the F.A.O. be given representative on. It might be further noted or it might be further considered that when the Interim Commodity Committee meets, arrangements might made for the holding at the same time of a joint meeting of this Committee and a representative of F.A.O. - perhaps the Committee at preesent meeting at Washington.l: Washlnngton. 'a, Caimmbri rm , e-enrally su-war t: h vi that -e sfhould l1h put -Lorentrd at .the prnmes, En me IthirI should athe viewddh that e.ta.: rnaa general statem-e.non the subject mit lee circumstances,g 'We mLht pss a resolution thaut wce sholad o-operte and co-ordinate our efforts, and a few other gnaral thi gws that .mighl doi; but l we are toi deal wlh .t.Ohe FA. on ttehisw matr, ge have got to ive them a pretty ooadof w idefc7at we arnge toin:to do, and also we have got to anhswer teir statement that our memtghods ght be unduly slow in .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5 E/PC/T/C. IV/PV/7 reaching any result. I think I would like to repeat what I said at the start, that both the Organisations are considering commodity agreements. We think that the solution of many of the difficulties in relation to foodstuffs and raw materials can be met by multilateral commodity agreements. F.A.O. thinks the same thing. I would add a final point: that we do not want to get the conception into our minds that it is the F.A.O. versus the I.TO. It might be that because some sections of a government are con- cerned with one and some with another, some degree of mild rivalry would arise. That I thinkm:ust be aioedcd, because in the last analiy ssthe goverentsnm which support both are the same; and, speaking for Austraalit, he positiown hit which we shall be facedi wthin the next f weweeks will be, just as one unit, one government, what are we igong to dabo out the proposals that are emanating fr om two sources on the msae subject, one fmro; Washington and one from London? It may be that oMne inirste i-h one set of advisersw .vll be dealingwi -h i- and he wi-l vnt to have a clear idea of what they oguhf to odcabout it. HE VICE-CHAIRMhN: Well, Gentlemen ITthiak the s3a-emeot made by the Australian delegate is of considerable importance to us, and I think perhaps we ought to have, for "the benei_-t ofh te dele- gates who have not so far obtained them, the proposawl hich was made by thei Drector General of the F.OA.. conceirhnn the est-ab ishment of the Food Board and also copies fggthe resolution swhi-h were passed in Copenhagen, and if possible, also theM inutes of the meetings inC openhgenm regarding that particular subjec.t I ask the secretariat to produce those documents, and I think it will be possbile to disrtibute them iether tdoay or tomorro.w Then would any other delgeate care to mkae any statement on this subject right now? 9. E /PC/ T/C .IV/PV/7 MR HALL (United Kingdom): Mr. Chairman, the United Kingdom recognises that/this is a difficult question, but, as has been pointed out by the delegate of Australia, it is extremely important that we should see that there is not a conflict between the work which is being done here and the work which is being done in Washington, and it will be the endeavour of the United Kingdom to see that its delegates, both here and in Washington, are instructed on similar lines, and we shall attempt to say the same thing in both places. On the substantive question the United Kingdom view, as I think is the Australian view, is somewhat tentative, but perhaps it would be helpful if I gave some indication of what it is. In many ways we feel a good deal of sympathy with the attitude put forward by the Australian delegate. As it seems to us, there are two questions. Firstly, the long-term question of the competence of the two bodies, and on that the United Kingdom view is that commodity agreements and agreements for introducing stability into the prices of agricultural products are clearly a matter of trade and as such should fall under the competence of the Inter- national Trade Organization when, as we hope, it comes to be established. We do not feel that it would make for good order if there were two separate international organizations, each dealing with their own blocks of commodities. It could be obviously better to have one set of principles administered in one place. We agree, of course, that a number of the things that might be done by the Commodity Coomissicn and the Commodity Councils of the International Trade Organization will be of very great interest to the Food and Agriculture Organization, and we think that some arrangements might be worked out for consultation. It is a general problem facing all the United Nations organizations and we have already a certain amount of experience of possible E/PC/T/C. IV/PV/7 ways for arranging for consultation between the specialized agencies in questions where the interests overlap. On the question of the interim problem, our thinking is certainly somewhat tentative at this point, because we are not at this moment - nor do we expect to be until somewhat later in the course of this Conference - perfectly clear about what is going to happen in the period between now and the establish- ment of the International Trade Organization. The Commission which was set up in Copenhagen and -which is now meeting in Washington is charged with studying not only this particular prcblem, and a considerable number of other problems which are clearly within its own province and in which we have only an incidental interest, but it is also going to study the general problem of stabilisation of the prices or the returns for agri- cultural products generally. We imagine it will be studying that not only as a broad general question, but it may well be making particular, studies in the field of specific products which later on may well be the subject of commodity agreements under the procedure which we have been discussing here in the last few days. On that, the United Kingdom would hope that the work which is being done in Washington will not be lost; that some arrange- ments will prove to be possible by which full advantage can be taken of the study and the thought which is being given there, and possibly some arrangement may be found to be practicable under which it is considered that there are particular problems in the field of particular commodities which have a high degree of urgency and where the Food and Agriculture Organization and its Commission may take the view that it is its duty to recommend immediate action, and that some preliminary arrangements might be made in that connection. I expect it is known to a number of the countries here that study groups have been established in a preliminary and tentative way for certain commodities where there is a reasonable 11. 3 :- expctoatiC that therwe ilel bcdifficulties. cWe drtainly do not take the wvie that urgent problewms ill have to be shelved until there is a full International Trade Organizatioon t dewal ith them. The United Kingdwom as substantially in agreemewnt ith the original proposals put wforard by the United States and in our thinking on commodity problewms e have attempted to avoid doing anythiwhng iwch ould be inconsistewnt ith those principles. I do feel that wit ill be swomehat difficult,w hoever urgent it fopisr us to reach tyoda or in the nextw fe days any final conclusions about the character of the interim arrangements which may be necessary, but on thwat e are certainly anxious that full advantage should be taken by our Governments - because I ould like to associatey mvelwf -twh -at MrM. YCarthy has said, that there are notw to conflicting organizations, but that there are a number ofo gvernmentws hi chhave a mmcoon interest in the proble m w -e should likoe ur governments and our peoples tgo et full advantage of these important and useful studies hich undoubtedly w -ll be made in Washington, and w - od not despair that some reasonable interim arrangement mgiht be made, althoguhw e would lkie ot reserve out position at thsi stage. It seems op us a qusetoin on .ic w. could need to hear the opinions of other delegations. I hope that that will give some indication to the Committee of the stage at which our thinking stands at present. Vice THE/ CHAIRMAN: Thank you. The delegate of France? MR. WORMSER 12. E/PC/T/C.IV/PV/7 WORASER (France) (interpretation): Mr Chairman, or this topic, which is rather difficult I would like to indicate to the Committee in what Direction the thought of the French Delegation tends. As has been indicated by the Delegates of the United Kingdom and of Australia - we are anxious tom find a copromiose which wuld allow the Internadational Tre Organization, on nthe one hhad, and te Foiod and Agrgcultaure Oranistion on thne other had, to each one fulfil its own tasks and we are convinced thmaromts this copie can beW found. e belgineeve minnn a eral aer that the creatimmon of a Coission on ucbasic prodts within the aIntenatiol Trade iOrganisat0n has the object of facilitating the settleent aof ngembarassiysithurions wbch might arise in the field of mmobasic codities and ghwhimpech mht iriml oand coprmise the general policy of the wNiations mhcbmh areMeeerIs of ath naterntdionl Trae OramsEton. a far as this polimicy ciaa t he dpeervelo-gmof international exchanges andma then inteance of full emmployent. -tgh retrd to the Foandodg xulcALicurge Orsnisation, we are well warm ofe thtfact that the tasunks zertaken at the emomnt by our colleagues in Wasghinton hanomvet yet reached fruition, buht watever ay be thegg oaaisatiowhin -h w.ll arise out of their diussciions we believe that this goranisation gouht to have the power to co-ordinate international probmles ncvening o policies of foodn aad griculrtue. This co-ordination uwoldas ve abovel al the aiom f raingsi the levels and technique s ofg ariculte urprocdution in order to satisfy the needs of coumnsers, which we believe to be increasing, in number and which we believeh soulde b aided in tiher development. Fmro thosew tgo eenral ideas weoup ld like to duedce a we would like to convince the mmCoittee that therwoe uld be some interest in drawgin the followgin conusclions. The basic mmocodities mmCosision of the InternatnaioTral de gOnraisation shloudave gh eneral power to ale&with all problmez concerning trade in braic cmmooziti s. 13. 1. E/PC/T/C.IV/PV/7~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ to policiThe rs of the F.tA. ., te shld dxtend-t ~~o th. other h'n- of pkroductio-nd consumtion in agricultural products . I wou1d i- e now to sketch before the Cottee how the rch egation foresees co-operation between these tw orgizations.. 7e eaving, of course, to the raftinZcomritee the task of picking cziogth ideas that'. we pphave sugested those rich hb. rceived the al rol of this Comittee, it i s -ecessar.y, first anCforemost, to leave-t the F.AO.0 the achievement nd the im.ementnton of all the necessary studies coerninr production a=d usau)tion ricultural products =nd then afterwar. to co-ariate n-etinal policiess i the fibld f food and agricultureati to ensure the implementgeon of these policies, tother wmpith the help of otheorgaro coeotent internationa nizatins. Secondly and oan this o.:t I think mth=tthere ionwill not be ;ry objecti to meet ifimpression I may jude frgom,thed o viress n whch I :aveZatheret fr.m listening t:all btenhe ddeclwarati.nsich have just 'ecr ) 'e blieve that there should be anommc interest taken in the basic:modities com- mission of the I.T..,po -hiclshould retain full res;-ibility for reulatmmoing agreemcoefopmnts =nbasic crrities in cnay with the directive idea of the Statutes which we oare studying. Thirdly, I cme t -othe matterr - thood and Ae relati-n between the Fiziculture Or- arizoati-n and thge InaternatiDal Trade Orani3-ion. I think that the basoicm comodaitieps cmiss zA.ighl c;ll -ono e F.>._O. order t_ obtain advice and inmformation which it ighgrictl nealeed concerning autu prodA.ucts. As gfor the F.O., it miht also, when it sees that an em- barrassinag over-production my occur, ocall the attention f the basic codities comissioon to this stand tte .f ffapoiirs,. a- - is a ;?i which deserves consideration and discussion - it should co-operate with the basic sdcommodities commsion in order to elaborate and build up internatopional agreementson agricultural prduce. It is possible that the Committee may alsoo find oit useful t lay dwn that amongst these agreements there should be reference to the various systems whereby prices can be stgabcal deduiciotopmiizolizeda. Thn whioch hone cn draw frm tese con- 14. E/PC/T/C.IV/PV/7 siderations, which I apologize for having expounded rather lengthily should to the Committee, is that, on the one hand, one / foresee one way or another, and with all the necessary elasticity, representation of the F. A. O. within or attached to the basic commodities commission; and I think that if the Committee where we are new discussing the point wishes it, and will give its general approval to the principle of this sug- gestion, within the drafting committee we might find a formula which would give satisfaction and all necessary assurances to those who have raised various matters here. THE VICE-CHAIRMAN: Does any other delegate want to speak on this subject? MR SCHWENGER (USA): Mr Chairman, I feel that there is a fair degree of common suggestion by the delegations who have spoken so for regarding this question, and in general our ideas which have been set forth in the Charter in regard to the need for a central Commodity Commission to deal with all commodity agreements in relation to trade under this International Trade Organization need no elaboration, especiaIly as they are, I believe, in accord with the main ideas expressed by each of the previous speakers. We agree, too, that the Food and Agriculture Organization has a very important concern in commodity agreements in addition to its other great and important problems, and that it should be closely in touch with everything that is done in relation to com- modity agreements regarding agricultural products. It was with this idea in mind that we included in Article 71 the phrase which Mr Helmare reported had been discussed for deletion, and the agreement to delete at that point was subject to our insistence that an effort be made to restore the basic thought at a more appropriate place in the Charter. I believe, as the Delegate for the Netherlands has suggested, we might well ask our drafting committee to consider the possibility of finding that place in the portion of the Charter which it will have to deal with. It may be that it will be desirable to specify to just what the relationship of the F. A. O.to the International Commodity Commission should be, whether it should be the namining of a member or an observer, or whatever we may 15. E/PC/T/C. IV/PV/7 consider to be the best functional relationship in order to ensure that the interest of the F. A. O is adequately repesented and represented with sufficient authority in commodity discussions concerning agriculture. There are many ways in which the work of the Food and Agriculture Organ- ization will be a necessay supplement to the work of the International Commodity Commission. It will surely not be possible to solve the commodity problems for which we envisage that agreements will be con- cluded in relation to the Food and Aricultural Organization, as a considerable measure of success in its, efforts to co-ordinate the agri- cultural programmes of the various nations of the world and to work out a rational world goal for the utilization of agricultural resources, and steps taken under the commodity agreements toward the achievement of such a rational pattern of world agriculture, could surely not be reached within the narrow confines of single agreement. They must be directed toward, through and with the assistance of the F.A.O. and its pattern of aricultural production The problems of increasing consumption, of rectifying the pattern of consumption to conform with nutritional standards - those problems have a close bearing on the working out an individual commodity agreement and are primarily concerns of the Food and Agriculture Organization. There are other points which have been made better than I could make them. We, too, are concerned at the simultaneous discussion, at least in part, of some of the problems - of of the same problem - in different places, and we are inclined to agree with the Australian delegate, that it is important for us to make known to the people who are working in Washington just what pattern we are working on here, and I think that that is a strong argument for getting ahead with our drafting just as fast as we can, so that, having started first, we will be able, through the represen- tatives of our vaious governments, to take a position in Washington which conforms with that which we are taking here, or on which we succeed in reaching agreement. MR GUERRA (Cuba): Mr Chairman, the Cuban delegation is at this stage of 16. E/PC/T/C.IV/PV/7 the opinion that the discussion that we have had so far shows a fairly high degree of agreement regarding the question of the functions of ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-a ng cotheit ag. Tm . g.anemfof tomodtyarents Wl, ime common piakers so other s-eg, notablygthee French dele at, that it will be possible to state very clearly a distinction between the fould btioar 21t oushd be Ae0rAed t nby the F.R.O. ad those that should be carried out by the Internagational Trade Ornization. 17. F.1. E/PC/T/C.IV/PV/7 - ; - e;*- na ver, there is one point t haet we mucwant to stress., Werc vey. =. inclined to agree with the pinion of the Australian Delegate that a general declaration or statement about cooperation and friendly relationships between the two ormganizations will, not help uch. We are inclined to think that it would be much more constructive in the way of avoiding undesirable rivalry between both organisations if we could go a little further ahead and state as clearly as possible what our position is on the question of the administration of the agreements, and conerning the way that the functions of F.An.. will fit in with our ov functions. Wea do not see any conflict, nd in this we are entirely in agreement with the Deglemgate from the Unpited Kindo, in taking all ossible advantages of the studies and conclusions that the Copenhagen Conference and the meeting now taking place in Washingaton have arrived at, and mybe are deciding o the subject, but that there should be a very clear distinction between the views and the dstudies that have been mae, and a great help in seeling to it that the genera principles, methods and approach to the whole problem of commodity agreements are taken into account, and that we may reFachO. a common ground with .A. That is one thing, and it is very desirable that the conszclusions that both Organations reach on this question will be in general the same and that there will not be any conflict between the point of .vAiew of one and the other t the same time, we think that while this agreement is desirable and possible, and that we will make sure of a greater degree of success in our general aims, if this common ground is obtained, the regulatory agreements, particularly as they, according to the terms that we now have in the Charter, are those that contemplate the regulation of production, trade and prices, should be definitely under the administration of the International Trade Organisation. I think that the basis reasons for this are so clear that we do not need to go over them again. s the United States Delegate said, the F.AIO. has very ma hings to do with this, but we feel quite in a different field. We say that we are not prepared at this stage to state clearly what the 18. F.2.E/PC/T/C.IV/PV/7. relationships should be between F.A.O. and the I.T.O. On this point, we think that we should do everything possible to reach a general understanding as between ourselves; and at the same time, regarding certain specific organisational relationships, particularly with the intergovernmental committees it is the purpose of this Conference to set up, we are not for the time being prepared to give any definite opinion. In general, we think that we should state clearly that the administration should be a matter concerning I.T.O. and that we are prepared to give, and are in the spirit of giving F..O. every justified and possible help, and inter-relate F..O. with the work of the Organisation, not only in the heigh level (I mean the Executive Board or some other place), but we are inclined to think that it would be useful to have those relations established at the lowest level, that is, the commodity commissions, or maybe even the commodity councils. I think that the suggestion of the Netherlands Delegate, and later of the United States Delegate, of transferring the declaration of cooperation set up in Article 71 to some other place in the Charter, will not be enough. I think that it will be constructive, in the way of avoiding conflict at an early stage, to try to achieve an agreement regarding what our position is with reference to the administration of the agreements and the organisational relationships between both F.A.O. and I.T.O. THE CHAIRMAN: Does any other Delegate wish to speak on this subject? If not, I think that the various Delegations who have expressed an opinion on this subject have given sufficient information to the Drafting Committee to enable that Committee to try to produce some results, and I think that perhaps we would be a bit optimistic if we expected that the drafting committee will be able to produce a define result out of the discussion which has taken place during the last hour. On the other hand, I think that we have come quite a long way, and I suggest that, as I think practically all Delegates who spoke have indicated, it is essential that we should try to come as far as possible to an agreement as quickly as possibly, and to as detailed an agreement as possible, on this particular problem, especially 19. F.3 E/PC/T/C.IV/PV/7~~~~~~~~~~~~~~~~~~~~~~~v ~~~~~~~~~~~~~~~ ' \-f for the benefit of the Conferene wlchis no ta place ThAgenda,en eralI tink 'e will have to move to the last it=n oa. I&MM l (Cna): Mir Charman, with your permission, I wou1d lik to raise 1, mainly a p oint in conecti6 with i&icle 47 ) prrOh a .- consideration of the Draftihng Committee. It has been recognized by tis Committee that, in making certain codity arrangements, it will be necesssary to inwclude synthetic substitutes in uch cases here more than one comodity may have to be imancluded in one commodity agreement. So n I suggest foromm the consideration of the Drafting Sub-Cittee that, as a matter ofwh wording, the Alast part of the sentence ich reads: . Commodity Couen-gcil shall be established under each introvernmental commodity agreement involving the reogulation mmof production, trade or prices f that coodity"; that is paragraph 1 of article 47. I would like to sugest that the wording of the last t of that sentence be so revised as to allow of the possibility of including the primary commodity as well as its synthetic substitute in the same commodity agreement. R DE VRIES (Netherlands): Mr Chairman, I should like to support the general idea of the Delegate for China, but, as is evident to our Delegation, in the case of some agricultural products,, without bringing it into contact with synthetics, it may be f use for a group of commodities within one commodity arrangement, as, for instance maize and oats which have established, relations in the United States, -- thermme may be a reason for a group of coodities in one arrangement thaiti we may read as a whole in the defntion that the commodity may, in some way, include a group of commodities and the synthetics come into that general term. THE CioAMA If there. ar nofurther ccmmens on that, I think we will just- leave that for the Drafting Committee. We will tAherefore turn to Item 8 of our genda: "Exceptions to provisions relating to interover"mmental commodity arrangementst Would any delegates care to speak on that? MR DErm VRIES (Netherlands): Mr Chaian, I have one remark to make, and one question 20. F. 4 . E/PC/T/C.IV/PV/7. ;. > . l-.' :4 to ask I believe that in ourhH discussions we widened e scope of inter-goverental c0oity agreements or arrangements, and decided that it would be wise for the Drafting Committee to consvider whether "conseration of reserves of reexhaustible natural sources; the equitable distribution of commodities in short supply; or in gnmentneral to intergovereal commodity agreements not regulating production, trade or prices" should be altogether, or partly within the scope of this chapter. The question I should like to ask is this: In this Particle altogether come up the objectives of Chapter 5. We have not been ditherscussing that altoge in this Coittee which deals with Chapter 6, so I should like to ask the United States Delegation what they mean especiall in the words "inconsistent with the objectives of Chapter V". It is not clear to me. G.fs. PAE G-1 Mr. ROBERT B. SCHWENGER (USA): Chapter V is being dealt with by Committee III. If they were to turn out a Chapter identical with that here, this reference would suggest that commodity agreements - that is, agreements of the kind listed here - should not be used to accomplish results inconsistent with the objectives of that Chapter VI, the business practices Chapter. I think, however, it is premature to discuss that here now until Committee III has done its work. We might ask their advice on this point. Is that your point? PROFESSOR DE VRIES (Netherlands) : Yes. Mr. E. McCARTHY (Australia) : Mr Chairman, in Article 49 of the United States draft, in the fifth line equitable distribution of commodities in short suply", I should like to propose that the Drafting Committee examine that specially when the rest of the draft is being gone over. I can conceive circumstances where it might be appropriate for a commodity council set up under the Organisation to carry out some work arising out of a shortage, For example, the present Food Distribution Councill 1 that body in America which took the place {if the Combined Food Board - might well ask the Comr;odity CouncJ 1 to do the work for it, It woulC have the machinery and it would have the competency generally to do it, So I thfnk it mYa:ht be met at some stage 5n the general review of the draft and until that stage is reached I would. like to. make a reservation against the complete passing of that Article, which otherwise seems to me to be quite acceptable, SENOR JOSE A\TTONI GUERRA (Cuba): 'Whi le I am very much in agreement with the point of vieew expressed lust now by the delegate from ago Australia, in the general discussion we had two days/we.discussed the objectives and.tie reasons for setting up commodity agreements, rjd, if I am not mistaken, we contemplated the possibility of setting up the a reements just because there was a shortage, That point was raised by different delegations, and with regard to the equitable di-stributJon of cbmmodlties in short supply, 22, TAE G-2 E/PC/T/C . IV/;V/ 7 it would be the r -rIsh tu'at *comri-oil-ty nZreenents shoudlc'. coLre under the En-neral ;r-,-ovI-slons of the Charter th.at the Draftin, CommIttee is settin-, uiz now for later discussJon by t.he full Committee. Article 49 refers to thIs type of agreement and refers to other aims of r.,ree::ients, such as the protection of public !:,orals, the protect-ton of human, anl-al or plpnt li fe or health, thae conservation of reserves of exhaustible natural resources, the equi-tabl2 di strIbutlon of cor.o.,dities in short supply. In vie;:- of the particular ar:r.s th"at such agreements contemplate, It Is proper that th.ey should be put In a Li-fferent place and subject to differenttreatrnent; but vie do not really see any reason., at least at this stage ol the discussion, for taking co-moJ>ty -areements kLCsi--'nod to acrhJive equitable di_ stri-- buti on of comamodlitles in short supply out of thle generall context and in this exceptJonrl Article. 1 we 1G like also on that po nt for tlhe ti-e -eln_ to maie a: reservati on. THE VICE-CHAIRIZAN: Does an,, either del.SEate care to speak on thi a sub j ect? i r, HIE, DAVIS (New Zealand) i:r Chairm-an, in connection zith the exceptions to the provIes:,ons relating to interg,'overnmenzal comaodi-ty agreements, th; point the ,ew Zealan-'! del egation would like to raise is pe:-hc-ps -.-ore rele-rant to Articla 45. I refer to the possibilIty of i.nzer-overnmentalgrear.Gs rergulitl ng the release ,to markse's of seasonally produced goods ;hich in the absence of. regulation of that kind bri-ng about seasonal peaks of marketing and seasonal troughs. Such arrangements have been made in the past, and we are not sure that they are permrI ted under the word-Ing now subm-tted in Article 45, Indeed, it may be ccvei'ed in Article 49. If such agreements are not permitted ' under the present 7ordJIn-, we wiold i-sh to suggest to t.he Drafting Conimitted that they should be admitted., 'PROFESSOR DE VRIES (NIetherlinds): The Netherlands delegation -completel2y agreewieth to- point of vI-ew of New ZeeAland. L *-th . . .p 23 23 .; E/PC/T/C .IV/PV/7 THE VICE-CHARMAN: Are there tiny other comments on this subject, item 8 of the agenda? (After a pause:-) Then I be allowed to say on behalf of the Norwegian dlelegsation that we are not quite certain that the intergovernmental agrements ought to cover resources in short supply. They are now dealt with by the Emergency Food Council, Which was established after the Combined Food Board, La and we feel that it raises rather difficult and other problems than those which we have discussed here. Wehave here bean dealing with commodities which are supposed to be or may be in burdensome surplus and the whole lay-out h .s that problem in mind . The question of allocation of goods in short supply arising out of the war from the Combined Boards in the war period, and then by the Combined Food Board to the Emergency Food Council, relates to different problems. l just want to have that put on record for the Drafting Committee. I fully appreciate the state- ments which other delegations have made. Does any oheer delegate want to comment on that? (After - a pause:-) If not ,I think the meeting of this Committee has come so far that we ought to be able to ask the Drafting Committee to go on immdiately with its work and report back to this general Committee as soon as possible. The secretariat indicates that the drafting , Sub- committee perhaps could start its work tomorrw morning at 10.3O. Will that be agreeable to the delgates? (After a 0ause:-) Well,we wiill take it them that the Drafting Subcommittee will start tomorrow at 10. 30. The room will be Indicated tomarro w. It is not likely to be in this room. The meeting is adjourned. (The meeting rose at 12.8 p.m.) 24.

GATT Library

ps985mt5228

Verbatim Report of the Seventh Meeting of Committee V : Held at the Hoare Memorial Hall, Church House, Westminster, S.W.l. on Tuesday, 5 November 1946 at 10.30 a.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.V/PV/7 and E/PC/T/C.V/PV/6-8

https://exhibits.stanford.edu/gatt/catalog/ps985mt5228

ps985mt5228_90230013.xml

GATT_157

K' ,' UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SEVENTH MEETING COMMITTEE V held at , rhe Hmore MeHallal E1l CHo-ch Iiusem West.insWer,S.7.1. Tuesdcy,o5tmbNIve:zer,1946 at a.m.0 - MNNLYIN DMINSTER .SR (USA ) (Frhe tle Shorthand Notes of . GU.NBTJ SONBS &FUNNELL 58, Victoria Street, Testzins'tr, S.W. 1.) _1. CHAIRMAN: . I . . . I . I -- , . , - . ...' . O A1. .. - t *?t ~ ' - A4 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' I, ,, v S - W 1 i' , TEE CHIRMN: vt the close of'tie meeting-yesterday we wert discusi .. Article 62 on the composition anl procedure of Commissions. . the die- ; cussi=n closed I suggested th.t the Delegate for the United States iiiht wish to make slme clarying state.-t with reference to the as;ummtions which had lain behind the preparation of the United States draft in respect to this matter; and I believe that it would be helpful to the Committee if I called upon him to =ake some statement at this timc. I assume, = course, that we will wish to continue the discussion of this very im- portant matter after he has made his statcment. The delegate for the United States. a GMWGG (U.S..): Mr Chni.man, taking up first the general status of the Cozmissions, it is the United States view that they should be autonomous bodies on a high level, subject only to the supervision and coordinating authority of the Executive Board. They would draw their authority from the Charteritself arl from their appointment by the Board. It is hoped that the members would be men of the highest calibre and prestige. We might hope, possibly, to attract such a man as our Chairman, Mr Suetens, -nd people of top-most rank and prestige of this sort. It is hoped that the important responsibility of the position which these men would hold in the Commissions would appeal to this kind of :an. The job of the Comrissions is to drar conclusions and to make recommendations on which the Executive Board will act. The next question would be: What is the relation of the Commissions to the Executive Board? The Crissions would be subordinate to the Board -n their recc::end.pions as experts would be subject to the political judgment of the gorunent representatives on the Bozad. The Board would also have the responsibility to co-ordinate the Commissions among themselves, with a view to keeping thon from wor1;ng at cross-purposes, lhe Executive Board would refer to the Commissions any matters which it considers suitable; that is specifically provided. The third question would be: What is the relationship between the Coiwissions and the Director-General and the Secretariat? The functions of the 2 B.2. Director-General and Secretariat are different in nature, in our view, from those of the Commissions. The Secretariat would assemble the facts and the evidence on the basis of which the Commissions would reach conclusions and make recommendations. The Secretariat would be ready to assist the Commissions in gathering and marshalling the information and to make the studies which the Commissions would require. The Director-General would consult with the various Commissions in setting up the divisions of the Secretariat concerned with the work of each individual Commission. The Director-General and the Secretariat would be able to maintain intimate contact with and full cognisance of the work of the Commissions 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 the Commissions' work on the part of the D.G. or his Deputy. If the Director-General foresees the likelihood of conflict as between the Commissions, he has the right of participation in the meetings of the Executive Board, and this gives him a chance to express his fears in an effective way. He may also initiate proposals in any of the organs of the I.T.O., including, of course, the Commissions. In short, the Director-General and the Secretariat would be there to render to the Commissions, on their request, the indispensible assistance in preparation, personnel and administration, without which the Commissions cannot operate. Another specific question raised was: Should the Director-General direct the Commissions? -- or: Should the Commissions be part of the Secretariat? In our view, this provision would tend to prevent the Commissions from having the high level status they require and which is needed in order to appeal to top-level men. The conclusions of the best experts in the field should, in our view, be channelled direct to the Executive Board, and should not have to pass through any one man such as the Director-General. To put this duty on the Director-General would be to burden him with, responsibilities (many of them semi-judicial) which no one man should assume. As a result, all or sonic particular segments of the work of the I.T.O. would suffer. If the capacities and interests of the 3. E/PC/T/C.V/PV/7. B.3. E/PC/T/C.V./PV/7. Director-General were, for example, weighted in one particular direction, it would obviously have serious consequences on the work of the other aspects of the I.T.O. another question which was raised was: Who will raise the problems before the Commissions? Who will bring matters to their attention? In the United States draft, the Executive Board, under Article 60, would refer matters to the Commissions as it deemed appropriate and supervise their work. The Director-General has the right, also, under Article 68(2) to initiate proposals in any of the organs of the I.T.O. The Commissions also would have the right, on their own initiative, to take up studies. - Another question asked was: Are there any precedents for this arrangement in other Organisations? The Air Navigation Commission provided in the Charter of the International Civil aviation Organisation is very similar; it is not identical, but it is very similar. It is composed of experts. It is appointed by the Executive Body ofOICA1 and it makes recommendations to that Executive Body. another question asked was: What is the relation between the cioeoGcr--eneral and the Chairman of a Commission? We feel that the Chairman of a Commission is the head of a semd-juaicial body, while the Director-General or his Deputy in the Commission !s concerwed vith the administrative and investigative work of the body. We feel that you should not give to an administrative or executive officer a judicial function, that the judicial function should be held by the autonomous bodies, responsible only to the Executive Board. Finally, what is the status of the Members of themiomn.ssions? We feel, as we have said before, that they have got to be men of extremely high prestige. The status of the Commissions has been so conceived as to attract this kind of man, but we feel it is now impossible to predict whether or not their jobs would be full-time or only part-time. You will notice that our draft does not at any place say whether they are to ue fall-time ort- paVtime. l It eaves the matter to the Conference. It may well turn out that some of thue Commissions. will i. B.4. . *.,--;;l...: find their work extremely heavy, in which case it is likely that they si4l calarg on theoir members.to work for a very lve part f the year, In other cases, it may not be necessary. We feel it is to be hoped that I the Organisation at the outset can get the very best men. These men will set up and establish the prestige of the Organisation in the Commissions, and if later we find that they are working more and more and their work is building up and requaring more and, more of their time, we hope that by that time the prestige of the Organisation will be such that we can attract good men on a full-time basis. 5. C.1 a t;' _ ,; , ,,, , ' P s ]it~ est t iOaIS (United Kingdom): I have listened,i at i t :o the statement of the United States Delegate, as am.sure.al Delegates have. It was a longish statement and an important state- ment, aid I wonder whether it could perhaps be inoporarte& i the-. record in full, as an exceptional measure. Tno CHAIRMAN: Would that be agreeable to the Committee? (Agreed.) GEL ERASMUS (Union of South Africa): I agree with the United States Delegate as far as the relationship of the Commissionsis concerned with the Ezecutive Board and the Secretariat. That isvery important. But I foresee a difficulty in getting really highly qualified men to do this work on the Commissions on a permanent basis. I think there will be difficulty ingetting them. There might be the possibility to appoint a permanent Chairman for each . Commission, and all the other members could then serve on a part- time basis. In that respect I think we should redraft the Charter. in that way. It wil bring out the different distinction between the Commissions and the Secretariat$and will show their responsibilities to the Executive Board. MR. COLBAN (Norway): I also listened with the greatest interest to the statement of the United States Delegate, and as I have already told him privately, I agree, I think, with every word he said. It was a clear and precise statement. Iwill-dd that I also agree 'wth the idea of the South African representative, and in order to bring the draft into accord with these ideas, I would suggest two tiny drafting amendments. In the first line of Article 62 (1), where it reads "Tluohe Commission shall be composed of persons appointed by...." Iwld say "invited by..." And in regard to the number of members of each Commission and the conditions of office, etc., I would say "the conditions of service." These two slight drafting amendments , - ~~~~~~-.6- C. 2 E/PC/T/CV/PV/7. would, to my mind, fully take into account the purposes - explained by the United States Delegate and would also be sufficiently elastic to make it possible for the Conference to make special arrangements for a permanent Chairman of each Commission. MR.BURY (Australia): I listened with very great interest to the statement of the United States Delegate, but in certain respects it did fill me with some misgiving. I feel that there would be con- siderable value in having Commissions of this character consisting of people of very high persona ability and commanding respect, but I think that their functions should be akin to those of a board of directors of an ordinary commercial concern, that is, that they should be distinctly part-time, that they should be people in constant daily contact with the affairs of their own countries and the world outside, and that it is the benefit of this kind of daily experience and outside contact which should be brought to bear within these Commissions. We feel that if there were a tendency for the Commissions to consist of full-time people, however eminent they might be in the first place, it would tend to build up bodies with considerable influence in these spheres which would be in practice very remote, and would as time wert on become detached further from the main stream of the things they were administering. As Sar as their permanence or temporary nature goes, too, we should be rather concerned at having an over-elaboratee structure which would inevitably be very expensive. The idea of attracting men of world eminence to fill these Commissions on a permanent basis would add enormously to the cost, and would in practice, we feel, tend to embarrass the Executive Board in its handling of these questions. The U.S. Delegate mentioned that these Commissions would be called upon to fulfil semi-judicial functions. If he means that in tendering advice to the Executive Board they would behave in an impartial manner, I would agree with him. -7- D. fols. E/P/T/CV/PV/7. Any tendency for these commissions, by themselves, to be exerting semi-judicial functions in relation to matters which the Executive Board will finally have to decide we would regard as most out of place. I found myself in very substantial agreement with the remarks made yester- day by the French Delegate on this subject. Although I realise that the United States Delegate leaves open the question whether these commissions should consist of permanent men or, temporary people, we feel that this is a very vital questions that it does affect the kind of functions that these individuals perform; and if they were to perform, say, the ,functions of an advisory character akin to those performed by boards of directors, and were selected from people eminent in their own countries in these sphered, we would give it our very warm support. But we would resist this building up of an elaborate structure, very expensive to operate, of world famous experts on a permanent footing. MR. HOMES (United Kingdom): I find myself in the happy position of agreeing very generally with almost everything which has been said on this subject, from which I infer that there is not really any real _Unfundamental difference between us. As regards the statement by the United States Delegate, I would say that in our view it is, very generally at any rate, on the right lines, and I had been intending at this stage to quarrel with only one word, a word which I think has caught the attention of the Australian Delegate, namely, the word "semi- judicial." It may be only a matter of language, but that did suggest to me that perhaps we were proposing to endow the commissions with rather more of a judicial character than was really intended. In the view of the United Kingdom Delegation; the commissions would be advisory, and the United States draft charter seems to us on the whole to provide for that. There might be certain passages in Article 65 which deals with the functions of the commission on business practices; it may be that this would apply also to Articles 64 and 66 in a limited degree. it may be that in those Articles there were one or two places in which we 8. D. 1. would feel that the general supervisory character of the Executive Board ih relation to the commissions might perharps have been slightly slurred over. Coming to what the Australian Delogato s just said,. I think perhapswe; would vreyfull2y agree w'ith im,a at ieally the memberso f the commissions, and ineeod their charmen,,wo udl greatly ececfit by the fIiarly close contact wihi reality, which they would ect from a dailyocr periodic nowledgec of how thingsw ere working in tec business world. Hwe-ver, in tec caec of ocec of tec cmmiissocn. -- and I expect this ooldu ppaly ocec particuaJlyJ to those provided for on cmmerrcial policy, and perhaps on commodity matters -- we must, I think,re-ogn;ies that teowoark will ec fairly arduousa dn fairly continuous. I doubtwhectecrw;ewomuld ecwLsec, hwececr, to lay omwn an particular rule, or atem:pt to do so, as to whetecr the work of tea cmmiissions should cocupy teo whoec tiec of those eor orw;oenn, or whether it should not ec llloedC to occupy more than ahlf tecir tiec. Circumsteces will very, and I think we shall haec to eec how we ect on. Provided i ils eoecralyy acoeped. that tecc mmmissions are advisory bodies composed ofexperrts, and that it will be the function of the EeccutiveBocada o- consider their advice and eoearlaly to speruviec tecir functions, eC would say that the sort of sceceC outlined by the United States Delegaecmtet the situation about as well as it could be me., R2. OLB3AN (Nowray): This is really suderfluous, but the slightdrCafting amendments I allowedm yelff to suggest had exactly the purpose ofcover- ing the points raised by the Australi and Unitad Kingdom Delegates. It-was done it order to avoid a text which would create offices, to see that they should only have the best possible advisors, leaving the question on what terms they should be appointed an open one. I rally 9. D.3.- . ,. - ;. -..-. .'* ; '., . . > ''-;, .-. , . haed n altcrnawivc draft, which I did not 1c to roadout, h i . rcad: " . scrviccs including stipulations conc , focs .nd indcmntics." That, of cours, dacs not fIt in in tho solcmn charter, but it iedicates thc way in which I am thinking - that wc ask the best wessibIc eorld exports wc oan get hold of, and.vc ask thcm to come togcthcr to act in n advise= capacity and not as holding office ein comeeeition -ith the Secretariat or thc Dirtor-Gcncral. 10. MR QUESHI (India): Mr Chairman, we all realize that the members of these commissions will have very important duties to perform. I certainly feel that those duties will be more onerous than those of any board of a company. Therefore, I very much doubt if it will be possible for us to have part-time experts, especially when they have to cover such a wide field and have to operate on the international plane. We realize fully the need for economy, but economy should not be at the expense of efficiency. I for one feel that you do not get good results by occasion- al meetings of ad hoc experts, and certainly if they are real experts they will not have much time for meetings of this nature, which may take up too much of their time. Again, we feel that there is a need for con- tinuity and for certain procedures and conventions to be set up and the- matters to be interpreted in that form. Therefore, the need for some sort of permanent or quasi-permanent organization seems very essential to me. We might arrive at a compromise in that the commission itself should be permanent but that the membership should be for a certain period of tine. If we want short contracts, it may be for three years, we may confine the memberships to a smaller number and the members may vary from tire to time. I would also like to emphasize that in the constitution of these commissions special regard should be paid to giving representation to the less industrially-developed countries, and we attach great importance to this point. THE CHAIRMAN: Gentlemen, the delegates from five antries have up to the present moment requested the floor at this point. Since I cannot give the floor simultaneously to all five, I shall have to follow the rule of awarding the bids in the order in which they were entered, unless some delegate wishes to yield to another delegate at this point. The first bidder was the delegate from South Africa. MR ERASMUS (South Africa): Mr Chairman, I will not be long here, but I just want to bring out these points on this question of permanent membership and part-time membership. The position in regard to permanent membership affects not only questions of economy, because if you have part-time 11. membership as well as if you have full-time membership you have a position-whereby you are building up an international civil service, which after four or five years most probablyy would lose the practical viewpoints of members, That is an important thing. Then you also have the difficulty of getting highly qualified peole on a part-time basis to sit on these commissions. So that I think it will be beneficial to the Organization to have a part-time membership, because you must have continuity in these commissions, and that is my point. I propose a permanent Chairman with, say, a secretariat of his own which will get all these points digested and put to the Commission. On that point you have a definite contact on the part of the Secretariat and the Com- mission, whereas if you bring your members in from outside on a part- time basis you will have the practical viewpoint coming in on the other side, and you need not lose any time in getting things done. THE CHAIRMAN: I believe the Chinese delegate had asked for the floor next. MR DAO (China): Mr Chairman, with regard to the selection of persons to be appointed by the Executive Board for the various commissions, we think it would be advisable to follow the precedent which has been set by the Economic and Social Council of the United Nations, that is to say, the selection of persons for these commissions shall be made in consultation with and subject to the consent of the governments of which those persons are nationals. Because these persons will be experts and highly qualified they may not be able to be spared by the governments concerned. Furthermore, we think it is advisable that not more than one person should be selected from any single country for any one commission. THE CHAIRMAN: I think the next delegate who had requested the floor was the delegate from Australia. MR BURY (Australia): Mr. Chairman, I just wanted to support the amendments suggested by the delegate of Norway, which meet in a practical way the points I was making. I would agree that at this stage it is advisable to leave the decision flexible and perhaps appoint people as circumtances 12. - ...*\ . ,2 ; tF suggest themselves later on, when the structure mf the Organization poican bmae seeos more fully, nmd provided the varis mon mat of which I agree w.h, are taken into consideration at that time. M HOrmTAN (Belgium) (Interpretation): MkrChai an, I shall be very short, because all that-I intended to say has been said already by the South zfrioan dele-ate, and I agree entirely with what he said. He said t;t we rnsind tbbmporary advisers for economic reasons, 'ou who wuld be gt the sam time -tchnicians who were hiZhly qualified. On the other hand, we ;ust have a permcnent secretariat, and it seems toa=e that this is juhtified by the aims =nd the functions w*ich are foreseen in the Charter, functions chich will be those of the various co mmission. Thereforep, in view of that, Ihave the honour to ropose the following amendment to article 62 (3): "Each commission shall elend not its Chairman, but one Chairman a1 one Secretariat, and will ado-t its opn rules of procedure, subject to the aiproval of the Executiva Comittee, and the functions of the Secretary will be of a Permanent character." M. PALTEY (FrancI)waInterPretation): Mr Cnairman, T ernt only to say that I very much agree with wat has been said by the deleg-te of the Uni-ed Kingdo" YesterdWy I was asking questions about the part played by the Co~nissions, and the answers which were given this morning were lx-. .,nely satisfactory. I complete y agree with the argument of the United States delegate and adeo with those of the various other &Rlegates who spoke, especially the delegate of Norway. I think that the suggestion he hos made would be very satisfactory fcr the purposes which we have imin view. Therefore, wa should not comt ourselves in any wny, but we should keep ourA'inaj draft in a very flexible form. MR BMY (.;steralia): IL-Chairman, without disagregng with it as an eventual solution, I do not feel very happy about the proposal made by the Belgian dele-ate at this stage. It does seem to me to be a case where we r3:ht leave it open for a later decision. 13. THE CHAIRMAN: We have had a very interesting discussion on the broad aspects of this problem. I have in mind that there should be a special Sub-Committee set up to consider all of the points of view that have been expressed and to attempt to draft provisions of this Article to take them into account. I think that it might be desirable, before we do that, however, if we were, to proceed through Article 62 p paragraph by paragraph, to see whether there are an more suggestions or points, perhaps of detail, which any Delegate might wish to bring up, and which could be taken into account by a Sub-Committee which would report on this matter. If that suggestion is agreeable to the Committee, I will ask whether there are any detailed comments on paragraph 1 of Article 62, in addition to those which we have already had. Are there any comments on paragraph 2? Are there any comments on paragraph 3? MR COUILLARD (Canada): There is one question on subparagraph 3. I understood the South African Delegate to suggest that the Chairman should be appointed or invited to serve on a permanent basis. On the other hand, I understood the Belgian Delegate to suggest that the Secretariat should be on a permanent basis. Could I have that point clarified, please? MR ERASMUS (South Africa): I suggested that the Chairman of each Commission should be appointed on a permanent basis, I mean a permanent man with a Secretariat for each Commission; That is to say, a few people who are expert and who can help him, and whenever the Commission has to consider a certain matter, the main points will have been taken out and the issue can be put before the Commission straight away and they can carry on their work. They can take up the matter and prepare the main issue for the Commission. Mr CHAIRMAN: Does the Delegate from Belgium wish to clarify the point which he made? MR HOUTMAN (Belgium)(interpretation): Mr Chairman, I should like to support once more the proposal of the South African Delegate, and I should like to bring a few changes to the amendment I suggested. should like to say that 14. in this new paragraph, paragraph 3, The Commission will allocate the on --- Chaiins the Secrret aliatilll d wa1lpt own rules of r cedurd,e wev. '. subjectt only to he execu.ive would - ikI to add that Secretariat and the Chairman wiJ1llave pezmarenn funoticnso- iSMR ERASM (South Africa): I did not .9sn that the Comimssion itslfelIwo ua appoint its Secrbtariat. I meant that the Secretariat; w3uld form part of tih I.T.O. Secretariat and it would be appointed by the Direct-or-Geer a, with, of course, the advice of the Chairman; not that the Commixsion woulld appoint its own Secretariat, but that it is a Secretariat allocated to the Commission. THE CMAIRMAN: Are there any comments on paragraph 4? MR LAURENCE (New Zealand): Just a drafting point: Comparing the language in paragraph 4 of Article 62 with the language in the first sentence of paragraph 2 of Article 68, we see in one place that the wording "deliber- ations of the Executive Board and of the Conference" is used, and in the other place the word "meetings" is used. Is it intended that there should be any discrimination between what are "deliberations" in one place an what are "meetings" in the other place? MR KELLOGG. (U.S.A.): In answer to the suggestion of the Delegate of New Zealand, there is no serious distinction intended there. "Meetings" is a somewhat broader word. It would, of course, cover procedural as well as substantive matters. If you prefer to use the same wording in both cases, we would have no objection. MR LAURENCE (New Zealand): I have no particular desire in this, but in some interpretations it may be thought that "deliberations" may include proceedings apart from formal meetings, and I was just interested to know whether there was any point in making the distinction; but I will leave it entirely to the Drafting Committee, having drawn attention to the THE CHAIRMAN: Are there any comments on paragraph 5? MR VAN TUYLL (Netherlands): Mr Chairman, I apologise for returning to a point which has been discussed at some length already this morning. In the 15. F.3. discussions this morning it was pointed out that it is essential that the members of the Commissions should be experts, and we all agree, I think, ~* ¶ -' ¢', ">,'. _, . . ; their wor tehese vprts ar e rtson.y as athey ha^&ci? 'wbrk iX fielehath wulc defomotolymnission is concerned. So t woQ d: tinite - mean that it is ad,visable to have these ts on a permanent basis4 but on a treprasrbasis.,De Itahink that the suggestion of tbh orwegiqanJ gte to chanryge tphe word "appointed" into "invited" is a ve hapy suggestion. However, would it not be advisable to introduce still further the meaning of what we have dmpecided by including words which express the teorary character still more? For instance, in paragaph 1 we could say that "The Conissions'hall be coposed of persons which from time to time are invit,ed", or "as may be required, are invitedt" so that it would mean that one expert, for instance, could sit for about 6 months, and another expert would be available for one year, so that not all the experts would serve the same length of service. G.fs. 16. MR. LAURENCE (New Zealand) I would like to raise a drafting point in connection with paragraph 5, in which there is used the term "pubIic international organisation". We have used the term "international organizations", and discussed it before, in respect of Articles 55 and 71. I am wondering whether anything is gained by the use of the word "public" and also whether it would not be an advantage to leave the term wide by deleting both the words "public" and "international". The Commissions could then make arrangements for representatives of other organisations having a special interest in the activities of the Commissions. MR. KELLOGG United States of America): I would like to thank the Delegate, of New Zealand for pointing out a matter which should be cleared up. I think we probably should conform the wording of paragraph 5 of Article 62 to the wording which we chose for paragraph 2 of Article 71, and use the word "intergovernmental". The Delegate of New Zealand raises, however, the issue as to whether or not we want to have non-governmental organizations included in paragraph 5 of Article 62. I should be very grateful to hear his opinion on that. MR. LAURENCE (New Zealand): I have been asked to express an opinion on this, and I would say that since we are dealing with a Charter for an organisation for which we have no previous experience, it would be desirable to leave the phrasing as wide as possible, and for that reason I would say that we should delete the words "public international". You have all the restriction that you want in the subsequent term "having a special interest in." I would simply raise the question whether it should be "having a special interest in the activities of" or "having a special interest to" any of the Commissions. But on the specific point that has been raised, I think it would be desirable to have just the term "organisation". -17- THE CHAIRMAN: As Chairman I should not wish ever to enter into debate on any subject. At any time the Chairman wishes to enter into - debate, he will relieve himself of the responsibility of sitting in the Chair, and turn it over to someone else. I would suggest, however, that there might be a rather important distinction there- between the wording which would, involve consultation with private groups or organizations on the one hand, and, on the other hand, provision for participation in the work of such Commissions. That is rather a strong phrase, and the Committee, in considering the suggestions made by the Delegate of New Zealand may wish to take into account the distinction, which I think is rather an important one, \between such a phrase as "consultation with" or "wish to consult", on the one hand, and actually providing for the active participation of private organizations in the work of those Commissions. I would myself have same misgiving on that, but as I say, I would not want to debate the matter, and I hope the Committee will forgive me if I just mention that point in passing. MR. BURY (Australia) The point raised by the Delegate of New Zealand is not one which has been considered by the Australian Delegation in specific relation to the work of the Commissions. Therefore, I can only offer a provisional thought of my own. It is that if organisa- tions other than inter-governmental organizations are to participate in the work of the Commissions, it might be sufficiently covered already by Article 71, which presumably covers the whole Organisation. On the other hand, if it is necessary or desirable to refer to a possible link between the Commissions and the other inter-governmental bodies, then I think it should be just confined to -that. Some of these Commissions might be a particularly suitable point at which there might be a reasonable degree of interlocking with organizations such as the F.A.O. and the I.M.F., but if it were open to other organisations -18- G. 3 E/PC/T/CV/PV/7. to press to be represented in the Commissions, it might make the Organisation subject to a lot of very unwelcome pressure. MR. COLBAN (Norvay): I would like to answer briefly the observations of the Netherlands Delegate. I all afraid that by introducing such a clause as he suggested in paragraph 1 of Article 62, we would make it a little bit too loose. I think it is dangerous to distinguish in the Charter between the terms of appointment for different Members of the Commissions. It is elastic as it stands, and I think it should remain as it is. THE CHAIRMAN: If there is no further discussion of Article 62, I would like now to have the approval of the Committee, simply to add Article 62 to the terms of reference of the General Committee which was appointed yesterday. You will recall that I eliminated Article 62 yesterday from its terms of reference because we had not completed the discussion, I think it would be practicable simply to add this Article to its assignment, and we would hope that within a matter of a day or two we could have a report from that Sub-Committee to cover the articles which were indicated yesterday, plus the one which we have discussed this morning -- Article 62. I might, simply for purposes of the record, indicate again that the membership includes Australia, Belgium, Canada, India, the Netherlands, the United Kingdom, and the United States. It might be well at this point also if the Secretary were to indicate the progress made by thatt Sub-Committee in its meeting yesterday, -19- G.4~~~~~~ R V/PV/7.//PC . . -r1URNER (Secretazy): For the information of the Committee I might report that the Sub-Committee held a meeting at five a'clock yesterd-y evening, and considered those Articles which haallyen specific=l12 referred to it. It was successful in coming to unanimous agreement on a redraft of those _rticles. The report is at present in course of preparation. If,dhowever, the auditional Article is to be taken up by mhe same Sub-Co;mittee, I would suggest mthat the Sub-Comittee should havc n further meeting, and that reports on all the Articles should be prepared by it. I think that could be done at an early meetinmg of the Sub-Comittee -- perhaps the next one, or the one after that. 11* ois. -20- H.1. ~ ~ ~ ~ BAA THE HAIRM.4 I takc tthat is msateeisfactory to the comrittc. The ncxt item on our agenda le coneideration of Articig 2, cxccpt th1.last part of paragraph L eIs was pointed out in thh statement deetrebueeday, thc comiItceeycstcrdyhw ohe cemmittoc may wis4 tr'defor consideration of the latter parw of paragraph 1, in vie; of its relation- ship eo paragraph 5 of Articee 78 which has nt yet bcon considered; or, altrnatively, it mc; wrsh to taka up consideration of paragraph 3 cf Article 7i at this poine. e Ieth-nk it might bc bcttcr to skip paragraph 3 of Articld 78 at thws moment and go ahead -ith all of Articlc 2 except the latter part of paragraph 1. Lot us first takc up graph first pert oferarazoh 1. Arc therc cxy coc.cntsfe or estggstions with r±rene to that, l e'HUeo' (Bmi (intcrprcttion): e I should likc to draw the attcntion cf theecommittee to thc fact that the French;translation is g differcit from the English text. In the Fench translation, which, is bcf'cr :e at tC- moment, it says: "Tee originel Mcmbcrs of thc Organization shall be tepse eouetries rcvrcscetod at the Unitcd Nations ConferenEmp on erade and Faloymcnt which accept the provisions of this Charter by December , 1946." This year which is mentioned in the French text is not mentioned in the English tcxtecehieh says, "Dceombcr 31, 194.--." Also in the Frcnch texo it shlul" be ""origineams, not originls. " I shall have Irbh comments to make in due course. THE CeAIRAiN: Arc there anmy further coments on paragraph 1? ML VherZ TUYIL (NetW-ands): Tat is the distinction between "original Mcbors" aed "sebsequcnt Mcmoers"? D6cs that have any poine anywhere clse in theanhartArt them in aticlc 2? MR. KLOGG (Unit-dStated): The only significance of the distinction is that n original Member can, of course, join or adhere to the organization wiehouttleaboing cared byferencen~fcronde. Onc any nation beculls a fl Member of the organization it ull MeilJ. Ember without any distinction whatever. 21. H.2. MR. VAN TUYLL. (Netherlands): Am I right in assuming that an original..l lembor, .wha h.s ecceptodethc provisions ofethc rhextcr by ertarizin eato bwt .ho has not agreed to nbrihethc Chertcr into cerdc pursuant to paragraph 3 of Arteclc 78, can only become Ma 1embcr subject. to thc approval of the confecenoc on the rmeecondation of the Executive rBod according to paragraph 2 - ehc origan.-emocberheho accepted the Charter but who did not aeecc to bring the Chaetor into force according to paragraph 3 of Artielc 78 would not be an original m.ebcr after that? 2RKE aOLCGG (United States): ehcre ercwt;o ways iw ;hich the Chaetcr con be brought into for:ee cither by having 2o cf the nations rcercseetud at the coeforeeco agreeing to accept the Chaetor, and thus becominMe;.mbers; oe cllse, failing 20 such nations, separate etcps taken by the rations whicweeJ hope ,ill participate in the negotiating meeting this spring cing together, uedor theirwovn stmen as it werc, and bringing the Chaetcr into foeco as for them- sclves alone. There erc, two aeroenatevc ways of bringing the Charter into foecc; and if one takes plecc the other does not. They are mutually exclusive; you do net havboocth. ER. VAN TLYILNeTotherlands): Therc is the possibility that M 1eebor agrees to bring it into fcexc according to the first condition but that he will not agree to bring it intoorcecr according to the second condition. He may not want to join that group of countries who bring it into forceebwee.en themselvesw -hile he may have accepted the provisionsfo- the Charter because he thought it was going toebo brought into force by 20M Rembers before that certain date. *2KEL LOGG (United States): Under the first alternative means of bringing the Charter into force you would presumably. have, either 20 or less than 20 nations aeegring to the Charter. If you had 20, then the Craetcr starts to operate, and there , is no further question; anyone who wants to doescacon adhereu nder thesc terms. In the case that only 15 22. H.3..- .e7 Ncmbves hacv adhered by tee timo thie stmes, co0s of,coutsehen or thoCharter would nme icoo Intoeforco. e Tyou woumuioive hae06th- altcrnative moans of puttieg tho ehartcr into forcomibec.,ng a possibility. I take it you are thinking of the case of n couitry ;hich is nMema l.tber ef tho original negotiating meeting,wbut ~hich is, however,un colmtry which will go to nternatyrnational conference. Thero you have a couwtry -hinh werts to adhore but is not one of the nucleus un coeztrics. I etak it yeu arv assuming the situation -horc this rcouKty "-" iswnot .illing to joiw up ;ith the negotiating countries in their following cut of the second alternative. I cannot see any owher ;ay in which your question can be raised. 1R. VAL TUYIL eNothcrlanas): m I a= afraid e havc not myde nrself quite clear. It eay bc a country which has decided to accept the Chartnr fiide jtsclf en thc position of having onlMe12 Yimbers who have accepted it. In that case the ehartcr will not come into force.w No;, thosMe12 lhmbers may between themselves put the Charter ioto ferce, subject to their agreement. L.i. ZLOGG- ed(Unit States): That is not precisely true. The 12 2dmbwrs ,ho may put the Charter into force under the second alto native mest bc countwies ;hich have actually gene aaead -nd negotiated tariff riductLons. Ie owhor ;orde, thc second altornative applnes ooly tc countries which have actually negotiated reductions i ofetradc barriers. ! N UYLLT=Y11 (Netherlands): Even then a country may deem it inadvisable to be party to the ehartcr if the membership is limited. If the Charoer dces not como intc force merely because of the rule that 20 Memmusrs t accept it beftre i canes into force, the country may dechde tAat the numbet is eoo small and will perwwps 'ithdiaw h;s acceptance. 23. H.4. THE CHAIRMAN: There is a very interesting colloquy going on between the Unites States Delegate and the Netherlands Delegate, buit we have a problem of interpretations and some of the, other members of the committee would like to know what is going on. I suggest that first of all we have the interpretation, and secondly that if the two Delegates cannot meet in their views very shortly that they should continue their discussion after our committee meeting to see whether they can iron out their difficulties. MR. KELLOGG (United States: The country would be a member of the conference of next fall, but not a country which has negotiated reductions of its trade barriers at the negotiating meeting of this spring. 24. THE CHAIRMAN: Do you gentlemen wish to continue this colloquy?. MR VAN TUYLL (Netherlands): I think it will be best to discuss this further, . Mr Chairman, after the meeting. THE CHAIRMAN Thank you. If you need a referee I will volunteer my services! Is there any further discussion on paragraph 1 of Article 2? MR HOLMES (UK): Mr Chairman, I am not quite sure - it is a very small point - whether paragraph 2 of Article 2 entirely fits in with the idea of Article 60, paragraph 3 as amended. THE CHAIRMAN: You are taking up paragraph 2 now? MR HOLMES (UK): Yes. THE CHAIRMAN: I take it there is no further comment on paragraph 1 and that paragraph 2 is in order? (Agreed) MR HOLMES (UK): Thank you. It is a very small point. Do we not want to be clear beyond doubt whether membership in the Organization is subject to some procedure on the part of the Executive Board or is not so sub- ject? We have altered Article 60, paragraph 3, to say: "The Executive Board may recommend to the Conference" instead of saying "it shall re- commend to the Conference the admission of new members to the Organ- ization." Do we feel that the approval of the Executive Board is a pre-requisite to the approval of the Conference in the case of the ad- mission of a new member? OMMITTEE SECRETARY: May I make it plain that the sub-committee considered that point, which I think was substantially agreed in the full Committee, anyhow, and the sub-committee is intending to recommend definitely to this Committee that the word "may" shall replace the word "shall" in Article 60, paragraph 3; and it was the feeling of the sub-committee that that would involve some consequential change in paragraph 2 of Article 2. MR BURY (Australia): Mr Chairmen, for reasons previously stated, I would like to propose that the words "on the recommendation of the Executive Board" be struck out from paragraph 2. THE CHAIRMAN: Are there any further comments on paragraph 2? if not, we will proceed to a consideration of paragraph 3. In the absence of comment on paragraph 3, I take it that it is agreed to. (Agreed.) 25. THE CHAIRMAN: Gentlemen, it is now 12.37. I do not think it would be Practicable this morning to take up another article for discussion, ' Before we adjourn, ehcSecretary wishes tsayta word COMMITTEE SECRETARY: Mr Chairman, my understanding is that the Committee wish to meet tomorrow to resume its consideration of these Articles. - decling wito vQtingem mmbershop cf tExeIbecutive Board andvoting on the Executive Board, that is to say, Articles 53, 57 and 58. It was also the wish of the Committee to receive in advance apco-y of the proposal which had been promised by the United Kingdom dgeleate. That proposal has been received, is at present in t"he wk"ts'ibe.ng trans- latedd an reproducea, :nd it will be available, I am told, by three o'clock this afternoon. The Secretariat of thiommi ttee will undertake to see that copiesearc delivered to every delegation office in Church House. I believe, however, there are some delegations which do not have offices in Church HousI.pi ,resume that most members of he'Com- mittee would like to get thatp paer in order that they can give it some consideration overnight, ^nd tomorrow morning, assuming that we arranged oue m:eting for tomorrow afternoon at three o'clock. Would it be asking too much if thosemmeibersof themmCooittee who wish to do so could call my r office in Room 133 or in Room 136 in the lattpar =rt ci the afteonozn to collect theppa;ers, that is to say, other than those wha hrve delegation offices in Church House? One last announcement. Wdula it be convenieTt for the merss of the two sbh-ommiIttees pgpointed yesterday to confer with me for a few minutes at the endocf this eaetig? HEECHAIRM N: This Committee will meet again tomorrow afternoon at three o clock and will take up the provisions on voting.T he meeting is adjourned. (The Meetngi rose at 12.4 .0 .pm.) 26.

GATT Library

gq576bm7638

Verbatim Report of the Seventh Meeting of the Drafting Sub-Committee of Committees I II : Held at Church House, Westminster on Saturday November 16 1946 1946-11-16 at 10-30 a.m

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/C. I II/D/PV/7 and E/PC/T/C.I/PV/4.E/PC/T/C.I/D/PV/7

https://exhibits.stanford.edu/gatt/catalog/gq576bm7638

gq576bm7638_90220034.xml

GATT_157

E/PC/T/C. I & II/D/PV/7 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of. the INTERNATIONAL CONFERENCE ON TRADE D EMPLOYMENT NTmivanLOYINT eport tire Report of the SEVENTH METING of the. DRAFOMMITTEE-CGhMJT'ME of COUH-ITT1S I & II held at ChuWes mouse, 'JtLinster on ovturday NN-ember 16th 1946 atm.C-30 a. ra NOMEatim eebrttij iRarorters wexe not present at the beginning of the moet:ng. (F:oc the shorthand notes of Y . B. GUtIY,NSONS & FUNBELL, 56 ViWtorminsteriestr nster, S.Wi.L) . A.1 A. 2 At 11. 25 a. m. TME RAPPORTEUR: I have taken careful note of what the Delegate ofBrizil has said and -perhaps when I am attempting to redraft paragraphs 9 and 10 I shall be ablle to do something. MR.MARTINS (Brazil) (Intarpretation): I thought we were now discussing paragraph 10 and .not paragraph 9, which had, I understood, been approved with the exceptinon of the reservation made by the Delegate of the United Kingdom. We cannot now go back on paragraph 9 because it has been adopted in conjunction with paragraph 1, and if we now introduce some changes into paragraph 9 which change the sense, we cannot do it without at the some time altering paragraph 1. e have already adopted that and included it in the text. THE RAPPORTEUR : I am sorry, the paragraph to which I was addressing my remarks was really paragraph 10. THE CHAIRMAN: There is no question of any change in paragraph 9, except the question we left open - the last bit of the paragraph. MR. HEIMORE (United Kingdom ): I agreed to postpone the amendment to leave out these words and I think Isaid that I was not pressing the exact form of my amendment on paragraph 10 if the Rapporteur would look at paragraphs 9 and 10 together. Paragraphs 9 and 20 both relate to supplies. THE CHAIRMAN In any case we shall have another opportunity of discussing this in the full Committee, so that I suggest we leave further discussion on this until it is redrafted, if that is acceptable. MR. LOKANATHAN (India): The only point is that the general principle of equality of treatment in respect of consumer goods and capital goods be maintained. That is the main point. THE CHAIRMAN : That is noted. Paragraph 12? MR. WILCOX (United States): I think you had a new paragraph for introduction THE CHAIRMAN: Yes, thank you very much. THE RAPPORTEUR: This paragraph follows paragraph 11. -2- E/PC/T/C.I&II/D/PV/7 - E/PC/T/C.I&II/D/PV/7 THE CHAIRMAN : It will now be paragraph 12, I take it? THE RAPPORTEUR : I have submitted this in an endeavour to cover the aspect of mutuality as between the supplier and the receiver of the facilities we have been referring to in the earlier paragraphs: "In the carrying out of programmes of general industrial and economic developmetn, therefere there will be an interdependance between the less-developed and more highly developed countries. The Sub-Commit- tee is of opinien that only if all countries recognise that they lave mutual responsibilities in this field will the programmes of develop- ment in the less developed countries be c arried out suscessfully. This interdependance implies that countries in a position to provide facilities for development in other countries will on the one hand not unreasonably cercl those facilities and, on the other hand, will receive reasonable c-&tn7>1 at the hands of those other countries." MR.WILCOX (UNited States): 1n -. cpinion this draft does net give balance to the report. We have here a report of some ten legal-size pages devoted to the provision of facilities to countries in the process of industriaisa- tion. We have here suggested one line with respect to reciprocal responsi- bilities and even that is put in the passive voice - "will receive reasonable treatment - The problem is not really discussed at all.. It seems to me that it would give us a very unbalanced report, and that we should have a paragraph1 .Which address itself to the preblems set forth in the relevant Article of the Draft Chartem in the same way in which the rest of the Report addresses itsellf to the other paragraphs of the Charter.. THE RAPPORTEUR : Shall I then take note of these statements from the Committee and redraft thin and submit it again?t i; r ,ain? TIE CHagraph:18?ag a, 1': ? TEUR: RAPPgraph ParaLg.a h 12 als a ae!erly ertabuls new. esliahed ndusnries .deperd initially at lhe tdomestic markettoo- r -:c fr the sale of their products. The ee -Ccal-tteinich t cpLiic- -zherefore that where necessary member countries dpromote to t,:cl ot industpmial develoient should have reaeonmble impecd tptoter .veose> -rotic measures so that their local nar~geteasonably .;sstieblyi asnur6mmoditie cor.caxlies which will be produced an a result of the carrying out of the plans for de elopment.%E L. WIdC X (UniteaI States): T- haamendment wmenklggent to ch vest whio'h I do not think chenges the sunsthefRepporteur alapporteur has L*. f to set 'orth here, and J berrese ntscm'rezpoode no o cIlsaly td the provisions of the draft. A.2v A.4 E/PC/T/C. I & II/D/PV/7 "The Sub -Committee is of opinion therefore that where necessary member countries desiring to promote industrial development 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." THE CHAIRMAN : Any comment on the proposed Any?any comments amehment on t,.is paragraph ? Then we will procged to parawraph 13. EUR 1RAP;-OIEUE: Paragrapnk13, I thiri wilome quire scaii consequential allnowents feilmendments mci'dents iiade yesterday. I have endeavoured to comendments ocncb.icnts and would just mit to sub2i.dt thom- o the CcTA- mittce before I ragad the partraph1 out. At the ehird lth; tZ.:eteinhe dword t',e `c-rd "thuire and in thc fourth line words he ;aord.-. " leould be c carly defined", and then insert after "trade" tge oollo inE wusee:s "it Soem;z desirable that countries promotment evelopricnt -- THE CHAIR- me xcuse . "rwhichh "'r2ade" are you referring to? THE RAP2ORTEURh: After the words "unwarranted restrictions on international trade".' ANE =CHAIi,{N: I see. yes. TEURII MAP)eems "It si.bcms desiralle that countries promoting development should establish ..." and then, .two swn ences dovsen, in the mntence begenning -WThc Sub-Committee f eels that it es desirablu..." I havereade that rvad "The Sub-Comrittee feels that it is desirable also that countries should be pre- pared to reduceh.., " Tle paragraph now reads: "?wever, since an unwiso use of preaective maeaur s for the.purpose of promoting uneustrpment places 1; pI-aces an undue burden on the economy of thencoumposen unwerran-i ur:.;v:ted restrictions on international trade, it sees desirable that coumories proiating development should establish crwheria tdustrch in.--r-iesonformshould c'o before qualifying for protection. Thewcriteria vhb h ome Su';-Cjpmittme has in rind would relatetto the iniernational obligations of the country in relation to Military secto the necess E nc:-.aity for industries being such as to contribute to raising the levels of. productivity and general standards of living. The Sub-Commi tee feels, that it is desirable also that countries should be prepared to reduce the protection given as the. industries concerned are able progressimely to corpete in the domestic ard oveetsas arkotz onims al ter;.is with comparable products entering international trade. As a general rule p oeasctive imasures should not be used indefinitely to protect coasts whichare unduly. high in com- parcison with osts in other countries." 4 E/PC/T/C. I & II/D/PV/7 MR.. WILCOX (United States): I am somewhat troubled by the sentence dealing with what the criteria should be. I am puzzled as to the international obligations of a country in relation to military security. I do not know what the international obligations of a country with respect to military security may be. I think that if we were to spell these criteria out they should perhaps be spelt out in considerably greater detail, and I think if we undertook to do that it would be a very time-wasting process. I am pre- pared to argue the point of what those criteria should be, but I suggest that the simplest way out of that problem is to drop that particular sentence, MR . LOKANATHAN (India): I have a further difficulty in accepting this. paragraph. The whole of this report as made before we approved the document as it was in the draft and that has been one of the real difficulties of this Confer- ence. This report was based upon discussions which we had and therefore it was quite all right, but the text which we finally adopted was very different and therefore there is no real reason to have paragraph 13 in -the form in which it has been drafted. we should draft t this report only to explain what has been approved in the draft clauses, why it is that certain clauses have been put in and so on. Therefore you rill notice that the criteria and other things have all been completely dropped. There- fore there is no reason to refer even to the principles of the criteria. I think all we have to do is simply to stop with the first sentence, "Since the unwise use ..." etc. and go on "And therefore countries should be very moderate in their use of these things" or something like that and leave it at that. In any case, even in regard to future paragraphs we should see how far these ideas which are nct relevant to the draft clauses are needlessly brought into the report. - 5- A. 5 B. 1 E/PC/T/C. I & II / D/PV/7 MR HELMORE (UK) : Mr Chairman, just as a matter of principle, I could not for one moment accept the idea that anything should appear in the report of the sub-committee except what appears in the text of the draf t Article. MR LOKANATHAN (India) Unless we agree to those things - unless we agree to the criteria and so on. MR HELMORE (U K): No. indeed might have said, "however. since an unwise use, in just the firs' sentence and then go on, "Some members of the Committee felt a great deal more attention should be paid to this. Others, however, could not agree, and the Committee agreed not to put this in the text," which would be a fair and accurate account of what has happened in this sub-committee. I do not suggest necessarily that this is the right way to meet the point here; but I could not let the implication go that different views are not to be given their full share of justice in report from this committee to the Preparatory Committee. MR LOKANTHAN (India): No; I agree that we should say just what is in the text and that nothing should appear in this document which is not found in the draft text of the clause. No; but the point is that for dertain reasons we decided to exclude certain things from the draft, and it was to, bring those things in, and' therefore if we did that without going into thc matter very carefully it would be rather awkward. That, is the main point. MR HELMORE (UK) I agree to that. THE RAPPORTEUR: Mr Chairman will endeavem to- redraft paragraph 13 on those lines. THE CHAIRMAN: Paragraph 14. THE RAPPORTEUR: May I just explain in regard to paragraph 14 that this matter was not discussed in the sub-committee, but it was referred to during meetings of the full joint committee, and I have therefore inserted it tentatively - I did not use the square bracket technique, but the Committee can assume that they are there. The use of dumping policy by 6. B.2 E/ PC/T/C. I& II/D/PV/7 other countries might be particular harmful to countries wishing to carry out a programe of development or reconstruction. The sub-committee, however, does not recommend that any special action be taken by the Joint Committee to provide against it, as it is understood that appropriate provision against dumping is being made by Committee II." MR HELMORE (UK): May me leave out the words "against dumping, " Mr Chairman? It attempts to define a series of provisions that Committee II arc making. It is purely a drafting point. THE CHAIRMAN: The next paragraph. THE RAPPORTEUR: "In so f ar as development in member countries is uneven, some members. will have greater need than others to use protective measures; but the subcommittee is of opinion that account should be taken of this by Members generally in any tariff negotiations and by the Organization, should it be called upon to determine whether a country has, without sufficient justification, failed to negotiate tariff reductions with any other member.," MR LOKANTHAN (India): I should like to say that we should also add something about the general level of tariffs. DR COOMBS (Australia): Is not that covered by the word "uneven" in the text? THE RAPPORTEUR: It was intended to indicate that some countries are more highly developed than others. MR LOKANATHAN (India): I would say that "account should be taken of this as well as of the general level of tariffs in any tariff negotiations." THE CHAIRMAN: You want the state of development as well as the general level of tariffs prevailing in the country to be taken into consideration? MR LOKANATHAN (India): Yes THE CHAIRMAN: Any further comment? Paragraph 16. the THE RAPPORTEUR: "In/view of the sub-Committee protective measures which should be permitted for the purpose of promoting industrial development should include tariffs and subsidies and; in appropriate circumstances, preferential 7. B. 3 E/PC/ TC. I &II/D/PV/7 regional tariffs and quantitative regulation of imports. In so far as there may be obligations in other parts of the Charter which would preclude the use of any specific protective measure, the Sub-Committee is of the opinion that provision should be made for release being granted by the Organization if after consultation with other members whose trade may be substantially affected it is satisfied that such nation is warranted. MR WILCOX (USA): Mr Chairman, I do not like the first sentence of paragraph 16 - that we should have "'tariffs and subsidies and in appropriate circumstances preferential regional tariffs and quantitative regulation of imports." That is distasteful to me. May I say that I am confident thiat many countries are going to handicap themselves unnecessarily in their industrial development by the use of those restrictions? If they arc determined to do so we will set up a mechanism thereby they may do so; but such a sweeping endorsement as this is something that I could not go along with. I think that here is a place where we should adhere pretty closely to what we have in the draft of the Chapter. These comments of nine by the way apply I think; to the next paragraph on preferential regional tariffs: that is a matter that is being discussed in Committee II; and I am quite prepared to accept the conclusion of Committee II on that matter. Iam prepared also to accept the mention of the release of the use of quantitative regulations, and so on, but I think the first sentence here should merely say that protective measures may be employed, and then I would skip down to paragraph 18 and say: "In the case of quantitative regulations,' and so on. MR LOKANATHAN (India): Have you any specific wording to suggest? MR WILCOX (USA:) I do not have any specific wording to suggest for that: I am afraid that that is another job for the Rapporteur THE RAPPORTEUR: Perhaps -I should explainthat the reason I have made a reference to preferential regional tariffs here is because of the statement made by the Delegate from Lebanon on that partcular matter. MR:WILCOX (USA):- If it is deemed desirable to have reference to that 8. B. 4 E/PC/T/C. I & II/D/PV/7 discussion in the Committee's report, I think it should be said that some delegates were of the opinion that something of this sort was desirable; that this was a matter within the competence of Committee II; and that the discussion was referred from there, or something of that sort; but to say that the Committee as a whole dndorses preferential regional tariffs I tariffs would be questionable. THE CHAIRMAN: I think it is fair to say that the statement made on this subject by. th delegatee of the Lebanon was not discussed. THE RAPPORTEUR: I will endeavour to redraft this paragraph 16. THE CHAIRMAN: I want to et one thing clear, to see that I understand Mr Wilcox.. He means that he would prefer, in this part, a general statement that those countries may have the right to protection, but not to include methods of protection. MR WILCOX (USA): Yes. THE CHAIRMAN: You do nbt want those to be detailed there? MR WILCOX (USA): I think what we should say is that the Committee is of the opinion that recognition should be given to the fact that industrial development may require the use of protective measures, and in the case of the use of quantitative regulations, it believes, as set forth in paragraph 18. What I am trying to avoid is that we should have all these provisions. THE CHAIRMAN: Are there, any further comments on paragraph 16? We will have to redraft that. THE RAPPORTEUR: I take it that will apply to paragragph 17. Shall I go on to paragraph 18? . ,.,, TIE CHAI' : Yes, please. THEP"PPORT;UR 'Release to ase quantit .tie regulation. of imports in preference to other forms of protection should only be given where the protectio ne essary-in 'any other form would.place a relatively 'greater burden on the country giving 'the protectionz and where it would be more ro' trctive cf> international trade than would be the case with quanti- tative regulation'of imports." 9. B.5 E/PC/T/C.I & II/D/PV/7 MR LOKANATHAN (India): I wonder whether this is really necessary, or whether it is not covered by the second sentence of paragraph 16. If we are going to refer to it specifically I shall certainly want to raise the point of the different treatment in regard to the rdease of the use of quantitative regulations, and that- it was accepted, that is to say, that if quantitative release should be given only when it is going .to be less restrictive than other forms of protection, then it should be granted in a more expeditious manner, or something of that kind, because I am trying to get that idea that in so far as one form of protection is less restrictive than another, it should be possible - I agree that the obligations on one member are not also effective as far as other members are concerned - to get over this difficulty - indeed, I think it is necessary that we should do that. MR COOMBS (Australia): Since the Rapporteur has to rewrite the earlier part of the section, I feel it is a bit of a:wasteof time really to discuss paragraphs 18 and 19. THE CHAIRMAN: Yes. Leave all these with the redrafting section. THE RATPPORTEUR: There is just one point.on which I would ask for direction if I may, Mr Chairman. It seemed to me that this section can be written either as a paraphrase of paragraph 3 of Article 4, without going into a great deal of detail or, alternatively, making reference to particular forms of protection. Would it be the swish of the Committee that I paran rsieparagraph 3 for the purpose of this part of the report, or should I go into greater detail? MR WILCOX (USA): Since this is a point where we have the greatest difficulty and the one on which we have worked out very carefully mutually acceptable compromise, Ii think that the easiest solution of this point Would be a paraphrase of that article. MR HELMORE (UK): I would like to make an alternative and even more radical to suggestion, which is simply to refer/the problem which has caused us to work out the compromise, if it is possible to. refer briefly to tho different emphasis, and to say that we have agreed on the solution which 10. B.7 E /PC/T/C.I & II/D/PV/7 is set out in paragraph so-and-so of the text, which we append, because I pity the poor Rapportcur if he has to paraphrase something that took several hours to get worked out. MR KOKANNATHAN (India): Yes, I agree. MR WILCOX (USA): In that connection, Mr Chairman, it will be necessary to make the last sentence in paragraph 19 consistent with the Chapter as we redrafted it yesterday. THE CHIRMAN: Paragraph 20. THE RAPPORTEUR: On paragraph 20 I think the first part should be deleted consequent upon action taken yesterday. The investigation under the new paragraph 3 of Article 4 refers to investigations previously pro- v ided for in paragraph 2 of Article 4. That reference has now been deleted, and I think possibly this paragraph might come out. As far as the last sentence of paragraph 20 is concerned, that raises the issue we were on yesterday, namely, the question of the relations of the Economic and Social Council and other international specialized agencies. There has been a redraft made of that paragraph of the report relating to that, and I think it is being circulated. DR COOMBS (Austrelia): Since I was responsible for this redraft, I would like to explain what I have attempted to do here. You will re- call that yesterday there was some discussion of this question of the allocation of functions and the appropriate method of having this dealt with. I am afrraid that to some extent I allowed a certain sense of irritation to obscure my objectivity a little in my discussion of this yesterday, and for that I offer my apologies. But I did think that the discussion yesterday served to throw up a point that there was some difference of understanding between us as to what it was we had previously done and agreed upon. I think it really boils down to what we mean by square brackets. I. have had a feeling for a long time that these square brackets would get us into trouble before long; and I think that is really what it comes down to. As to what is the nature of the reservation, we understood by the inclusion of that clause in the 11. B. 8 E/PC/T/C. I & II/D/PV/7 Article dealing with industrial development that the suggestion was that the Organization should be given powers to carry out certain positive functions in this respect. Now, in order to settle it quite precisely and to clarify my own mind, as I understood the nature of our discussion on this matter, I have redrafted the section of the Repporteurts report which deals with this matter and it is that which has been circulated this morning. I did also prepare a redraft of the suggested resolution which I think we discussed earlier and about which I think there was some uncertainty as to the phrasing which we had in fact agreed upon. That, however, does not seem to be here and I will see if I can get that straight away. But if we could have a look at the redraft of this section of the report I think it would at least provide an opportunity for us to determine whether we have the same view on the stage we have reached on this question. MR WILCOX (USA): Mr Chairmian, I should like to explain to the Sub-Committee the position I am in on this maatter. At the this when we brought before this group a suggested draft of the chapter on economic development I told the group that I was putting this in on my own responsibility and that I should recommend to my Government that such a chapter be included, but I marked the draft as tentative and non-committal. I am happy to say that I have authority for the inclusion of such a chapter in the draft Charter, along the lines of our-agreement. On the question of the bracketed paragraph, our Government is committed to the, work of the Economic Development sub-Commission, of the Economic and Employment Commission of the Economic and Social Council, and this question as to. whether their should be an Industrial or Economic Development Commiss- ion with positive functions within the Internationial Trade Organiization is one which wie agree should be placed before the Economic and Social Council. Also, I have, no personal feeling of opposition to the est ab- lishment of such Committee or Commission. I think the way is open to it; and it seems to me that there is a great deal to commend. it. I do not, however, wish, to take any action here which would prejudice the 12. E/PC/T/C.I & II/D/PV7 position of our representative on the Economic and Social Council or foreclose the issue. Ther are involved here the Economic and Employment Commission and the sub-Commission, the International Bank, and the F. and it seems to me that this whole problem must be looked at, and I should bc perfectly happy to go along and submit this problem to the Economic Council for decision without prejudice and to abide by that decision. I should very much prefer to have the report in the form of a resolution to which it would not be necessary to make any reservation whatsoever. I certinity will not vote against an affirmative recommen- dation from this Committee, but if there is an affirrmative recommen- dation, that the brackets should be removed, if it is said - and it is the opinion of this Committee - that the brackets must be removed, and that this Committee recommends to the Economic and Social Council that I. T. O. undertake these functions,. then I must abstain from. voting. DR COOMBS (Australia): Mr Chairman, I would like to really to one or two of the points which Mr Wilcox has raised. First of all, it is not my view that this Committee can or should recommend to the Economic and Social Council that the square brackets be removed. As I have stated, and as I have expressed it in this draft of the report, "The Cormmittee is aware, however, that this problem cannot be looked at solely from the point of view of the Charter" (this is paragraph 3) "and there is a number of internationaI agencies concerned with various as-pects of industrial development" and I have listed some of them there. The essence of my case is this, that the only people who can made a decision upon this are the members of the Economic and Social Counrcil, who will have to take into account not only the purpose of the Charter, but they will have to take into account the interests of the whole range of international bodies, their own plan and their own idea obout this subject rnatter generally; and in connection with the other economic work it my well be that, fully admitting every point we may make and looking at this matter from the point of view of our own Charter, they may still desire to advise .us to eliminate this paragraph. Now, if that 13. E/PC/T/C. I & II/D/P V/7 is their position, that will be perfectly satisfactory to me, and I would not regard any delegate here, even if he approves of the way in which we have cxprossed this and approved of the report, being committed even to advising his government to support this proposal. fols. 14. E/PC/T/C. I & II/D/PV/7 Before his government makes up its mind on whether it will support this at all the the Economic and Social Council, it too will have to consider / I other aspects of this problem other than those which are the proper subject matter of this Committee. It seems to me that we have a responsibility which is concerned with the subject matter covered by the Draft Charter, and that our discussions in that field have indicated that the purposes of the Charter could be promoted by action of the kind we have indicated in the paragraph in square brackets. I believe wie have an obligation to put these points to the Economic and Social Council, and provided that we do that, and make it quite clear that we expect the Econcnmic and Social Ccuncil to take other things into account, I believe we shall be doing our job. That is the idea which I have tried to ombodly in the draft report and in preparing the draft resolution I have attempted to leave out of it any-suggestion one way or the other as to the nature of the Council's decision. It reads: ."The Preparatory Committee resolve to invite the Economic and Social Council in its consideration of the allocation of functions a relating to international action to promote economic development to take into account the views of this Committee as embodied in paragraphs and of its report and furthermore to advise the Committee whether Article ... at present included provisionally in the Draft Charter is in accordance with the Council's views as to the proper allocation of functions relating to economic development." I do not think there is a great deal of difference between the two points of view. 15. C. 1 E/PC/T/C.I & II/D/PV/7 I do not think there is a great deal of difference between our points of view. Mr Wilcox says that he would be unable to support an affirmative recommendation from this Council that the square brackets should be removed. So, too, would I, because I am only considering here one phase of the problem, and before I would be prepered recommend to the Economic and Social Council the square brackets should be removed it would be necessary for me to study many other phases of the question but I do think that I certainly would be prepared to support the inclusion in our report of the factors which I have listed in a preliminary way in paragraph 2 of the draft section of the report which appear to me to be the factors favourable to such a decision which the councill might very well take into account long with the other matters which it will have under review. MR WILCOX (USA): Mr Chairman, the draft resolution as circulated is perfectly acceptable. The bulk of the draft report section is acceptable. The only thing that others me are the three words "it seems desirable". If you wish to say "many members believe it to be desirable", or "a majority of the Committee believes it to be dcsirabl'', or "a case can be made for...." - I think there are many formulac that will get round that. All I want to avoid is being in the position of appearing to vote for an affirmative recommenda- tion; that is all. MR IGONET (France)(Interpretation): Mr Chairman, I must confess that I am puzzled by this debate. I do not qu to feel the importance of it and I know that there are arguments in favour c. the I.T.O. 's being concerned with the question of economic development; I also know that other Organisations already have dealt with it, but I am afraid what perhaps I am not sufficiently aware of what the arguments are, and I do think I would be grateful if it would be possible perhaps, so that I could make up may mind, to know a little more about the arguments, if some explanations would be given. MR HEIMORE (U.K.): Mr Chairman, I find myself in very slight difficulty with the words "it seems desirable" here, since those words and any such words as "a majority of the Committee " or "most of the Cornittee" might be hold to commit governments - might be so hel.. I think that is the only difficulty. I would be prepared to argue that they do not; but, at any rate, if we say 16. C2 BAPC/T/C I C IIAV¢V/7 "it scorS desirable" it can bu rea'l to i.acaii that ocoplc herc hav c xprosscd an, opinion and that that opinion A'-, beon oexressed not in thcir c=jDacitics as Lndividual ncilbors of this Z6rr.i- tc- but in soma ,way as boinG the servants of their Goverm-nonts. I am sure th. difficulty could bu got over if ier could : o'oneine oulrsclvcs to a statoeL-nt o.c Cact: nalcly, that froma the point of view of the purposes of the Chartczr and e.ffoctivc working of the INO therc arc strxong argumcnts for, and so o .i, then -o on in tho next paragraph, paragraph 3, to say that vic ar avwa-e that it cannot bc looked at solely from that point- of viovi. I think *hat ir. the onlyr difficulty that is bothering pvoplc, najacly, that from the -eOinLt (f view of our task horc vc appreciate thc :forcc of certain arum-,ents; and think if it vere put in what I might call a non-corittal vway, but %,hici .;ecrrthcless states tho arguments prop crly, then the vwhole trouLO!c Wvr- :.d bc over. MR ILCOX (USA): That would be arxcqp-.lc. 12 IGONI-'T (France)(Inturprctatio ! X.': ha-r.ian, I wud likc to knov i."' Corrittee V. has been also c3r. ult;-. c)nc.r=ing this problem, because I imderstand. that the substance cf tVA atbae herc would come under our Corm_-stteo, and I understaInd tl-.:t i .i; Co:r.ittc V -which has the problo.a of the creation of ad hoc coimaL.ttc.- and of special cornoittees to be part of ITO; and. I vonder if this C...lict.- V 'has been spoken to or if this CommnLttce intends to speak to Cormini.t. o.r V as to their coping with this prob2 cr.i, -which I thiiik docs eoo- uw- .:r th.ir terms of ceferonce. TM CHA]iERXMkN: The Position ;ith regal' to this point, I might explain, is that Corinitte V are postponing, any- action on tilis point until they hav'c solm Icnovilodge of the tentativc dct: 'cn =cahed in this Comnittoc and the 'rco:oendatLon that this Comeni tee . make. There again the positecn is as to ke-thoxr there rvdi1 or wL- I nc te an Industrial fcvelopmlent Comn.Lssion of the ITO. The ps sitic.. with regard to that is that we, if this proposal is acoeptod, shall .t ;c r? orgurients fo;? and against - not no much thc arguments against an - ho ur.ionts for this work being undertaken by the ITO, and also the arg=u-nts .- supoort of the fact that the decision rust finally rest --idth the Eco'nomci .~nd Social Council; and it would be for that body to maakc up its mf nd c.. chis particular matter; and it seeps to :. - ~17.; C3 . E/PC/T/C.I & II/D/PV/7 me that on this point as to whether there will or w ill not be an Industrial Development Commission of the ITO the decision must naturally await that consideration. That is the position. MR WILCOX (USA): The draft of the final chapter of the Charter on Organisation provides for the establishment of any Commissions. If the economic and Social Council docides favourably on the inclusion of the Articlc that we have in brackets it seems to me that the Interim; Drafting Committce might be instructed to develop an appropriate sections on in the chapter on Organisation for submission to the next meeting of the full Committee. THE CHAIRMAN: Is there any further discussion? I taKe it that the amendment suggested by the delegate of the United Kingdom DR COOMBS (Australia): The suggestion is to delete the words "it s eems desirabel "? MR HELMORE (U.K): Yes; and put to "there are strong arguments for empowering the Organisation". THE CHAIRMAN: "There are strong arguments for empowering the Organisation to perform certain positive functions" - is that agreed to? MR WILCOX (US.A): T'here might be ##parable changes in sense in subsequent sentences: "seems appropriate" and "it is believed". I think "it is believed.' might be changed to read "it can be urged", or something of that sort. I think that is merely a matter of goi. through the paragraph. DR COOMBS (Australia): Yes. What. about the resolution? MR HELMORE (U.K.): Mr Chairman, yesterday when we were discussing this I did. refer to the position of certain countries members of this Committee who were not members of the Economic and Social Council. It is a point of no interest to the United Kingdom because we are, happily, members of both, but I think I would feel happier if there were some hint at least to the United Nations authorities to see that the views of Governments represented at this Committee and not members of the Economic and Social Council were before the Economic and Social Council. MR WILCOX (USA): Would you add that to the resolution? MR HELMORE (U.K.): I really do not know whether it is polite to add to the resolution something which tell: the Secretary-General how to do his work, or 18. C4 E/PC//T/C.I & II/D/PV/7 whether we could leave it to a mention in the report and then leave it for it to be arranged internally within the mechanism of the Economic and Social Council. DR COOMBS (Australia): Suppose we leave it and take it up with the executive Secretary and ask him whether he considers that it is appropriate to add to the resolution or whether he would prefer to deal with it admiinistratively? MR HELMORE (U.K.): I think there should probably be some mention in the report saying that ``the Sub-Committee hopes that, when the Economic and Social Connril considers this, the views," etc DR COOMBS (Australia): Yes.. MR LOKANATHAN (India): What are the two organisations referred to? MR HELMORE (U.K.): This Proparatory Committee, which is forwarding this report, and the Economic and Social Council, which is going to consider it. It seems to me to be right that countries should have an opportunity of. saying what they think about this if they have participated in the preparation of it. THE CHAIRMAN: I take it the draft resolution also is approved? (Agreed.) Then, gentleman, this brings the work of our Sub-Committee to a close, as I do not propose to have another meeting of the Sub-Cormitttoe. The points made in today's discussion will be incorporated in the draft, and the final draft will be put up to the full Committee and I propose to have a meeting of the full Comittee at a time convenient to members. (After an exchange of views it was decided to have a meeting of the main Committee at 5 o'clock on Mionday next.) The meeting rose at 12.30 p.m. 19.

GATT Library

qq248bb0685

Verbatim Report of the Sixth Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1., on Thursday, 31 October 1946 at 3.0 p.m

Unites Nations Economic and Social Council, October 31, 1946

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

31/10/1946

official documents

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

https://exhibits.stanford.edu/gatt/catalog/qq248bb0685

qq248bb0685_90220008.xml

GATT_157

.1 E/PC/T/C. II/PV/6 UNITES NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SIXTH MEETING of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S. W. 1., on Thursday, 31st October,1946 at 3.0 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.2 E/PC/T/C.II/PV/6 THE CHAIRMAN: When we concluded last night we were discussing the section of the Agenda dealing with State Trading. I think most of the delegations that wished to speak had spoken, and I was about to call upon the United States delegate to reply to some of the points which have been raised. Does any delegate wish to add anything to what was said yesterday before the United States delegate replies? MR. AUGENTHALER (Czechoslovakia): Mr Chairman, Gentlemen: We have seen from the preceding debates that there exist in many countries State monopolies or State trading enterprises of very different kinds. Some of these monopolies are of very long standing, others were introduced in recent years. The reasons why these monopolies or State enterprises- have been introduced are manifold and depend on the political, social, economic and, I should say, even philosophical, considerations prevail- ing in different countries. Some monopolies represent just a form of imposing and collecting indirect taxes on sale and consumption of the product concerned. Some trade organizations have been introduced as social institutions, thatis to say, to protect the socially needy public from price fluctuations and violent changes in real income, or to pro- tect the small producer from disastrous competition. Others have been introduced for security reasons, such as, for example, in Czechoslovakia explosives, and some other countries, a state monopoly of/ and yet others as a protection of health or morals, or even for religious reasons. This is only a rough and very general enumeration of the reasons why many State enterprises and institutions of this kind have been introduced. We must also bear in mind the fact that many States which have extremely varying structures as regards economic and social institutions are not represented at this meeting, though thy probably would be greatly concerned with what we are doing here. 2. E/PC/T/C.II/PV/6. B.1. Now if we try to subject the economies of the various sorts of State enterprises to some controls, it would mean that we are to some extent examining not only the economic policy of the individuals of the particular States (and, as you know, opinions in that field may differ very largely) but it would also mean subjecting to discussion the general policies of those States. In our opinion, it would exceed the scope of the proposed International Trade Organisation. On the other hand, we are fully aware of the fact that it is of general interest for international trade that member countries should give assurances as to the handling of their monopolies and State trade organizations, and we agree entirely with the principle that in the first part of Article 26 of the proposed Charter "such enterprises shall, in making their external purchases or sales of any product, be influenced solely by commercial considerations such as price, quality, marketability, transportation and terms of purchase or sale". We suggest that if the broad principle were put in the Charter as a basic principle, no further detailed provisions would be necessary at all. We presume that there is some general clause of the Charter, I think in Article 50, line 4. which makes it possible for any member if he feels that some other member is not acting in accordance with the spirit of the Charter, to bring his case before the International Trade Organisation. If we disregard this way, the most normal way to discuss this matter is, of course, in the usual diplomatic way. We would suggest, therefore, as I have already said, that the Charter should contain only this basic principle as is contained in the first part of Article 26, and that the rest of this article and the whole of articles 27 and 28 should be left out. There would be, in accordance with past experience, always the possibility that at some later date this basic principle could be completed with some more detailed particulars, possibly even with a special agreement. As far as Czechoslovakia is concerned, we have a State monopoly in the truest sense, only on tobacco, salt, explosives, raw spirit and saccharine. All these individual monopolies are really an internal indirect 3. B. 2. E/PC/T/C.II/PV/6. tax on consumption, and the revenue represents a considerable proportion of the income of the Czechoslovak State budget. I think it is hardly possible that in all these cases we could make these monopolies an object of negotiations concerning the price for which the individual product is sold to the consumers, because it would mean that we would negotiate with other members of the I.T.O. the margin and incidence of the tax we impose on these products, and it seems difficult to imagine, for instance, that salt imported from Germany would be sold to consumers for other prices than salt from Austria, etc. Besides, these negotiations would be somehow superfluous because it is quite natural that the monopolies are interested in a high revenue and apply to their purchases and sales purely commercial principles. As far as Czechoslovakia's State-owned industrial enterprises are concerned (they represent about 70 per cent of the production capacity of Czechoslovakia's industry), these are neither State monopolies of individual products, nor should I classify them as State trading enterprises in the sense of the Charter. These nationalised enterprises work in the same manner as enterprises of other sorts, and according to the law, they have to conduct their business on purely commercial lines. The control of the State shows itself only in the appointment of the management and also in the provisions that by the end of each commercial year the State examines the financial result of the conduct of business. Purely commercial principles govern the yield of these various industrial branches and they have to pay taxes as any other enterprise. They have also to compete not only among themselves, but also with non-nationalised industries. To put their purchases and sales under controls as envisaged in Articles 26, 27 and 28, would mean just the same as controlling such purchases and sales of private enterprises of other member countries. It seems that it would mean putting the State enterprises on a footing of inferiority towards private enterprises. THE CHAIRMAN: Are there any further comments on this subject of State trading? If not, I will ask the United States Delegate whether he wishes to reply 4. B.3. to any of the proposals or comments raised in the speeches of the various delegates. MR HAWKINS (U.S.A.): Mr Chairman, I should like to comment very briefly on the statement just made by the Delegate of Czechoslovakia. As I understood his suggestion, it is that State trading operations be governed only by the provision in Article 26 which requires that the country engaging in State trading operations buy from the foreign country where it can place its orders to best advantage; in other words, the rule of commercial considerations. I would suggest that if there are to be obligations assumed with respect to State trading at all analogous to those which would be assumed with respect to trading by private enterprise, something more than that is needed. If the obligations on State traders were the same as those proposed by the Delegate of Czechoslovakia, and only those, the only obligation would be the granting of most-favoured-nation treatment. Countries would be free to raise duties to any desired extent, provided only that they were not discriminatory. That is, I think, the analogy to the proposal of the Delegate of Czechoslovakia. In our thinking on the subject, we felt that there should be some commitments by State trading countries analogous to the duty reductions and reduction of other trade barriers by other countries, and that is the purpose of Articles 27 and 28. Now I do not pretend for a moment that we have found the final solution in the draft that we have presented. It is a very difficult subject to deal with. It is a new field. We have no long history in tradition and experience for dealing with it. Therefore, for the moment, I would be content to point out the need for some provisions -- some obligations by State trading countries analogous to those undertaken by other countries in reducing duties and other trade barriers. Mr Chairman, I would like to try to answer some of the questions raised yesterday, and comment on some of them. The United Kingdom Delegate made a suggestion with reference to Article 26. He suggested that provisions requiring that purchases by 5; E/PC/T/C.II/PV/6. B.4. E/PC/T/C.II/PV/6. State trading organisations be made where they can be made to best advantage should not apply to services. The reason for his view was that the Charter should deal only with the treatment of goods. We would be inclined to agree with that, and would be agreeable to deleting services from that Article. Another question raised by some Delegates -- I think the Chinese and Norwegian Delegates -- had to do with the varying prices for imports from different sources. In other words, they raised the question whether the payment of different prices for imports of a product from different supplying countries is inconsistent with the provisions of State trading. The answer is that, in our view, there is no inconsistency. It is quite natural that prices should ib vary in that way as the State producer seeks to get his supplies from the cheapest source; the cheapest source may be at one time one country and at another time another; or conceivably at the same time, approximately. The United Kingdom Delegate indicated that he favours the use of landed prices rather than the price at which goods are offered, in determining the margin between purchase and resale prices under Article 27. C. fs. 6. F1. 1 C E/PC/T/C.II/PV/6. The reason for the suggestion is that landed prices can be more easily ascertained. We would agree with the suggestion. He also pointed out that it is not administratively feasible to compute the margins between purchase and re-sale prices on the basis of individual consignments. His point is that the re-sale price would be uniform, whereas prices paid to foreign suppliers would vary for different consignments of a product. For those reasons, he suggested using an average of prices. This would not be precluded, we think, by our draft. I should think, however, that the period takon for such averages should not be too long; it ought to be such as to reflect price changes. There was at least one question raised regarding the last sentence of Article 27. The view was expressed that the obligation in to satisfy the full domestic demand at prices charged under maximum margins should be qualified where there are systems of rationing and price control. I believe that question was raised by the United Kingdom Delegate and also by the Canadian Delegate. We would agree with the suggestion. That is assuming, of course, that the Xlke domestic product is subject to rationing and price control. I might point out, in that connection, that the obligation to supply the full domestic demand is specifically subject to the same qualifications as apply to quantitative restrictions in other words, the exceptions set forth in Articles 19 and 20. To illustrate: where the balance of payments exception is involved, the obligation to supply the full domestic demand would not apply. I believe the Canadian Delegate also enquired specifically whether exports could be restricted by a state trading organisation when there is local rationing or price control. I think the answer is that, whatever provisions were agreed upon in connection with quantitative restrictions, they would apply, and we indicated the other day that we thought there might be some basis for making a change in those particular provisions. The Delegate for Chile enquired whether an export monopoly could charge the different races in different markets. That is more or less/obvious of a previous question which I have just commented on. The answer, though, specifically would be: If this is done for commercial reasons -- such, for 7. F1.2 C E/PC/T/C.II/PV/ 6. example, as meeting local competitive conditions. We think that entirely consistent with the provision; in other words, I think I am merely agree ing with the proposition as the Chilean Delegate put it. The Delegate for India raised a question regarding long-term contracts. The question, as I understood it, was whether long-term bulk purchase contracts are consistent with the commercial considerations principle in Article 26. This is the kind of question which presents some difficulties and differences in viewpoint. I will give you our viewpoint. The answer to the question seems to depend on. first, the amount purchased and, secondly, on the length of the contract. As to the amount purchased, if the contract were for the purchase of all or a major part of the purchasing country's needs for, say, a year, we would consider at open to question. Our reason is that, even though prices in thatsupplying country were generally lower than those prevailing else- where, some suppliers in other countries who were able to meet those prices would be excluded from the market. Now, as to the length of the contract, if the contract for any quantity of a product were made to run for, say, 5 or 10 years and, as might well happen, the position of other suppliers should improve -- the competitive position -- so that they could sell on a competitive basis, they would, nevertheless, be excluded from the market. The rule laid down is the rule of commercial considerations -- buying where you can buy to the best advantage, which means that suppliers should who are in a competitive position / be able to participate in the market. The Canadian and Australian Delegates, as I understood them, felt that the global purchase provisions in Article 28 should be deleted. That Article relates to commitments which might be made by a country having a complete monopoly of foreign trade. The Article provides that such a country might agree to purchase from all countries goods to an agreed aggregate value, the country concerned being free to determine the kind of goods and the sources from which obtained, subject only to the obligation laid down in Article 26 to buy in the best market. I under- stand th.t the suggestion for eliminating the Article is based on doubt as to its practicability of application. We recognise the difficulty. 8. F1.3 C E/PC/T/C. II/PV/6. However we would be reluctant to delete the Article until there is opportunity to discuss it with the country principally concerned. As I said in commenting on the remarks of the Delegate of Czecho- slovakia, some sort of provision seems desirable. We feel that some pro- vision must be found that will permit participation by the country with a complete monopoly of foreign trade. As I said, we recognize fully the difficulty of applying the Article, but we do think it could be worked out. In brief, we feel that the Article should be retained as a basis for discussion with the Soviet Union when there is opportunity. There were two or three other questions which I am having difficulty with. They are related to monopolies which sounded, from the discussion, as though they were more in the nature of control boards than monopolies in the sense used in the section on state trading. There were certain questions raised by the Delegates of the Netherlands. South Africa and China about the consistency of the operation of certain monopolies, as they call them, with the state trading provisions. As I said, from the discussion, these bodies sounded more like control boards than agencies purchasing and selling directly for the Government. I suggest Mr Chair- man, that I be given an opportunity to discuss the matter with the re- presentatives of those three countries to get a clear picture of what the operation is, and then I should be glad to comment on them in this Committee or the Sub-Committee or both, as the Committee may desire. That is all I have to say. 9. D.1 E/PC/T/C.II/PV/6 THE CHAIRMAN: Does anyone wish to raise any further question or comment arising out of the replies of the United States? On this question, then, gentlemen, it does seem to me that the main problem facing the Committee is that of how far it is possible for us to lay down general rules covering the conduct of trade where state trading organisations are participating parties in view of the fact that this is a class of transaction with which our experience is relatively limited. There seems to be fairly general agreement that it would be unwise for us to reach any very definite conclusions at any rate in relation to the rules which should relate to trading with countries whose foreign trade is a complete monopoly. A number of delegates have suggested that the clauses contained in the draft charter relating to trade with countries whose foreign trade is a complete monopoly might be deleted. The United States, on the other hand, have suggested that they might be left there not in the sense that they were approved but that they should be left as a basis for negotiation with countries that might be directly concerned. It does seem to me to be wise that we should not seek to lay down rules for the conduct of trade of a kind with which none of the countries present have any direct experience, and, whatever the outcome, whether the draft Articles included might be retained at this stage might be a matter to which our Drafting Committee should give attention; but it does seem to me to be the sense of the meeting that the contents, whatever may be left there for the time being, should be regarded as primarily for the purpose of negotiation and discussion with countries that might be primarily concerned. I feel that the remaining questions are also of a related kind, that is, that there is some uncertainty as to how far we can go in laying down rules of conduct for a type of trade 10 D.2 E/PC/T/C. II/PV/6 with which many of us at any rate are unfamiliar. The types and varieties of state trading enterprises are clearly various and, furthermore, the purposes for which those state trading enterprises have been established are themselves varied and very different in character. Attention, for instance, has been drawn to the complication which is introduced when a state trading monopoly is established primarily for the purpose of the collection of taxation. another complication is that to which Mr Hawkins just referred, where a species, at any rate, of state trading enterprise comparable with a sort of board of control over a particular industry is established primarily for the purpose of maintaining stability of prices over a period of time for local primary producers. That element of uncertainty as to the appropriate rule, in the light of variation in the purposes for which state trading enterprise has been established with a monopoly, runs through a number of the problems that have been raised by individual delegates. I feel that the reply of the United States delegate has clarified many of the problems associated with the more familiar types of state trading enterprise, and I do not doubt that our Drafting Committee will be able to reach fairly satisfactory conclusions on most of the points raised. We do suggest, however, that they bear in mind that this is possibly an expanding field and one in which we are not as familiar as we are with the more traditional types of commer- cial transaction, and that therefore there is something in the Czechoslovakian point that we should hesitate to go beyond laying down fairly broad principles except in relation to enterprises with which countries are fairly familiar. For the rest, it might be sufficient to establish those principles with the clear understanding that progressively, as the activities of these enterprises become more clearly 11 D.3 E/PC/T/C.II/PV/6 known and their purposes more clearly discernible, more clearly defined rules of procedure and behaviour might be worked out as a matter of negotiation progressively. I do not think it is necessary for me to touch in this summary on the individual points raised by a number of delegates. The bulk of them, I believe, have been clarified fairly satisfactorily by the United States delegate, and I think we might conveniently at this stage refer this matter to a Drafting Committee. For your consideration, I suggest that we might refer the matter to a Drafting Committee consisting of the delegates from Czechoslovakia, the United Kingdom, the United States, New Zealand and China, with the understanding that the particular problem relating to the activities of marketing boards - which are perhaps not completely state monopolies might be examined in the first instance by a smaller Committee consisting of the United States, the Netherlands and South Africa. I shall be glad of comments by delegates on that suggestion. . . . I take it, then, that it is agreed that we refer the question of state trading to a Drafting Committee consisting of the delegations of Czechoslovakia, the United Kingom, the United States, New Zealand and China, with the understanding that the activities of marketing boards might be referred in the first instance to a smaller Committee consisting of the United States, the Netherlands and South Africa. MR DEUTSCH (Canada): Mr Chairman, just to clarify matters perhaps for the Drafting Committee, the answers which the United States delegate has giv en to the points raised by the Canadian delegation and the willingness he expressed to make certain adjustments are perfectly satisfactory to us for our present purposes. THE CHAIRMAN: Does any other delegate wish to add anything to 12 D.4 E/PC/T/C.II/PV/6 the discussion on state trading? . . . I propose, then, that we leave the matter of state trading and go to the next item on our agenda, "Emergency Provisions, Consultation, Nullification or Impairment." MR SHACKLE (U.K.): Mr Chairman, I note that the Journal for today suggests that after discussing State Trading we might proceed to the relations with non-members. I think that on the strength of that it is quite possible that certain delegations (it certainly applies to the United Kingdom delegation) may have studied up the subject of relations with non-members with some care with a view to a discussion, whereas, on the other hand, they may be caught somewhat unexpectedly if we proceed to discuss the emergency pro- visions. Would you like to consider that? THE CHAIRMAN: I am in the hands of the Committee: in this matter. We did receive a request from one of the other Committees that we should, at a fairly early stage in our discussions, consider this difficult problem of relations. with non-members. I did not propose to bring it forward immediately because I was hopeful we would be able to devote some time to it tomorrow, but, if the Committee would prefer to discuss it now, then that is quite acceptable to me. Would delegates indicate which course they would prefer to follow? DR SPEEKENBRINK (Netherlands): The reason why the Committee on Procedure asked for this question to be given some priority is that, when discussing the most favoured nation clause of Article 8 and the exceptions thereto, we found ourselves confronted with the question of open conventions and others, and they have a direct bearing on Article 31; so in order that we can proceed with an early discussion of Article it would be helpful if this Committee dealt with the problem at this time. 13 D.5 E/PC/T/C.II/PV/6 THE CHAIRMAN: Is it agreeable to the Committee, then, that we proceed now to a consideration of Section H, "Relations with non-members"?. . . May I take it that that is agreed? Would the United States delegate care to indicate the views of his delegation underlying these proposals? MR HAWKINS (USA): Mr Chairman, Article 31, in its essence is very simple and not new. Over the past ten or fifteen years or more there has been a great deal of discussion of the possibility of multilateral agreements. The view has usually been, on the part of those who have considered the problem, that some stipulation along the line of Article 31 of this draft is desirable, if not essential, to the success of open-end multilateral agreements: in other words, if. a number of countries get together, accord benefits to each other, and provide that all those who will accord the same benefits may join, there is an incentive to join which would not exist if the benefits could be had without joining. some of you may recall that a convention was once formulated providing that no country would invoke the most favoured nation clause in its bilateral agreements in order to obtain the benefits of such a multilateral convention. The convention which I have mentioned referred to genuinely open end agreements, that is to say, agreements among a group of countries so drawn that other countries could accede. The benefits of it would be denied only to those who could accent and chose not to. That is the principle. It is not new to this charter. It is as old as the discussion of multilateral agreements. On the other hand, a provision of this kind in a charter of this kind does present problems of great difficulty and importance. It would be a rather serious matter for some countries in effect to aeper. their commercial relations with non-members. 14 E/PC/T/C. II/PV/6 I fully recognize the difficulty that is presented. Just as a sugges- tion for consideration, and not reprecsenting any firm view on my part, I would suggest that the Committee might adopt this general line of action with respect to this article. It might consider the formulation of it, keeping it in draft, but not adopting it until the whole Charcter goes before the World Trade Conference, to be considered there. At that time it will be possible to see more clearly what the scope of the mem- bership of the Oraganization is going to be. Obviously if every country in the world joins the Organization you will have no problem. THE CHAIRMAN: The question is open for discussion. The Delegate for the Netherlands. MR SPEEKENBRINK (Netherlands): Mr Chairman, I have listened with interest to what Mr Hawkins just said, but I would like at this stage to draw your attention to one special difficulty. As I understand it, we will have our tariff negotiations in March of next year. The results of those tariff negotiations should be incorporated in a protocol as far as I understand it and that protocol should come into effect at once or, in any case, presumably before the World Conference is held or has reached definite conclusions. I think, that we are in the middle of the problem and that the suggestion of Mr Hawkins will not save of us from these difficulties; so that I would appreciate his views on this point. THE CHAIRMAN: Does any other Delegate wish to speak on this matter? MR MCKINNON (Canada): I think in the light of the remarks just made by Mr Hawkins, on behalf of the United States delegation, that we would prefer to leave it in that position. His remarks have the effect of divertirng attention for the present from the rather, precise formulation of Article 31 and throwing it back into more general wording and the terms of Article 2 on Membership. It is our view that the suggestions he has just made are very practical and sensible ones. THE CHAIRMAN: If I could attempt to clarify this position, I understand that Mr Hawkins's suggestion amounts to this, that when the Charter and the 15 E. 2 E/PC/T/C. II/PV/6 protocol are submitted to the World Trade Conference of the United Nations late next year we hope that the benefits will be extended, tem- porarily at any rate, to all the United Nations. There will be a period during which they will be given time to pay their membership fee in the form of the conclusion of multilateral tariff reductions; but until the period during which that payment can be made they will be entitled to the benefits of membership, and that therefore the problem of de- termining the nature of the relationships of members with non-members is not really an urgent one, and that be can therefore leave it for determination until we know more clearly how wide membership is likely to be and what the proportion of countries will be who remain outside the Organization. I think it is clear that the whole of this question does turn very largely on that fact. As Mr Hawkins has pointed out, if all countries are members then there is no problem. If Mr Hawkins's suggestion is adopted the question is whether it is wise to leave the suggested relations with non-mebers in the form in which they at present exist in Article 31, recognizing, that that is purely provision- al, that it will not affect any countries at any rate which participate in the United Nations Conference next year, and that, therefore, we will have time by then to assess more precisely the nature of the pro- blems and the relations of members with non-members. Would that ex- press the position, Mr Hawkins? MR VIDELA (Chile): Mr Chairman, this morning in another Committee was raised the important question of the denunciation of conventions in force. I do not wonder if we/need to take that difficulty into consideration, because we cannot say that we are members until we have ratified the future con- vention, and we cannot say that we waive our obligations to non-members until we have denounced them. I only mention this question because this morning I had to intervene in the debate as the Chairman of the Technical Committee. Thank you. THE CHAIRMAN: Are there any comments to be offered upon that point, Mr Hawkins? MR HAWKINS (USA): Mr Chairman, I could not hear very well. 16 E/PC/T/C. II/PV/6 THE CHAIRMAN: I take the Chilean delegate's point to be that a number of countries have commitments towards other countries who may or may not be members, and if we as a result of our negotiations in April of next year conclude certain bilateral arrangements which are generalized to the countries nere represented, certain countries at any rate would be obliged by existing commitments to extend those further to other countries which may or may not be countries which attend the United Nations Conference in September. MR HAWKINS (USA): I think that the answer to that question, and possibly also to the inquiry of Mr Speekenbrink, is that you carry on your ne- gotiatione next spring and generalize, pending a decision. You see, under this draft the application of the Article would be put off for a year and we shall be merely extending that. I think that would take care of the suggestion of the Chilean delegate, because you would not be immediately faced with the problem of terminating agreements with non-members. As I said, even under this draft, if this were adopted, you would have a year; but if it were not adopted but merely held in abcyance for consideration by the World Conference, any negotiations that took place could place on the assumption of the generalisa- tion and wait the decision of the Conference before action was taken with respect to agreements with non-members. MR AUGENTHALER (Czechoslovakia) (Interpretation): Mr Chairman, for a change I will speak in French, to give some work to some of the other interpreters. I believe that we have already expressed our point of view concerning this passage in the documents which were submitted to the Committee and from our point of view we see no objection to the first paragraph, that is to say, that no member State should seek advantages to the detriment of other members. There we are in perfect agreement with the proposals of the United States; but as far as concerns our position, it is more or less as follows. The countries represented here are about 30 or 35 per cent. of our foreign trade; soms 65 per cent. of our foreign trade is conducted with nations which are not present here, E. 4. E/PC/T/C. II/PV/6 and so we do not know, and we have no hint, of whether some of them may or may not become members of the Organization. If that were to happen - and we do not desire it, because we would be most happy if all nations became members of the future Organization - but supposing that one or other country did not become a member, I do not see how Czechoslovakia, a small country, could put itself in the situation of being in economic and commercial conflict with that country, that is to say, denounce existing commercial treaties and so on. On the other hand, I suppose that the Charter which we are drafting and the Organization which must arise from the completion of our task ought in themselves to offer such advantages to countries which are not present here that it would load them to become members. I do not know whether this is a threat that we see in Article 31, and whether it might not have that effect, or possilbly a contrary effect. Therefore, we believe that if a document is to result from our work here, a document which ought to be submitted as our common opinion, it would be useful that that passage, which contains, if I may so call it, some kind of sanctions, should not be included in it. Thank you, Gentlemen. THE CHAIRMAN: Thank you. F.fls. 18 F.1. MR SHACKLE (U.K.): It seems to us, Mr Chairman, that firstly matters have at this stage gone rather far simply to withdraw the Article which appears in the draft; after all; this draft has been published to the world. It rather seems to us that to leave it out at this stage might rather suggest doubts about our possible success. If we suggest doubts, perhaps our success would be so much the loss likely. It does seem to us that the problem falls to some extent into two parts: first of all, the general obligations of the convention, and secondly the tariff part of the proposed arrangements. As to the general part,that is perhaps loss urgent; one can go ahead on the general assumption, for the present, that those countries who are willing to undertake the obligation will get the benefits. As regards the tariff side, the problem may present itself rather sooner. It may be that we should do well to leave over a decision on the tariff side of the matter until we have had our tariff negotiations next year; but it seems rather doubtful if that side of the problem can be left over much longer after that. On thinking over this question before hand, it seemed to us that there are really three possible alternative courses in this matter: the first possibility is a definite requirement that the advantages of the agreement should be with-held from countries that do not adhere to it. That would, of course, have the logical consequences which are set out in the American draft of Article 31, such as for existing obligations (most-favoured-nations obligations) which which Members have towards non-Members/should be terminated either by agreement or, if there is not agreement, then after the prescribed period of notice of unilateral termination has been given. It is difficult to see how, under,those conditions, under the conditions foreseen in Article 31, any Member country could have any sort of convention or commercial relations or agreement with a non-Member. That obviously might give rise, under certain circumstances, to serious difficulties. The second alternative would be that it right be left to Member countries individually to decide whether, and how far, they should extend any of the advantages of the 19 E/PC/C/C.II/PV/6. E/PC/T/C .II/PV/6. agreement to any non-Members. The object of that is obvious, I should think, that it would largely remove the incentive for non-Members to join. There is also the further objection that it would open up a risk that non- Members, especially if they were economically strong and important countries, might be put in the position of forcing upon a certain Member trade agreements of a kind which would discriminate against other Members, and that clearly would involve a risk of breaking up the Organisation. The third possibility is that the right of Members to conclude trading agreements with non-Members should be dependent upon the Organisation's approving each proposed agreement, applying to it some such tests as: whether it would or would not tend to injure the interests of other Members. One realises that this particular course would place a difficult discretion on the Organisation. It might often be hard to say whether a particular agreement was liable to have injurious effects on other Members or not. Also, to some extent, that middle course would weaken the incentive for non-Member countries to join the Organisation. Nevertheless, it seems as if, in certain circumstances, it might turn out to be a prudent compromise. As has already been suggested here, we may do well to defer a decision between the various possible alternative courses until a later stage in our discussions. The question arises, however, of what kind of draft, is any, is to be contemplated as resulting from this stage of or discussions, It rather seems to me that we might perhaps do well to put in alternatives. You might have as the first alternative an Article of the type of the present Article 31 of the United States draft. The second alternative would be on the lines of the compromise course which I have mentioned, namely, that it could be free for Members to make agreements with non-Member countries, subject to the Organisation's approval. Obviously, there are grounds on which 'the first alternative may be defended, that it is equitable, that it provides the maximum incentive. On the other hand, it may, from a technical point of view, be disadvantageous to put it forward along, because it might be considered by some countries not here represented that we were seeking, in some sense, to 20 F.2. E/PC/T/ C.II/PV/6. present them with a fait accomplit, and that would not be helpful to the prospects of securing ultmate wide membership. So I think that possibly we might think of putting forward as a basis for further consideration a compromise which would involve approval by the Organisation. There is one last point: I think we need to be clear in our minds as regards the conception of "non-Membership", and what the term "non-Members" means. I suggest that no country ought to be regarded as a non-Member or to be subjected to any consequent disadvantages or disabilities unless and until it has had a reasonable opportunity of adhering to the agreement. In other words all countries ought to have the opportunity to adhere. No country should, for any reason or on any ground, be denied the opportunity to adhere; and it is not until a country has had the opportunity to adhere and has either refused it or has given reasonable grounds for the belief that it does not mean to take advantage of the opportunity -- it is not until then, I say, that any action ought, to be taken by the Members, on the assumption that that particular country is to be regarded as a non-Member. Thank you, Mr Chairman. MR LOKANATHAN (India): Mr Chairman, our views on this subject is that the balance of advantage lies in postponing consideration of this question. I do not think it would be of much help to have various alternative drafts, because the whole question of the relationship between Members and non-Members can really be decided only after we have had the International Trade Conference, and after all the Articles are drafted to the satisfaction of the Member countries we do not know yet whether even the countries which are now participating in the Conference will be in a position to accept, and become Members of the International Trade Organisation; and that can only be known when we have had the final stage. I think it is also necessary for us to note that, as the United Kingdom Delegate once pointed out, the elimination of quantitative trade 21 F.3. E/PC/T/C.II/PV/6. controls is not only necessary in the interests of world trade, but in the interests of one's own trade. So, similarly, my point is that the reduction of tariffs, the removal of restrictions and so on, are desirable in themselves for various countries, without any regard to the question whether they are Members or non-Members Therefore, that being so, that is one of the important reasons why, irrespective of the attitude of non-Members, we have to do certain things if they are good in themselves. I quite grant that in a matter of trade there are mutualitics of advantages, if we give something in order to get something. There are other difficulties which have already been pointed out by several Delegates, and we in India have similar difficulties. If we have, for instance, to give the most-favoured-nations treatment to countries which join the International Organisation, but are compelled todeny it to others, with whom we are in intimate trade relationship, merely because they are non-Members, we shall be placed in an extremely awkward position. There are several reasons why at this stage we should not pursue consideration of this Article but just defer it. The Drafting Committee must simply say that Article 31 has been noted, but consideration is deferred, to be taken up whenever necessary. Therefore, all that we have got to indicate now is that the matter relating to the relation with non-Members is being taken up, bbut it will be considered at the appropriate time. Thank you. MR STEYN (South Africa): Mr Chairman, in supporting the statement already made by the United Kingdom Delegate, I would just like to say that we, as a Delegation, feel that membership should be open to all countries, and that there should, therefore, be no question of an ineligible non-Member. Thank you very much. THE CHAIRMAN: Are there any other Delegations who wish to put forward their views? Gentlemen, it seems fairly well agreed that it is impossible at this meeting of the committee at least to finalise the question of the relationship between Members and non-Members. Consistent with thatg generally agreed view, there are, therefore, a number of approaches. One is that we might leave Article 31 substantially in its present form, on the understanding that the whole question 22 F.4. E/PC/T/C. II/PV/6. will be subsequently reviewed. That has the advantage, or disadvantage, according to the point of view, that it would indicate presumably that this Committee was of the opinion that, given a favourable outcome to the question of what countries were to be Members, there are embodied the sort of provisions which we felt to be reasonable, and whether we have actually agreed to that or not, I feel that that is a likely conclusion to be drawn. Consequently, it is necessary to consider the other two alternatives: the one put forward by the United Kingdom Delegation, in which they suggest that there should be prepared, in addition to article 31, an alternative form of provisions which would set out a sort of compromise arrangement which would recognise the necessity for members to have contractual trade relationships with non-Members, and make the nature of those relationships, insofar as they are embodied in contracts, subject to the approval of the Organisation itself, There may, of course, be other possible alternatives. also. The third suggestion, which the Delegate for India put forward, was that no provisions should be included at this stage relating to the relationships between Members and non-Members, but that the whole question, without any indication of alternative views, should be held over until a later conference. These are fairly difficult questions and, subject to the wish of Delegates to consider them further at this stage, I think it might be worth while if the relevant three alternative approaches were considered, in the first instance, by a drafting committee which could report back to us. 23 F1.1 G E/PC/T/C. II/PV/6. I suggest that such a Drafting Committee might consist of the United Kingdom, the United States, Czecho-Slovakia, the Netherlands and India. MR DEUTSCH (Canada): Mr Chairman, do you think it is possible for us to arrive at some decision today rather than to create another committee? We are really finding it physically very difficult to man the various Committees that we have now. In supporting very strongly, as we did, the suggestion of the United States Delegate that consideration of the matter should stand over for another place and time, we had hoped that probably the present draft of article 31 would not go forward. We had come with very substantial suggestions and amendments to propose in connection with that draft. On the other hand, it may be equally inappropriate, in our view, to send forward a draft with a blank numbered 31. Therefore, there might be something to be said for the United Kingdom suggestion of at least sending alternative drafts if we can arrive at alternative drafts without the creation of too many sub-committees and too great a length of time spent upon a subject which we seem to be generally agreed should stand over for further consideration at another time. THE CHAIRMAN: Might I suggest that we adjourn for tea and resume at five o'clock? During tea, the countries that I mentioned might confer, with a view to our concluding this matter by agreement when we-assemble. We will adjourn for tea and re-assemble at five o'clock, and might I ask Delegates to be prompt in returning to their places at five o'clock? H.1 E/PC/T/C.II/PV/6 THE CHAIRMAN: Gentlemen, during the tea interval there has been some consultation between the executive and certain of the delegations and it has been suggested, in relation to the difficult problem concerning the relations with non-members, that we might ask the United Kingdom delegates to prepare for the consideration of this full Committee a draft report on this question which would review the issues involved and I gather would come to the general conclusion about which we were all agreed, that it was undesirable to reach a final decision on this matter until perhaps at least the bilateral tariff negotiations were complete and possibly until the full United Nations Conference had assembled. That draft report would be prepared by the United Kingdom delegation after consultation with other delegations and would come back to this full Committee for consideration. If that arrangement is acceptable to the members of the Committee I would ask the United Kingdom delegate whether he is prepared to undertake this onerous task. Is that agreeable to the Committee? . . . Is that all right with you? MR HELMORE (U.K.): Mr Chairman, we shall be happy to, try to assist the Committee in that way. THE CHAIRMAN: Gentlemen, instead of going on now to the section of the agenda dealing with "Emergency Provisions, Consultation, Nullification or Impairment", it has been suggested tome that some of these matters are rather tech- nical and it is a long time since a lot of us have read the relevant Articles of the charter, and that therefore it might be wise for us to revert back at this stage to a matter of more general policy with which we omitted to deal, and that is the question of subsidies. This, of course, is closely related with our discussion of other forms of protective devices such as tariffs and quantitative restrictions. It 25 H. 2 E/PC/T/C. II /PV/6 has also some very close affiliation with the subject matter of Committee IV, which deals with inter-governmental commodity arrangements. I think it would be of value to us here to commence the discussion on this matter now. If that is agreeable to the Committee, I will ask the delegate for the United States again to commence by outlining the point of view underlying the proposals put forward by the experts of his Government. MR HAWKINS (USA): Mr Chairman, our proposals on subsidies are found in SectionE, and there is one article on the subject which covers the field. In the first place, there would be a general obligation on the part of members to report to the Trade Organisation on all types of subsidy that it may be employing and to discuss with other interested members the possibility of limiting the subsidization. In general, direct subsidies to producers would not be prohibited, and that obligation to consult is not to be regarded as a pro- hibition on them. The reason for placing the obligation on a member employing direct subsidies is that there may be some cases in which the use of subsidies would cause particular hardship to some other countries; for example, if a direct subsidy permitted by the Charter were used to such an extent as to replace or seriously reduce the market for the product normally imported from abroad, that would be a proper subject for consultation between the parties. The main point, however, is that direct subsidies would be permitted, that is, subsidies to producers. Export subsidies we consider to be in a different and special category. The main rule as regards export subsidies is that they would be prohibited. An export subsidy would include any system which results in an export price lower than the. domestic. Now, there are exceptions covering those rules. The exceptions relate to situations in which a product is or 26 H.3 E/PC/T/C .II/PV/6 is likely to become in burdensome world surplus. When such situations arise there would be consultation among the members. The purpose of the consultation would be to see if consumption could not bo increased or if the problem could not be met by reducing inefficient production; or the object of the consultation might ultimately be to see whether a commodity agreement could not be worked out. Now, if all these measures failed, so that the problem was not gotten under control, the obligations regarding subsidies would cease to apply. The idea there is that a country or countries afflicted with a serious surplus problem who have tried to find some international solution of it might be forced back on to such measures as they could have recourse to, which might be to use export subsidies. The remainder of that Article deals with the limitations on the use of export subsidies in such circumstances, the obligation being that if, in the conditions stated, export subsidies are used by any country, they will not be used to increase the share of the trade which that country had in a previous representative period. 27 J.1 E/PC//T/C.II/PV/6 Then there are provisions which, as you see, are intended to help to definetand decide what that representative period would be. One of the main features of the proposal regarding subsidies is that the direct subsidies to producers are permitted as long as those countries are able to use that method, which depends less upon trade restrictions. In our opinion, the use of a subsidy is preferable to an import restric- tion or tariff. From the standpoint of the country using it, the effect of the subsidy is to keep prices down and keep demand up. Indus- try or producers would benefit very largely from a larger market at home, and the subsidy would enable them to get a share of it. Subsidies as we see them are expansionist rather than contractionist measures. Now, you will note that a good deal of that Article relates to matters with which Committee IV is concerned, and the subject matter of this Article is closely tied up with the question of the commodity agreement which is now being disussed in the Committee. I would suggest, Mr Chairman, for your consideration, that, in view of that fact, the appropriate way to deal with this subject would be to create a joint committee of Committees II and IV. to deal with it. MR McCARTHY (Australia): Mr Chairman, it appears to us that the object of this Article is to consider subsidies as applied or as alternatives to import tariffs and as applied to primary products particularly, but also to products which are in surplus supply. It is fairly easy to consider them as substitues for import tariffs, and it would seem that it is proposed by the United States that such subsidies be considered legitimate and that they are less harmful than high import tariffs, and if they do not appeal to the Organization as being harmful, that they be allowed to remain. That is fairly clear and understandable; but when we come to the application of these subsidy principles as laid down here to primary products and, in particular, primary products which have export surpluses, the Australian delegation has considerable difficulty in re- conciling itself to accepting them, or, to put it in another wayclearly but to understand them/the principle seems to be that if subsidies are given 28 E/PC/T/C. II/PV/6 direct to producers they are admissible, subject to the condition that they might be discussed with the Organization. It then sees on to differentiate between those production subsidies, as they are termed, and subsidies which are given on exports - and export subsidies are defined as subsidies where an actual payment is made on export, but also where because of some national machinery that a country has adopted, the home consumption price is higher than the world price or the export price, and it is not clear that any distinction is made at all between what might be described as dumping, where the prices at which the products are exported are less than the world price, and cases where the products are sold at the world price but sold on the home market at a higher price. The plain fact is that many of the schemes that have been adopted by countries with export surpluses pro- vide for this process of having a higher price than the export price, and in effect the incidence of those subsidies is precisely the same as if they were production subsidies. It is only a matter of tech- nique. I could describe certain of them, but I would make that point, that some of the methods which are followed, such as excise and bounty principles, mean that the price of some products is higher on the home market than on the oversea market, and because of that they come under the category of export subsidies in this document, and because of that, too, they are under question. We feel that there should be some change made so that the criterion will be not whether the home price is higher than the oversea price, but the effect of the subsidy, whatever be its character on the international market. The great objections to sub- sidies on primary products, whether they be by export or by production bouny, are that they stimulate production either in an exporting country or in an importing country and they glut the world' s market by so doing. To try to make it clearer still, our view is that it does not matter at all what form of assistance is given to a primary producer by price support as long as his surplus is not stimulated to a degree that it injures the world market. If a country decided that it would give 29 I.3 E/PC/T/C. II/PV/6 support either by export or by production subsidies and at the same time suppose that it limited production to avoid stimulation, we consider that ought to be legitimate, and we consider where an export subsidy is paid, accompanied by limitation of production, it is much less harmful than a subsidy described as a production subsidy which makes no provision for production control. A lot of the difficulties that have been caused to primary products in the past are due to sub- sidies on the part of importing countries. Thoy have engaged in highly uneconomic production and by doing so they have narrowed their imports, they have narrowed the net world import demand, and by doing that they have caused gluts. Now, the machinery laid down here would exempt importing countries entirely from any disciplinary measures by the Organization; they cannot have export subsidies because they have got no exports, so that, whatever their subsidies are, they are pro- duction subsidies, and they are only liable to be called upon to engage in a friendly talk on the subject. Exporting countries, however, have been divided into two categories: Production payers of production sub- sidies and payers of export subsidies. The latter category are obliged to undergo stricter discipline from the Organization. Our statement is therefore that we see no great distinction between production sub- sidies and export subsidies, but they have the same net effect of giving price support. That price support, whatever be the form it takes, is harmful if it stimulates production economically to such a degree that it injures the world market. We therefore say that the dis- tinction that is made between the subsidies paid by importing countries and those paid by exporting countries is not equitable because the uneconomic production in an importing country right be very much higher than - and we believe it has been in many countries - the uneconomic production or the stimulated production in an exporting country. We, therefore, wish to put forward these points for consideration by this Committee. I have said enough, and Mr Hawkins also indicated this, to show that the relationship of subsidies with primary products is such 30 E/PC/T/C. II/PV/6 that it is very close to the work of the Intergovermental Commodity Agreements. I think that the greatest cure for all these subsidies in their various forms as applied to both exporting and importing countries, is a commodity agreement. When a country finds that it is necessary to interfere with the ordinary flow of international trade in any form or to any degree, that then is I think a confession by that country that commodity agreements are called for. Put in another way, that if any regulation at all is required in respect of all important primary pro- ducts which have a big international market, whether it be by subsidy or by tariff or by any other form of support, that is a very good reason for regulation under a commodity agreement. There you do have a commodity agreement the countries affected, both export and import, come together and iron out all these problems that are associated with that particular product, whether it be tariffs or subsidies - and again I say subsidies in any form, because there are very many different forms and some of them seem to be more strongly criticized than others - but whatever form they take, I repeat it is all a question of the economic effect they have on the production of the product. They support the price that is received for that product; and the question is whether that support brings about injury to the international market or whether it does not. If it does not bring about injury it cannot be questioned - in fact, there are reasons why it should be continued. But if it does bring about injury it should come under question, whatever form it takes. I would agree with Mr Hawkins's suggestion, that this question be considered by the Committee dealing with Intergovernmental Commodity Agreements, because I believe that if the objectives of that particular section are successful, or are successfully achieved then we will not have very much trouble with the subsidy question, but if they are not I can foresee a good deal of difficulty with this subsidy question, because some countries have built certain techniques, whether they be good or bad, but which are very firmly imbedded in the economics of some of their products, and in dealing with those we should seek to decide whether they are doing any harm or not before seeking to remove them. J. fls. 31 J. 1. E/PC/T/C .II/PV/6. THE CHAIRMAN: Is there any further discussion on this point? MR RODRIGUES (Brazil): Mr Chairman, the Brazilian Delegation wants to declare that, concerning this question of subsidies, we think that we need to follow a different policy from the policy contained in the draft Charter of the United States, especially in regard to paragraph 7 of Article 25. In short, we think that it is very difficult for a country Which depends heavily on the exportation of some products to draw a clear line between export subsidies and production subsidies. We feel, as we have tried to explain through our suggestions presented at this Conference, that the best way is to avoid granting new or additional subsidies on, exports and to try to eliminate the existing ones within a short period, because the policy of subsidies -- even in the production subsidies -- can create great difficulties for some countries which are not able to face the competition of countries better organized, especially in the financial field. At the same time we should like to point out that some countries which are not really interested in the inter-governmental commodity arrangements, can, by fighting these commodity arrangements, later on take advantage of this. Therefore, the Brazilian Delegation wishes to state at this stage in our discussions the view that we are strongly against any kind of subsidies, even subsidiés relating to the production of any commodity. MR VIDELA (Chile): Mr Chairman, the Chilean Delegation accepts in general the general principle laid down here in these Articles. Nevertheless, I have some doubt regarding the definition, I should say, of what are called "subsidies", When they refer to a price "lower than the comparable price chargeable for the like product to buyers in the domestic market". When I call attention to this wording, I have in mind the distance of my country, and the peculiar market we have for such commodities as, for example, wool. Our overall production of wool is entirely in the South of Chile in Magallanes, and we find that it will be very difficult to sell our output of wool from the south of Chile at no lower prices than the domestic market in the centre of Chile. I think this difficulty 32 J.2. E/PC/T/C .II/PV/6. must receive an explanation. I think actually we are competing on a fairplay basis, but on the work price, not based on the domestic market price. I would like to hear an explanation in connection with this matter, Mr Chairman. MR FRESQUET (Cuba): Mr Chairman, I only want to express that the position of the Cuban Delegation concerning this matter is entirely the same as the position expressed by the Delegate of Australia. Thank you. MR McCARTHY (Australia): Shall I answer that point, Mr Chairman? THE CHAIRMAN: Yes. MR McCARTHY (Australia): The case I had in mind was where, taking an example, say Chile produce butter, and there is a world market for butter, which might be 100/- per cwt., and an arrangement is made with the support of the government for agreements between the shippers of the butter and the central organisation under which it is agreed that butter sold within the country is 120/- per cwt. and then a pool is made and the 100/- butter and the 120/- butter are mingled in the pool and what is called an equalised payment between export and local consumption is paid out to all producers. That could be a production subsidy; it is paid to producers; and they get a price which, assuming, in the instance I have given, that export and home consumption are equal, would give a return of 110/-, which means that a sum of 10/- per cwt for export is paid out to producers; that is called an export subsidy because the rate at which the home consumers pay for their butter is higher than the international market price; but the international market is not affected in any way. It is quite possible it does happen (it has happened in the case of Australia) that the production of Australia on the international market is receding, whilst this subsidy is being paid; and it does mean really that, rather than having an injurious effect, it can be associated with two things: either a receding export because of seasonal conditions, or a fixed export due to the fact that the country is afraid that its measures will stimulate production and it puts a limit on production and thus a limit on exports. 33 J.3. E/PC/T/C. II/PV/6. THE CHAIRMAN: Does that clarify the position? MR FRESQUET (Cuba) Yes, but as we are a very distant country, 10,000 miles from the market where we used to sell most of our commodities, I would like to have that also clarified. We cannot take for a basis the domestic price; we have to compete with prices in the world market, and sometimes we may need to give some support to our exports in order to pay the difference. We have that handicap on freights. MR McCARTHY (Australia): That is another point. You can have a straight- out export subsidy, which means that instead of relating the subsidy to the whole of your output, as in the case I described in relation to butter, you can just pay out so much a cwt. on your exports. That again, of course, has a different effect. If you paid a straight-out subsidy, such as you suggest, and the effect of that was to lift your home consumption up to export parity, that is, the export parity based on the world price plus the subsidy, then, of course, that is one thing that would happen. The other thing would be to pay the subsidy on export, but t so arrange it that the benefit of the export subsidy would be distributed over the whole of your market, both domestic and overseas, which would mea that you might pay an export subsidy of 6d, but the effect of that is to give all your producers 2d. That illustrates the different forms an export subsidy can take; but the point I was trying to make was that a subsidy which might be export in form has exactly the same incidence as a. production subsidy. THE CHAIRMAN: Is there any further discussion on this point? MR DEUTSCH (Canada): Mr Chairman, this question of subsidies is a very complicated one, and we have a choice between two sets of figures. Both types of subsidies, the producer's subsidy and the export subsidy, may be very harmful to international trade. I believe there is much force in Mr McCarthy's argument. However, the harm that is possible to international trade as a whole, taking into account both trade in manufactured goods and trade in primary products, -- we believe that the ham inherent in the use of export subsidies is greater than the limitation 34 J.4. E/PC/T/C. II/PV/6. the producer subsidies would produce, for the simple reason that if a country must subsidise the total output as compared to subsidising only the export part, the likelihood of the use of subsidies will be less in general if the whole output has to be subsid rather than simply the export output. Therefore our choice between these two difficulties is the same as that taken by the drafters of the American charter, and on the whole we feel that the limitation to export subsidies is preferable. 35 K.fs. K E/PC/T/C. II/PV/6 MR LOKANATHAN (India): Mr Chairman, I should like, first of all, to say a word upon subsidies payable in respect of manufactured goods, and then revert to the question of subsidies on agricultural products. Our attit- ude to subsidies is that they are an effective method of creating pro- duction. In some cases, we regard it as a superior form of creating pro- duction, because we know what the cost of production is, and that is its great advantage. On the other hand, we are alive to the fact that poorer countries have not the same means to use that method in preference to tariffs, because, although the incidence of subsidies as compared with the incidence of tariffs may be the same -- a point referred to by the United Kingdom Dele- gate -- there is a very real difference in the way in which both can operate. The Finance Member can certainly operate by use of tariffs whereas he would be hard put to it to operate by way of paying direct subsidies. Therefore, the technique is as important as the actual incidence and we, therefore, consider subsidies to be very important, but their use is limited by the fact that some countries are poor and others are rich. On the whole, we are in favour of production subsidies. The distinction between pro- duction subsidies and export subsidies is a real distinction, although I grant the position taken by the Australian Delegate that in some cases both may have similar effects. But, in the case of underdeveloped countries which have established new industries, there is very little chance of those products coming into the world trade and, therefore, they are not likely to cause any international reactions or to inflict any harm upon international trade, whereas export subsidies as such are likely to bring about international disharmony. For that reason, we agree with the Canadian Delegate's view that the export subsidies are not so desirable. When we turn our attention to the subsidies on agricultural products, the considerations are here somewhat different. Actually, when rich countries resort to the use of subsidies, whether domestic or export subsidies, the effect upon poorer countries, agricultural countries, has been very unfortunate. India has suffered under that, and in respect of some products India has suffered because she has not been able to compete in the world market in respect of certain goods which, in pertain other countries, 36. K E/PC/T/ C. II/PV/ 6. have been subsidised. Actually, the method of subsidisation is a very important thing. If the United States, for instance, wants to subsidise raw cotton, I think the best way is not to give subsidies on the total amount of production of cotton or the total amount exported. The real basis for subsidisation is not that you should give a certain amount of money to particular products; it is rather that the people who are the growers of cotton should be given a certain income. Therefore, the whole approach to the question of maintaining the income in purchasing poser of the primary producer should be, in the case of rich countries, Free from the point of view of the fiscal machinery -- that is to say, the tax system in that country should be so managed that certain benefits should be rendered and transfers of income should be made by means of taxation from the rich to the poorer classes who are in agriculture. On the other hand, if they are going to give subsidies of various kinds in respect of products which have also to be grown by the poorer countries and have to be exported; then the competition between the two countries is so un- equal and unfair that the poorer countries have a definite case against it. Therefore, with regard to export subsidies of agricultural products, I do not think we could accept the position and, if it is done, it should be done in a different way which will not produce this undesirable effect. THE CHAIRMAN: Is there any further discussion on this matter? MR SHACKLE (United Kingdom): I should like to associate myself with the remarks which have been made by the Canadian Delegate and also the Indian Delegate in regard to the more dangerous and objectionable nature of export subsidies as compared with domestic subsidies. When I say "domestic", I should say general production subsidies. We feel, as the Canadian Delegate remarked, that the mere fact that the whole production is subsidised under the latter method is in itself some safeguard. For the rest, the type of subsidies which we feel to be particularly objectionable is where a country makes use of export subsidies in order to secure for itself a larger share of the world market for a product 37. K. 3 E/PC/T/C. II/PV/6. than it could otherwise obtain and, having done so, proceeds to use that as a means of securing a commodity agreement which perpetuates for it a larger share of the world market than on its economic position it would be entitled to. That is the typo of subsidy which we feel it particularly desirable and necessary to rule out. MR TUNG (China): Mr Chairman, the Chinese Delegation are generally in accord with the provisions in Article 26 on subsidies: that is to say, we feel that member nations should not unduly resort to subsidies as a means to promote export trade; but we think there is an exception in the case of preferential markets. We think it is only fair for an exporting country to give a certain amount of subsidy to their products going to such preferential markets. In connection with the topic of duties in article 11, paragraph 2, which is to be discussed by this technical sub- committee, the Chinese Delegation have proposed a certain amendment, and I would like to read that amendment. It is as follows: "In the event of preferential treatment being accorded by a country to certain countries to the exclusion of other member countries, no countervailing duty shall be imposed upon the products imported from such other member countries against subsidies which are granted by the latter to such products as compensation for covering the preferential margin." MR SPEEKENBRINK (Netherlands): Mr Chairman, I hesitate to add further examples to the many we have already had, but there are a few special points I would like to make on which I would ask the guidance of Mr Hawkins before defining our attitude with regard to export subsidies. One point is this -- and it is only a small point it may be. At a later date, when the currencies have been established, this will not be a difficulty any longer, but we find it difficult cometimes to trade with countries who have not established their exchange up till now on a higher level. Private persons can try to get a solution for this problem by selling at high prices and buying at high prices, but often you find that they cannot find the right partners. So a possible solution for that is that the Government itself, which is doing it with agricultural products already, should levy a duty 38. K.4 E/PC/T/C. II/PV/6. when exporting to that country -- let me say not in the form of a duty, but, when you ask for a licence, you have to pay a certain amount of money and use that money again when buying commodities from that country. It seals to me that, when we have export subsidies, in the spirit of the Charter, we should not be allowed to levy a duty on exports, as I have just mentioned, and we would have here a kind of import subsidy instead. The same thing, putting it in another way, is that you have not our monopolist system which I mentioned yesterday on agricultural products. We try to find an average price for the produce in our country for certain agricultural commodities. We do not discriminate with regard to importing countries, but if, for instance, the average price is 110 guilders, and the import price should be about 85 guilders, then we would when giving a licence ask the importer to pay 115 guilders to the common front and that we use again as a production subsidy for the maintenance of agriculture. This system, as I said yesterday, has been functioning already for about 15 years, but sometimes one has difficulty with it, and also the country which Mr Hawkins represents has sometimes spoken of raising countervailing duties. I think the whole matter of subsidies is a little one-sided. You can give a production subsidy; you can gave an export subsidy, but, when you try to have a real regular development of your market, following the trend of world prices, you are prevented from doing so by the different stipulations of the Chaertr. As we have already agreed that I should discuss this with Mr Hawkins, I just raised the point here, because I felt I could n otrefrain fmro mentioning it at this moment. Those are all the remarks I have to make, thank you. MR McCARTHY (Australia): Beforeo Mr Hawkins speaks, Might I say one word. I would like him to consider this exmple: A country introduces what it describes as a stabilisation scheme for its own country. It decides that it shall fix a home consumption price of, say, 120. for butter, and the object in doing that is to avoid the fluctuations that take place, brought about by the international market moving up and down. It is found that at times the export price is 120s -- sometimes it is110 s.; some- times it is 121s., and sometimes it is 119s. It is moving up and down all 39. K.5 E/PC/T/C. II/PV/6. the time. Is that country to find itself questioned because it has an export subsidy when the external price is 118s. and then it has got that for about a fortnight and it stops because the international price has gone up to 120s., or above it, or is it to abandon what is a very sound proposition -- that of stabilising its own home market and avoiding in its home market the bad effect of the fluctuations of an external market? It could happen that it would have to abandon its scheme and it would find itself coming under this provision one week and dropping out from it another. Now that is an export subsidy within the meaning of this paragraph. MR JOHNSEN (New Zealand): Mr Chairman, I wanted to refer to the question which has just been mentioned by the Australian Delegate. We have, as a matter of fact, submitted a paper, No. 23, covering this particular question, with a view to ensuring that a guaranteed price scheme, such as that operated in New Zealand at the moment with respect to dairy products, is not ruled out by any charter that might be decided upon. As Mr McCarthy mentioned, the producers of dairy products arc guaranteed a price determined in relation to costs of production and other factors affecting the producers' position. Any amount received in excess of the guaranteed price is retained in a fund entirely for the benefit of the industry and on which the particular industry might draw in the event of its being faced with difficulty such as from a fall in overseas prices. Such a scheme may be operated by an industry with or without Government 40. sponsorship. ls. E/PC/T/C .II/PV/6 It can probably be likened to the action taken by a cor- poration to build up a general reserve for use in special circumstances. The necessity to give producers, particularly in a country like New Zealand, which relies so much on exports of a few primary products for its economic stability, some measure of stability, will, it is felt, be generally appreciated. Apparent also will, I think, be the advantage of such a scheme to world trade as a whole, since the effect of any reduction in overseas demand for such primary products is through such a scheme cushioned, thereby keeping up the spending power of the producers and maintaining a demand for consumer goods which it is necessary to import. In considering whether there is any measure of stabilisation through such a procedure we agree with what has been said by the Australian delegate, that you cannot look it it over a short period. Prices fluctuate not only as between shipments but also from season to season, and we think that the only basis on which it can be considered is over a reasonable period of years. I might say that in respect of the guaranteed prices for butter, I think that since 1938 there has been a continual credit which has accumulated in the account. We were hopeful, therefore, that the suggestion which we have made and which, I think, is self-explanatory, will be given careful consideration. THE CHAIRMAN: Is there any further discussion of this matter? If not, I shall ask the delegate for, the United States to reply to the points raised. MR HAWKINS (USA): Mr Chirman, I am afraid that I am unable offhand to cover adequately the questions raised by Mr McCarthy. I think that the questions that he has put are pertinent. I do think they need consideration. The question raised by Mr Speekenbrink, as I understood it, was the question whether, if they have an average price in the 41. L .1 L.2 E/PC/T/C.II/PV/6 domestic market of 100 and an import price of 85 and require the importer to pay 15, and the funds so acquired are used to subsidise domestic producers, there is then any conflict with these provisions. Is that correct? DR SPEEKENBRINK (Netherlands): Yes. MR HAWKINS (USA): I think the question there is the extent to which the interests of suppliers of the market may be involved by that operation. If domestic production were built up to a point where it would exclude imports from other countries, I think it would be definitely open to objection. I think it would come under the general provision in the first paragraph of the subsidy section and would require consultation with the country that might be injured. There is one other point on which I would like to comment. The United Kingdom delegate referred to the use of export subsidies by a country as a club in order to force the negotiation of a commodity agreement and to obtain in the commodity agreement a larger share of the market than it was entitled to. We did foresee the possibility of such abuse, and the Provision in section c. of Article 25,3. is intended to put a limit on that. Whether it effectively does so might possibly be argued, but the point is recognised and an attempt is made to deal with it. THE CHAIRMAN: Thank you. It seems that there is a fairly clear line of demarcation in this subject matter. With regard to the use of the subsidies as an alternative form of protection to the use of import duties or quantitative restrictions, I gather that there is fairly general agreement that the use of subsidies as a general rule is a desirable form of protection compared with the other two subject to the limitation which has been made, particularly by the delegate for India, that in the case of governments with limited governmental income there may be limitations on 42. L.3 E/PC/T/C. II/PV/6 the degree to which they can rely upon this form of protection; and also that in relation to the use of subsidies for stimulating or protecting the production of manufactured goods there is a fairly reasonable distinction to be drawn between general subsidies and subsidies on exports, in that the latter form of subsidies - those which are payable only on exports - are definitely more likely to be harmful of the interests of other countries than subsidies payable on all production. However, enough has been said by a number of countries to indicate that there are special problems relating to the use of subsidies in connection with primary production, particularly where they are used for the purpose of stabilising the incomes of producers of primary production in exporting countries; and it has been pointed out here, I feel with some justice, that the question of the use of subsidies as a means to stability in the incomes of primary producers, particularly in exporting countries, is very closely allied with the subject matter which is being dealt with by Committee IV, on Inter-governmental Commodity Arrangements. It has been pointed out here that the nature of the subsidy - whether it is generall or whether it is payable only on exports - is not necessarily a fair criterion for judging whether the subsidy is legitimate in the sense that it imposes any great burden on the economies of other countries. It may be, therefore, necessary to seek some other criterion, such as the effect of the payment of the subsidy on the world market. It seems, therefore, that it would be desirable for the further work of this Committee to divide the subject matter, as Mr Hawkins suggested, into two parts. One would seek to set out the views of the Committee, which appear to be fairly generally agreed, in relation to the use of subsidies as a means of protection for the production of manufactured 43. L.4 E/PC/T/C.II/PV/6 commodities; but, in so far as the question of subsidies, either general or export, affects primary products, there is need to reconsider the matter together with those people who are examining the problem of primary production from the point of view of Inter-governmental Commodity Arrangements. I suggest, therefore, for your consideration that we ask the United States, the United Kingdom and India to confer and prepare a brief outline report for the Committee in relation to the use of subsidies in relation to manufactured products. Secondly, that you authorise me to approach the Chairman of Committee IV with a view to setting up a Joint Sub-Committee to consider the use of subsidies, both general and export, in relation to primary products. I have anticipated your approval to the extent of asking the Chairman of Committee IV whether he is agreeable to that procedure, and he has expressed, subject to your agreement, his willingness to do so. If that is agreeable to the Committee I would suggest that you leave for the moment to me and the Chairman of Committee IV the preliminary selection of the delegates who might be associated with that work, subject to their names being submitted to you tomorrow for your concurrence. Is there any comment on these suggestions? MR FRESQUET (Cuba): Mr Chairman, I propose that the delegate for Australia should be included in that small group of countries. THE CHAIRMAN: Thank you. Are there any other comments or suggestions? If not, we re-assemble tomorrow at 3 o'clock. We are now approaching, I think, somewhere near finality in regard to our preliminary survey of our work. There remains for consideration in full Committee only two groups of items, items D, G and J of the provisional agenda, dealing with "Exchange Control", Emergency Provisions, Consultation, Nullification or Impairment", and "Territorial 44. L.5 E/PC/T/C.II/PV/6 Application"; and also Discussion of quantitative restrictions in so far as balance of payments provisions are concerned. It is, I think, desirable that the balance of payments provisions and those relating to exchange control should be dealt with together. It should not, I feel, take us very long to deal with emergency provisions and territorial application, since they are largely routine matters. I would suggest, therefore, subject to your concurrence, that we seek tomorrow to dispose of emergency provisions and territorial application, and also at least to make a start upon a consideration of quantitative restrictions and exchange control in so far as they affect the balance of payments. I know that some countries are anxious to leave this difficult matter of the balance of payments as long as possible, but I think you will agree with me that it is desirable that we should complete our preliminary examina- tion of this matter before the end of the week, otherwise we are going to be lagging very badly behind the other Committees; and, whilst I think it is inevitable that we will be the determining, factor in fixing the concluding date of the Conference, I am reluctant that we should lag too far behind; so, with your concurrence, I will ask that you come prepared tomorrow to discuss emergency provisions and territorial application, and also at least to commence discussion of the item of the agenda dealing with quantitative restrictions as affecting balance of payments and exchange control. We stand adjourned, then, until 3 p.m. tomorrow. The meeting rose at 6.15 p.m. 45.

GATT Library

bj693bk4933

Verbatim Report of the Sixth Meeting of Committee III : Held in the Hoare Memorial Hall, Church House, Westminster on Wednesday, 6 November 1946, at 10.30 a.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.III/PV/6. and E/PC/T/C.III/PV/5-7

https://exhibits.stanford.edu/gatt/catalog/bj693bk4933

bj693bk4933_90220061.xml

GATT_157

A.1. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL: PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the SIXTH MEETING of COMMITTEE III held in The Hoare Memorial Hall, Church House, Westminster on Wednesday, 6th November, 1946, at 10.30 a.m. G CHAIRMAN: Senor don Higinio Gonzalez (Chile) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58, Vi,ctoria Street Westminster, S.W.1. 1. ACTING CHAIRMAN: E/PC../T/C.III/PV/6 A.2. B.1. / . II PV E/PC/T/C.III/PV/6. interpretation):" yrthe meeting is open. ptrysyionTheh ctig m( Toe neetir is cpeh. What do we bave I a?dayl gegd<a Thele ate o Australia.. MR CIER a.utlat): H The re i be a meestinHgs of he Xasof Dseegatiorn later one in the vnig I undstathe nd that cthat tpreclues hce attndane of a Nuer of Delegates who have occupied rather prominent positions int tie discussions, and -hre aaronge au numberave oafnohers m=r v'who hbr orning, other engahiementsinghbsrnn, and I thc ink it would asist cus f we ould come to wesome arleav;;rangement ndr which nleould this meetinng to stad over until some later time. I think it would be a help to us all if we had more time to study this document, too, before we get into a deeper adiscusion on it, I JustChairman. mke that sugestion to the aman T CHIRAN: J> note omNOTE m ' (rspretation): I tnbaotthe otion ub- Amitted by tnhe hon delegateAor Lstralna, ad I leave it to the n on Committee to come to asee c ouldnizn this subject - whetherulsid adjourn or not. I request the opinion of the Committee on that sub- Jct. aNR MOEGCR Canada): Mr Caharmn, before the motion is put, I would lile to make a fearemnrs. lDo I vu nderstand that it wivl hae-t be trahens,multaneous ted olakr are we using tmuinzaneo transition service? are at the mHAIRMANALMA' r-ortatiwe a: e oreoment using the simul- taneous method, anmfw= nr onw the simultaneous interpretation servicle wil be in action. mMRER MGOR (Cnada)m I=ustconfess that I spent a more or less sleep- lessr nigaht, gravely concened bout the attitudes expressed yesterday, which seemed to indicate a desire or a willingness to whittle away oome c the essential requirements of any convention which can be expected to produce even moderately effective results in preventing harmful effects and practices in I hainen ternational trade,pp)en to be exceedingly keen to have sometmmhing produced by this Coittee which will effect nablleahe I believe that IO .0.o to ve reuctreceve that in of this draft the I.T.. would have an instrument that could be effective. I think mthmmembeara of this Comittee shre that keenness and that faith; 2. E/PC/T/C.III/PV/6 But I am exceedingly alarmed that when it comes to the point of approving something that is essentially reasonable, there appears to be a holding back, because it may make it necessary for one country to prevent com- mercial. enterprises within its jurisdiction iron engaging in practices Which, while they may be harmful to others, are profitable to those commercial enterprises. I am reminded of the Scriptural story of the invitation which was extended to a number of peole to participate in a feast. One by one, as the record goes, they began to make excuses or to make reservations. The actual words are: "They all with one consent began to rake excuse." We have been invited to the task of drafting in international agreement to prevent combinations and monopolies from engaging in practices which have harmful effects. I earnestly hope that we have seen the end of the beginning. We all recognize that not all by any means have made excuses; but I should earnestly hope that only the strongest reasons, and not illegitimate excuses, will prevent us from getting ahead. If we were drawing up an international convention that was to result in the reduction in the number of traffic accidents we could hardly expect European countries to adopt the suggestion that Canada might make (but would not make) that they change their laws and procedures and require cars to drive on the left side, or, as we should able, say, the wrong side of the road. It would surely be reason/ though, for us to urge that coach country should do its utmost to prevent the contin- uance or the recurrence of traffic accidents and should do its utmost to implement such measures to this end as the countries jointly agreed were necessary to Prevent such accidents. Surely it would be unreasonable for any coutry to disagree, if it was really keen - and what country would not be keen - to reduce traffic accidents? A better illustration would be the control of traffic on the high seas, and that would corres- pond more closely with our problem in the field of international trade. If one country agreed that it would do its utmost to prevent accidents on the high seas, but insisted that its own ships should be permitted to run according to its own whims or according to the country' s laws and E/PC/T/C.III/PV/6 procedures, even if such procedures were to run counter to those of other countries, the results wouls be fantastic - certainly the harmful effects would not disappear. Surely it would be reasonable to have international agreements, which fortunately are in existence as far as shipping is concerned, under which each country would undertake not only to act vigorously but to prevent certain practices which all countries agreed were basically responsible for many of the harmful effects. It would not be sufficient, surely, for any country merely to apply the chastening rod to some shipowner whose vessel had run amok and suggest to him that in future he must exercise more care. If we want to carry on an academic debate in this Committee, you can no doubt point to defects in this analogy; analogies are al- Ways defective in Some respects; but all I am trying to suggest is that if we are in earnest in this matter we, is individuals, as delegates if you like, will put it down as our own individual opinions that each member country should undertake to do its utmost to prevent harmful practicess and to eradicate as far as possible the conditions which are responsible for those harmful effects. I am referring, of course, to the specific suggesting in Article 35 (6) of the draft before us, that the Organization should call upon each member to take every possible action (Perhaps it should be "all possible steps" as in the draft of Article 37) not only to prevent specific harmful practices which have happened, but to terminate agreements which are responsible for most of the harmful effects that we are all agreed should be prevented. The corresponding prevision is found in Article 37 (1). In it all that a member undertakes to do is to take all possible steps to prevent harmful practices (surely no one will baulk at that), and in particular to take all possible steps to prevent practices which the I.T.O., after inquiries and hearings and all the rest, find have had harmful effects. Surely no one will baulk at that. Even If that is accepted, you can bank on it that different countries will act on E/PC/T/C.III/PV/6 it differently. Some will act, in accordance with their own laws and Procedures and in keeping with their obligations; in an exceedingly vigorous way; others may merely go through the motions and implement vigorous way; others may merely go through the motions and implement, . * , -. -'~ - their obcligaatsioans ayin a vewill dory lakandiicl w; some .it in a sna ,'bu-t meddling Md model way of reaseliblngb wqy others will take the e :ut firm action, such as you would natuurally expect Canadato take. Bt by "firm" I do not mmean ixelding invancsistence on eticulous obserzo f the letter c the, agreement; and by "reasonable"' -d -nt tman flbexible to the point flabiness - - - Eapabven the words we have used "ll-possible steps" .re rJe of veryIt sdifferent inte3tantins by different countries. t, e twy you sapy itbn." Some will reas it, drhaizing - hwor ""?os!le "albl sxsipbJAtens"-and, c' cour, they cannot pe ezcetedto tak impossible steps. ld bOthers w1 read it, as I think it shouff read to- n that each =bercountry will do everything that it possibly ca to panrevent tPracttheices that are harmful z to ge at M core of the disetheaagrese and eradicate if necessay the ement, or the parts of the agreemment, wra are responsible for the harilI effects. Surely that is not asking too much of any member if they really intend to assist in revctinr harmul practices. If any county - and I am thinking of the countriest that will consider subscribing, o this perhaps a year hentice - is not serious in such intenons, then, surely, th?neey should not subscribe to the cvntion at all. I hope you will not take what I have saisd wirthh eany feeling that here is elf-igtous Canadian who is syinyng his pieceC I am not makirg ax charge of lack of goomd faith; in fact, I have been ighmensely impressed by the feeli of hesarnestness in connecetion with ti problem that has ben shown by every member, not onlye of mthe sub-committee, but of the Comittee as a whole. I am oy ceallidnZ ttention to what, in ycstraZy' Meeting, seemd to be something leike indifference or lukewarmnss. eehr Laurence will understand e I say than it seemed to me - it mas not have seemed to others - butwe it seemed to me that there re some 5. indications of a readiness to tone down things to a point that I think; would be fatal if the whole project is going to be effective. Certainly, if anything like apathy were to creep in at this state, it woud develop apathy at the next state and the next, until, in the end, you would have an apathetic document to administer and you would have also an apathetic organization to administer it. I used the word "lukewarmness." I do not want it too hot or too cold, but I do think that we should be exceedingly carefull not to let this draf Chapter become a document that will be ineffective. I spoke yesterday of the inability of the Canadian delegate to commit the Canadian Government or the Canadian Parliament. 6. C. 1 E/PC/T/C. III/PV/6 I think on this point all we are doing is committing ourselves to the belief that such and such a thing should be considered by our Governments and the decision will be taken then as to whether we were right or wrong in the tentative opinions that we expressed in these meetings. THE ACTING CHAIRMAN (Interpretation): I consider that we should take very much to heart the interesting remarks of Mr McGregor on the task of this Committee, but I hope that all the honourable members of this Committee will take his recommendations into account, in order that we may attain our real aim and not, as he said, produce a merely lukewarm; document which would not have any practical effect, and so that we may be able to present to the Drafting Committee a really useful proposal. In view of the fact ta-t it is alread11 i o'cloca end as the honourlabe degleatef ou Astralia has also said thawt e mightn djou,rn I therefore oprpose to the Committee that we should ad jurn until tomorrow, at 3 p.m. I declare the meeting d ajourned. The meetgin rose at 115.0. a m. 7.

GATT Library

cb767kt8764

Verbatim Report of the Sixth Meeting of Committee IV : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Thursday, 31 October 1946 at 10.30 a.m

United Nations Economic and Social Council, October 31, 1946

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

31/10/1946

official documents

E/PC/T/C.IV/PV/6 and E/PC/T/C.IV/PV/4-7

https://exhibits.stanford.edu/gatt/catalog/cb767kt8764

cb767kt8764_90220091.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE TRADE AND EMPLOYMENT Verbatim Report of the SIXTH MEETING of COMMITTEE IV held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Thursday, 31st October 1946 at 10.30 a.m. Chairman Mr. J.R.C. HELM0RE (U.K.) (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) A.2/E/PC/T/C/IV./PV/6 THE CHIRMAN: Before this meeting, commences I think perhaps it would be convenient to members of the Drafting Sub-Committee if I said now that I would like them to stay behind,when this meeting adjourns, or a few minutes' private conversation with myself. Wehave now left on our agenda items 7 and 8. 7a. relates to the Commodity Councils and there we are referred to Article 47 of the United States draft charter. PROF. de. VRIES (Netherlands): Mr Chairman, under paragraph 1 it is said that "A Commodity Council shall be established under each inter-governmental commodity agreement involving the regulation of production, trade or prices of that commodity'" I believe. there are two ways open to us there. We could say that a Commodity Council shall be established for any inter-governmental commodity agreement, or we might choose another name for a body which can administer a commodity agreement, say, for research and propaganda and expanoion of consumption, and so on r would not like to make a formal proposal that we should choose one of those ways, but they should be the two things we can choose between. MR QURESHI (India): Mr Chairman, I would like to 'point out that in Article 47, paragraph 1, the regulation of production should not mean restriction of production, owtherwise the whole aim of the raising of the standard of living will. be defeated; nor should it mean to discourage the production of certain -commodities if certain countries find it necessary to do so and to, expand their production in the interests of their of their country. The attention, of the anisation sanould be mainly devoted the the orderly market- ing of commodities, and decreasing the cost of production . and efforts should be made also to increase demand. 2. .f ' . 2 MR SCHWEN GER (USA): Mr. Chairman, we are addressing ourselves to paragraph 1 of Article 47, which is for ths purpose of setting up the Comodity Councils. The remainder of the paragraph is merely to identify the kind of agreement for which it is required that a Commodity Council shall be established, and is derived from other Articles in the chapter; it does not stand on itself in any way, and therefore no modifications can be made of it here; and in this context it seems to me properly the relevant phrases elsewhere in the chapter may perhaps be subject to discussion, and if they are changed this phrase would change as a consequence. THE CHAIRMAN: Yes. I take it that the point made by the Netherlands delegate was really this: that any inter- governmental commodity agreement needs a body to run it, and the point he was safeguardinfg was that the provisions of the remaining paragraphs of Article 47 should only apply to thoee agreements which are in a special character because, as in the words here, they involve regulation of production, trade or prices. I think that is a point that could be convenient"Wy left to the Drafting Committee to work out - that they have got to provide somehow for a body to run any commodity agreement, and in the case of particular kinds of commodity agreements the body has to have a certain constitution. Whether the words regulation of production, trade or prices" are the riht words to describe the special kind of ccmmodity agreement which needs a specially constotited body to rumn it is something, I think, which will come out in the wash of how generally the Drafting Commititee feels that it could distinguish these bodies; and that Committee vill takae note of the point just made by the lndian delegates 3. B-1 E/PC/T/C.IV/PV/6 Mr J. NELANDER (Norway) Mr Chairman, we are now discussing the organ is at lonal methods by which the commodity agreements should be administered, and in the general discussion we indicated that we were not sure whether it would be the right method to establish commodity councils at all, It may well be that it could be arranged that the Internazional Trade Organisation itself could administer those agreements, If we have special commodity -councils established, that will necessitate the solution of rgan- Isational problems which will arise, namely, the relationship between the International Trade Organisation itself and the commodity councils, We feel that in order to try to obtain the most efficient administration of all these international agree ments in this total field namely, the general commercial policy principles, the principles regaring restrictive business prac- tices and also the principles applIed in regard to primary products, it would perhaps be the best way of solving these organisatIonal problems if we left out the commodity councilsity councils altogether and heleft it to t International Trade Organisation to build up that oroganmiisation t adninister tnghe whole thi. I tank it would. perhrightaps be the istage in our discussions now todiscuss in principle whether or n t the commodity councils should be established at all. Mr, RL, ALL (UK): mMr Chair-a, as I undehrstand t lsuggestion of the delegateN from orway, kinghe is as whether it would be advisable to have a specific commodity council to administer each Agreement, or whether it ought to be left to the International. Trade Organlsation itself, While that seems to have some advantage froim the pont of vimpew of silicity, I thightnk it mi a rather deceptive simplicity, owing to the fact that each specific ycommodit Aalmost certain to presenwt its om peculir problems, that the probiems of one commodity are not at all li ely to'be exactly the - in s,and ome cases hey miht be quite ntdiffere from the s of nother ther n commod y; and, the United Kngdom hasinlrtaJni 4. envisaged the at attack on this problem as really an attack on s cries of indivi-dual problems, and we certainly felt that the countries which were primarily interested in one particular commodity would wish not only to participate, as has previously been suggested, In this document, in the formulation of the agreement, but also In the administration, rather than to hand over, as it were, a. central body of principles and an agreement and leavethat subsequently to be administered on general lines by a central organisation. Dr. A. J. BEYLEVELD (Union of South Africa): Mr Chairman, the three clauses we are considering this morning all provide really for downward restrictions; they all refer to surpluses What is said in (1) in effect refers to surpluses, 49 (1) excludes the districoution of comnodities In short supply; and 66 refers to burdensome surpluses. Now, we have had all these problems about shortages, The question is whether we should not by sub-division give some Indication to the Committee as to how to deal with these adjuustments if shortages are to be covered. THE CHAIRMAN: Could we leave the problem of shortages for the moment and try and give the Drafting Coommittee some idea, at any raw, of the two schools of the two schools of thought, on whether there should be commodity councils to run these agreements or not? We will come back to the shortages point in a minute. Mr. E, McCARTHY (Australia): Mr ChaIrman, the Australian view would be definitely that each commodity agreement should be administered .by a body representative of the signatories to that agreement, The main reason for that view would be that any other body which is representative of the Organisati0n would not be suffci-ently Interested in the different products and would have sufficient regard to the peculiarities of the Individual products. I do not know that one could enlarge on that vermuch, but it is something upon whhich our opinion is considered, and our view would be that the body actually administering the agreement, should be 5 . E/PC/T/C.IV/PV/6 representative of the people who sign that agreement, They are the people interested and it could not be agreed that the represon- Natives of other countries who might be on the Organisati on would be involved in the day-to--day handling of that agreement. As to the other aspects of that, are we dealing with 47 (1) only? THE CHAIRMAN:Yes, I think it would be convenient lust to clear this point which has been raised by Norway first, and then return to others. SENOR JOSE ANTONIC GUERRA (Cuba): The Cuban Delegation is defin- itely of the same opinion as that advanced by the Delegations of the United Kingdom and Australia, that each commodity agreement should be administered by the countries. party to each particular agreements When later we- come to the organisatlonal relation- ships between the commodity councils and the Organisation, I will give more reasons for this; but for the time beingI content myself by saying that we entirely agree with the reasons put forw, by the United Ki-ngdom delegate and the Australian delegate, Mr. J. MELANDER (Norway) : Mr Chalrman, this problerm which we are discussing now seems to have certain diff erent aspects, Iunder-- stand from' the remarks Just made by the delegate of Cuba and the delegate of Australia that they envisage commodity agreements with comparatively limited membership. I think we agreed in principle when we-discussed the commodity agreements in general that it would be open to any member of the International Trade Organisation to join the .agreement. That does not in itself mean that every .ember of the International Trade Organisation would have the same interest in any. agreement, and, it may well be that certain Members of the Organisation do not want to join one particular commodity agreement because they have no interest at all in that particuar commodity agreement, Generally speaking, I think, however, that most countries Members of the Organisation will join most of the commodity agreements. 6. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.: .:6 V be interested generally as consumers and as ####################### lthough the total quantity, if I may say so ######## - Mt con oftbB pZ oduceurse we .mlayf i t hat p s he, -be sAaayb,, a 0 on Ube other side, the importers.14, -ltay members; and that showstbat we canniottk.~X~ !6i there would be say cply 5. 6, 7 to 10 -members Ov1.t of .e-: commodWty agreements Well, if that thnk we can risk havirm commodity agreements with, say, up to 40 eber's perbapa. anyway In the main commodity agreements covering thlnga 11ke heat, rubber and other commodities wbi-c practlcallyever y country will consume. Now,in that case I think 't is quite obvi-cus is Imoss1blp for A boarge a that to adm3-mister such an agreement In its dayto-day work, Consequent, ly, one must try to form a sort of executive body, That s the reason why I suggestthat it wodd be easier to administer these commodity agreements lf -it were left to the Organisation itself 4~~~~~~~~~~~I throw# itscommodlty commissions, containing experts from the _ountle :minly interested, but still it would be a small group Within the Organisation of experts, and they would admi'nlster th agreements which, of course, would have to be so clear and die- tinat that they could be ,dmInistered by the Organisation, I take it that that would be the aim of all limbers, that t a -k ment a should be as clear as that5 so that the daily super vieS-onand the daly admirstration should le almost a matter of rout ne, That is the reason 7V suggest zha the asiet wa to solve these problems would be to leave out the commodity council altogether and place the administration Wthin the OrganlsatLo., How I should bi rganised, Orgaion itself should- orgamse the administration of each particular commodity agreement. wou0, of course, have "ered. when we * 74 - . . ' ,~~~~~~~~~. E/PC/T/C.IV/PV/6 consider the question relating to tho Organisat on itself; and, secondly, of course, it is quite right, as the United Kingdom representative said, that the different commodity agreements are of different characters, and they would require the solution of- different categories of problems. I can see that is no reason why the Admninstration should not admnister them. We take it that the Admi-nistration will have experts on all these subjects and that, consequently, although there may be up to 10 or 15 commodity agreements, they could all be administered by a small group of experts. I think those would be the main reasons why we suggest that that would be the easiest way and the most efficient way of running these commodity agreements. ~~~~~~~~ the way which has been #################33phCa a o *.bn Jw4 ure.nIf we were to say that there sshould ;a. srozse fcrr the ~ ~ ~ ~ eN ves of 50 or 60 countries, . . - . . V r r$. a ; s mmodities have to consider all the commidities which would come under an arrangement, in the first place, it nwould mean having experts in several commodities and \*'-;, -e f t 00 * ou- need' , pert work. on the oouod ity ould a red n lot Ofexpert VrcrkOn' t Councis which are now in existence ant.wbich wre in existence before different parts of not just one exPert; there wee eVerts fl'odi ferent tbe world commission fort is that if you have smh a caiouodity o01uisaion-for ting arrangements.L.istration fle do see bovA you bave &ood, vo; arr*Ee uld be equally repres-There is a zinple th-atproducers and ccasizaers shou repres- ented, but if Yu -ix up several coodities undc.r obbcy how you zzkelion eon vot~i-n? Foeh probe-e. you would to have a Iw vctimnL prwfor each country e.na. I tnk that mould be a very tr hand, we feel that Commodityco jroubesoi tio dco On t, we fehe Comodity -Coz sion ay aguarding the lex:Ee wrt in stting up -and safet-rdinL th pdminstration of ecirinomples whole thinC- Ibut o n the a&- inst co".a-oditY in itsed would not the douth "fricm):zr Cheir.an, w-ulJ. r t the difficulty of the rArticle 60 epresentCommodityative c Norwy be partly At by.tiche Gomodty CEx= iSSIOne has to report t the executive Boad ana that untries with MLht be amplified - that tlhe conith lesser interests shouL n with the Executive Board in bey~ -re sopcific O uicatO prof view.esent their.. points view4_-' rman, perhaps the Delegate for south Africahe DeleEate fir South ikfrio ir)arcbian e s that try to plain in a. i~tie mre &f tai he had in ~ind on tt pet:icular sub`eact ' ^x Lrik p5 re icle 60 provides for the i~) ir '.En 6rtc2. 60 provides for the Executive hoard to which this Qo-,ission Lst report an& the Executiw ~~9 E/PC/T/C . IV/FV/60 Board has some control over the actions of the Commission. Now, would it not be possible for the countries with shall interest in a. particular comidity we have some say in the Commission through the Executive Board? Mr. QURESHI (India): Mr. Chairman, the Delegation from India would like to support the view that we should have a separate Council for each commodity. 'Each commidity has its own problems and requires though exmination and handing by experts. THE CHAIRMAN: I wonder was the perhaps this discussioin would not be assisted if the late of the United states would explain to us their ideas about the constitution of each Commidity Council and its duties; and perhaps we might here go on to paragraph 2 and hear how the interests of producers and consumers would be equally represented. Mr SCHWENGER (US): Mr Chairman, we had envisaged that each commodity agreement would contain a central body which by custom has come to be referred to as a Council in the agreements that have been essayed so far. Only the countries participatins in the agreement would be directly represented., as Mr. McCarthy has said, and in which - and I think this is a point which may bear on the discussion - they would be c reprseented in omes proporion to their interest in the commodity. Sott in to.e cc-zaity. So tmattt in the bstance relating to that commodity,tine tc t.^c co-zdity, to its producprices and related matters the varicusd ..attcrs, the variou part that corresponded with their interest in the heir interest in the to-aaodity,ecisions sultlnt dfecisions zouLd tallyfore substanticJly e of these important inteese important interestts. I believe tha that is en tuential -Whn ou c theseragreements arereeazents cre entered into nd concern trade which tradea7rhi ch in -ny cases is vital to the ~~It of.:--c, et voice between the countries representingen the countries reprEsentifl_ s representing the exporters can then be tinE the erporters can then be ion the total expert and total importtotal ex:;r= t d total iz;crt de in the commodity and as modified by the dificd by the d production intere terests, at .E&y be a~reeCC, ani. then divided within each according tp tje omterest. I think an agreement of this kind, a voluntary agreement as to the regulation of production. trade or prices of a Single commodity cannotbe treated as part of an international administrative process. There has to be an to 'b an. ag-eeentine of an aLgeeament betweenthe pearties at intere and its adniministration occorrespondo that essqnential ructw.ure AMr. HELANDER (Norwy): Mr Chairmna, I woul dthank tae Dcelegateoof the Unitedesate of the United States for his eXlanation whch mI thinke covers so. of thcpoints I have ind. paOrticularly in w course, what v are particuarly interested in is to arranem hat thgresme com:ohity a-raetnciple s, wiih in primill be memberbopera forganisationthe all nisadministered acainistered by representatived mf the Governeents which arr interested. As I said would have much largerhave =uc large interests commarticular oorLodity n other areejents thar countries but if we take it, to use an exaple, thucing the five prodc ard exporting countries shall equal in voting, power mer or importing countries it is to my mind essential .y -indessential that it should be possible to ammodity agreements in a wayeaents in a way that will =intain the balance betw een exporters,on the one hand, and the iziLprtersners, on the othnd.er har e, That s the eason why we in ouegDel cation consideredoit most iost efficient to leave the administration to tganisation itse itself as tganisation would,ould, of course, have on its staff expertall commodities and also it lso i would have an international Secretariat. They would have an essentially objective view of the wholegthinL and if the agreements are clear and distinct dministration tion should be very easy. 0Jeparticular powhi vi-ah the United States has jmst =may perhapshaps w anw anothgger iht on sthe ubjecamely t, n the point that thmmoditye co ement would, of couef cebe se voluntary. That meanssthat we should not havall 1 thmembers rs of the ganisation onaparticipants in allll the mmodity agreements, and I adminhthatat would perhaps make it a littlmore didifficultofcr the ministration to cover the whole thing,, 1 E/PC/T/C . I V/PV/6 but if we accept in principle the establishment of commodity councils to cover each commodity agreement then I think it should be essential to establish the relationship between the commodity councils and the organisation. It is quite obvious that the organisation, as the policy-making body, the main body, would have so to say to direct the commodiity council. and supervise their administration. It is obvious that the commodity agreements are only part of the whole structure regulating the international trade and therefore I think perhaps I would agree to leaving open this question of establishing commodity councils riht now and we will take that as a basis for discussion, that those commodity councils will be established, but I would definitely reserve my view when we consider the relationship between the commidty councils and the organisation itself and thereunder, of course, the Commissions which the organisation will establish. When we have seen the whcle thing in its full aspect I think it will be easier to say -which would be the easiest way in which to solve this particular problem. Mr MCCARTHY (Australia): Mr Chairiman, there are one or two aspects which I suggest the Delegate from Norway might consider. In the first place, it is not our conception that everybody who wants to come into an agreement should come in. It will remember that we discussed, I think at some length, the question as to who should be included and some emphasis was placed upon the participants having a substantial interest. I think it is rather doubtful whether countries where the interest is not substantial should be members of the organisation and I would. visualise that in many products it would be found that quite a lot of countries should not be members. I know in our case thare are quite a few product with which we would not wish to be associated, or commodity agreements with We would not want the responsibility. I certainly wich we should not wish to be associated./ could not recommend that not recowiaend that istralia should take responsibility in voting on cotton or on coffeeor other pronameduct,s tbt I couelrd nand.onmightoth3hand, we light be just S l.ttle>country which has a very small has' a ve aall interest in l and it will probably n. it- i- probably egotiations the neaotiatiofls ' ; n _ ' * ' n~~~~~~~~~~~~~~~~~J for commodity agreement s to decide what countries should be members, Definitely we visualize people with substantial interests either as 2 consumers or pdicucers ingrmembers byt certainly not to have everybody in..: It can certainly begre.eed that en if the n numbers party togreement are substantial, the co-unci will not carnr out, exectutive work but it should not mpass its work upwards to some Commission the functions of which are distinctly general. I would visulaise that ## commodity council itself would appoint an organisation under it which wpi;d carry out the day to day functions of the commodity council. It would be almos certain that there would be an executive body which woula receive its directions from and have its functions defined by the commodity council itself. The other point which might be considered in connection with the organisation of the commodity commission is this. It is stated here'Aere buseens te.4s o be inferred the commoditycommission would be an ulj b executive aody &s distinct froepresentative body. bo I think our view wouldhat th-.t a pretgy biL degreautcnory has not to be left to the commodity council and that the supervision wicih the would eercise over the Council would be on a fairly narrowly defined line. 13. D. 1. 3:/PC/T/C. IV/PV/6 The Commodity Council would certainly have functions which could not be supervised, or should not be supervised or subject to supervision, by the Comission, particularly as a commission is an executive body. We visualize more the commission being a co-ordination body between the various councils, somewhat in the direction of defining principles and inciles 4nd seeinGplrinci2les agrbein.; carrd out iairlyn a fc^irlway m r.y, but that if anplinary acdisciactioyn or an criticism iddddddddered necoessary f the Commission that it should be conveyed to the body to which the Ccmmission is subject. I think it is this executive body whid is a representatiyve We bod. .ave to havae it f.rly clearly in mind that the dirpresentatives cct reesentatives of countries on a council could not be subjected to suprvsion and discipline by an executive body of the Conference. I think, in the last ahnalysisepresen0s the igher rCDr;s tagive body ta.t has -ot to exercise discipline, which is the executive boardmight be ast view ii&;ht be questionwd; it is one that we have not wet discussed, but 7e had contemplated discussin- it later on when .e c=megto this mgater of ,eneral or_-anization. But there might be room for w aifference of viev -s to the amthority of the com.odity councils. Our considered view is that tgeir authcrity has 7ot to be on the full side, and that the revworkto which thsubmittedshould be 3ubmitted should be limited. TEE CIWLZth I do sugest -hat thisgoCommittee is oing, to run into a difficmpt ulty if we attwnea general theory of the here to lay do or- g2siation fw the I.T.0., -wch is a mtherter for anoiocrody. Obviously the work aP the various committees of the Preparatorust neittee mst be reconciled .at the end, but- Iwe would be wise at th moment to moment to n assumption that we are taking abalking aboue bthis on th basis that the T T. 0. is oghly rganized rouas set outUnitedeStates draft in theT and if Committee V alters than that t. awe msy ha to reconsider e of the things that we have said.sid McCARTHY (Australia): With respect, i would point out that Article Ur brings up the subject te relationships between the Council ad 14 ~ Commi THE CHAIRMAN : I was about to suggest an ausumption on which we would his- cuss that without intervening in the subject matter of another committee. As I see it, we ought here to say that we ## interested in ## the relationship between the comodity council and the I. T. O. as whole How the I.T.0. chooses to organize itself to carry out function is a matter which is for somebody else; and I would have tought the sensible assumption to make was that the I.T.0. will consist of what is called I think the Conference in the Organization chapter, which works through an executive board. Those bodies have upon them members representing their governments. If they choose to set up commissions to carry out certain functions for them, however constituted, I do not think that it matters very much to us at this stage; and the point to which we ought to direct our attention is what is the relationship between. the commodity councils and the superior body. So that, when we come to look at article 66, which deals. with the functions of the Commodity Commission, need we at this moment bother very much whfo are the members cf the Commodity Commission ? Surely we have to assume that they are goin, to work within the general fraework of the organizations, that is to say, wien Article 66 says: "The Commodity Commission shall have the following, functions," I think the right way for this body to loock at it is put the Commodity Cormission rather in square brackets and to think of it as: "Whatever superior body is set up, it shall have the following functions in relation to the commodity councils." There are, for the comfort of the Australian delegation, plenty of words there which imply that the Executive Board will have control over the commodity commission, and I do not see the comnodity commission anywhere operating as a rather inepenent body of experts that rush about the world. MR McCHARTHY (Australia): Article 47 (3) says: "subject to the approval of the Commodity Commission,'' which is some think wold have to be left opnen until we knew the relationship between the Commosdity Commission and some other representative body. 15. D.3 E/PC/T/C. IV/PV/6 !:/?C/T/C4^ IV/4PW/6 refectly fair point, that is a perfectly fair -io suggest to the Cormittee that meen we corE to ehdraftingc dr±ting coiittoe the words "Commmissionorisision" therppear inaear in square brackets, becauimply do not know yetknc>w y, ummil Co=-ittee V finish, whether there is going to mm aity=-oddty Commissi6n. What we are interested in is the superfunction, tior2, whoever it is exercised by, and if we stick to defining pervisory visoxy function and not to a rather narow argument about who should exercise it andahow thct body should be constituted, I think we would probably rmgress roress here, without upsetting another Committee, and would reserve to ourselves the right to reconsider this if they come to a decwhsion iich wrong rong in relation to our subject .atter, ANDER (NornER (Nway): I would wholeheartepport ly su) what you have just said. I think it is essential to work on thmption thion that where we are talking about the Commodity Commisesaion w re in fact gtalkin about the Organization. The Organization will have general assembly consis- tinlg of rlm the embers constituting the Conference. It will establish an executiyve bod and the Conferencecommissions. Thatcoznis is just on mehe sae lines as the Gensermbly al Ashe of te United Nations Organization, so that the comissions mally ean re the Oranization it- self. What we are-interested in, I certagreerainly with the Chairman, is the relationship between the Commodity C ounciland gathe Ornization as such. There I think it is essentiali that t should be established that.the Organization will supervise and control in order to aee thct the Commdity Council caruies oit its onncti63 in the light of the r, namely, in the l;the light of the principles which are set out as a basis for tommodity agreements. nts. -So that I think the Organizsation' ll b wil be to control and to seer to it hhat tbe Commodity Council ses its administation of commodity agreements in accordance with te wit as one point. Another point was that the Australian delegateGate ested that he did not consider it right that every member 16. tS ve'7-' Well, there I think we are agreed of our Agenda and in particular when we refer to Article 46 (1) of the *4 t'8- 1 t - . e e open to Chwter - that the o=3odigreetmeifts b'A e ope to pzarticipati3Zo by agy rb.er of thOrganizatin. ihen it s a question course, meansof deciding whether any nber would tend tht -' ;is' wantial interest in hether aW member considered itself to have a ubsten- the particular comodity in question. It should, in -ther words be llleft to rmembear governmnts to decide whether they ,dake paitin r cample, lomodtygg agreement. It should not be openr,for exmo a bi ro- ducer or expcurtin country to say, "1al,we consider that ort f 30 constms, or coutntripes .0irortin, onlyen, ought to .ake -)art," Takeonlyfee, as an exoinhabitants, has 'rnlythree-million ixiabitants, and, ofmecourse, tahe quantity of coffee consued in-Norwy is just a fraction of the toatal consumption of the world, but I sy that coffee isn tis to this p o us a noiColrink even more tha tentry; so that, you see, we have definIite and a substantial interest. just zke that point to malmyemit quite clear that it is, to LFid, in principle, agreed that any country mmodity council. OnNowill be able to ta agreements and consmmodity equently be a mermber of the CoCouncil. On we all agree the otherall hand,r I take it that that not counties 8al.o hae the sam vo agreedtes; that is -bvous, as -vie a,at the orting gexporting =mup he irorting ll have equal votes. ay IiskIR- RA (Cuby I ask ution, Mr. Cnairm-an, on a poit of order, whether as to we should discuss the commodity counw,cils no because it seems to me that we mpedhave ju to the question of the organizndation a relationships which impls contneated i pars 3 4 and 5 of Article 47radeal of the United. Startes Chategraph 3r. Par deals with the qustion of equality cg.f votin I want to know whetahergoing gwe re to discuss the hing oaltogether or whether we are now hgole tct discuss the organ- ization of relationships. From the pocint of view of the Cuban delegation all these matters are cosely related, and we have no objetcion to taking 17. D.5 E/BC/T/C . IV/PV/6 the discussion together. what I want to make quite clear now is that as far as I understand it has not been agreed yet about the subject of equality of voice and that is the question that will be discussed later. We shall then I take it have a general discussion regarding; the principles set out in the previous Article, that is to say, in Article 46. I repeat that we consider these rmatters are all closely interrelated and we are quite ready to discuss then now. We want to know whether that is the idea behind the discussion. THE CHAIRMAN:I think we ought to be very grateful to the Cuban delegate for reminding us that we are straying over a rather wide field, and I am inclined to suggest myself that. Article 47 (2) is a special aspect of this, getting down to the detail but a detail which raises obviously important points of principle. Would the Committee agree that we should discuss, in a general way, the commodity council and its functions to- gether with the relationships to the I.T.O., however it hapens to exercise that supervisory function, and then return to the precise point which I think the Cuban delegate wants to raise, which is: Wjat is the exact meaning of the words ''have together a voice equal. " If we could split our discussion in two in that way I think probably it would be better. I do not know whether that meets the Cuban point. MR GUERRA (Cuba): As I said befor, from our point of view, both these are very closely related, because in fact our point ofview is that the voting arrangements within each commodity agreement should be deterrined by the countries party to that agreement; so that that brings up necessarily the organization of relationships to a degree of autonomy that the commodity council will have, and whether that will include or not the arrangement of the voting power. Therefore, from our point of view, we are quite ready to discuss the two matters together. THE CHAIRMAN: I think, in view of that, we had better discuss it altogether. MR SCHWENGER (USA): I wonder if I could say a word on the question of par- ticipation, hich is closely connected with voting and upon which two -viwhvibr.. :x- :sd been expressed, and both epreased w nd both of which ve had in mind I belief in diftg this Charwhter and. beween Yichwe tried to find' a resolution. E.1 E/PC/T/CIV/PV/6 On the one hand, we felt that necessary, delegate from Norway has said, that any member feeling that it has an interest in a earticular agraement should have the right to participate; and on, the other hand, as the delegate from Australia has said, we felt that it, would be undesirable and inefficient in a sense- ceranly not entirely representative - if a large number of the voices in the administration and and substantive decision connected with a particular agreement should be held by countries which, if l may use the apt example with which he provided us, have the kind of interest in cotton which Australia as a great weel producer might have. The formula that we have used ( i f I may repeat it here, although I am sure you all have seen it) was to open the agreements to participation, once they are formed, once they are completed, on the part of all members who wi sh to participate, it being understood from the rules that we have here that their participation should be proportioned to an objective measure of their interest; as that there mlght be, in an extreme ease, a majority of countries which did not have a substantial interest in a commodity participating in the agreement,but their collective voice would not be very large because it would'be proportioned to their objective participation. Now, on the other hand, in the negotiation and early consideration of a prospective agreement we provided that the right to participate should be reserved to any member having a substantial interest, and we hoped that restraint would be exercised - as I am sure it would be and will be - so that the negotiations and discussions leading up to agreement could be of a wieldy size. THE CHAIRMA: I noer if I c-uod ask ^tathis point for a straight Yes or N forom the protagniosts on either side as to whether that midesd way is broadly satisfactryo. E. 2 E/PC/T/C. IV/PV/6 MR McCARTHY (Australia): I am not sure of your point. Do you mean the middle way of discussing it? THE CHAIRMAN: No, the middle way of meeting this point of participation - that in the stages of formulation it is the principally interested countries, and that when the agreement is made it is open to adherence by all - if I understand the United States proposal aright. MR McCARTHY (Australia): I would agree with it. I am more worried about the stage of negotiation than any other, because it is going to take a lot of negotiation, and if you have the small fry, as we have been described,on some committees they can hold things up. THE CHAIRMAN: I would like to ask the same question of Norway. MR MELANDER (Norway): Tell, Mr Chairman, I wouad certainly agree with the suggestion of the United States delegate, and in fact the reason why we have not ourselves raised this question when discussing the initial paragraphs of Article 42, concerning special community studies and the calling of a commodity conference, was that we fully appreciated the point that it would be natural that countries which have substantial interests in one particular commodity would take the initiative. For instance, a country like Brazil would be likely to take the initiative in establishing an agreement in regard to coffee.- But what we consider as essential is that when the agreement is made up then it shall be Upon to any member to enter; and then, to use the same example again, we might find that, in respect of a coffee agreement Brazil would have the votes of, say, thirty other importing countries. That, I Think, is the principle, and I understood that we in fact agreed on that principle with the United States, but, if it is though: we should discuss it now, I am quite open. Mr McCARTHY (AUStRaLia):With all due modesty, we would Say that 20. if Australia did not come into a wool agreement there probably would not be a .wool agreement. On the other hand, E/PC/T/C.IV/PV/6 if Australia took any sort of stand on coffee, nobody would worry very much. THE CHAIRMAN: I think we ought to ought to the Cuban delegation. explain in more detail the point of view which affects the. whole of this discussion. MR GUERRA(Cuba): Well, Mr Chairman, we consider that the question of the setting up of Commodity Councils has been apparently decided, at least for the time being. We pass now to the organisational relationships between the Commodity Councils and the organisation; and I will take now the point of view expressed by the Chairman, that we should not worry very much about the type of body but about the relationships between the body and the Organisa- tion. We think that this question of the organisational relationships is the most important of all matters concerning the possbility of success of the agreements for achieving the objectives that we have all agreed. At various times during the discussion in Committee IV the Cuban delegation has stressed the question of flexibility of the agreements as one that we consider vital for the success of every agreement; and this question, in the last analysis.,. is directed to the organisational relationships between the Commodity Councils and the Organisation. From the discussion which has taken place at the beginning of today's- session on the question raised by the delegate of Norway, it is clear that most of the delegations consider it indispensable that the agreements be not only agreed upon but also administered by the countries which are participants in each particular agreement. The Australian delegate made some reference to this point when he referred to the question and said that the Commodity Councils should have an sample and 21 E. 4 E/PC/T/C.IV/PV/6 well defined degree of autonomy in carrying out their functions. The are in entire agreement with the view that has been evident throughout all our discussions here , that the I.T.O. should aim in this chapter of, the charter a making it possible to incorporate particular commodity agreements within the framework of the Organisation making sure that each of these agreements will be carried out in accordance with the general Principles of expansion of world trade and, more particularly, in accordance with the specific principles set out in the chapter relating to these agreements, to which I do not think I need refer at this moment as it has been discussed at considerable length; and we have all shown what amounts to general. agreement as to what the principles and the objectives should be, and as to what methods should be used for attaining these objectives. We feel that it is entirely indispensable that the administration of each agreement should be arganised in relation to the Organisation in such a form that it will make it possible to deal effectively with the particular problem that each commodity presents. In this connection we see very much difficulty, as we have indicated already, in administering the agreements in too rigid a form. Every commodity has peculiar problems, and, even if the principles and the aspects of a concrete policy are agreed upon by different countries regarding any particula: commodity and the methods are very clearly stated, I do not think the question of the administration of a particular agreement should or could in any sense be made a matter of routine. we should remember and have in mind all the time that these agreements are not fixed. The rules that are set out in each agreement will have a general applications but the method ofworking out an agreement so as to reach certain objectives will be constantly changing, if not in the in the character of the medthods themselves, in the degree of application of them 22 Many, or, at least, some of the agreements will require the setting up of export quotas and production quotas, and in general they contemplate as an objective the balancing or supply and demand within the limits of the objectives to be obtained .That will require a very expert knowledge of the condition of trade at any time in a particular commadity. That will require the adjustment of supply and demand to reach the objective of stabil- isation of price, which is one of the main ends that we propose. to reach. That is why, in our view the administration of an agreement can never be made a matter of routine. It will be requisite that every agreement should be administered by the countries who are parties to the agreement which have not only the main interest in the trade in the trade in the commodity, but which also, because they have the greater interest, may be reasonably expected to have also the richer experience, All these matters have a bearing on the question of the autonomy that the agreement should have in the framework of the Organisaton, The Cuban Delegation feels that it is very important and really vital for the success of the agreements That a great degree of autonomy should be established for the administration of the agreements. We think the Organisation should have supervisory powers and faculties to establish the general principles to be followed, to see to it that these principles are adhered to and carried out in every particular case and at every partcular time. Furthermore, the Organisatlon will have the right to decide in the last instance on disputes and questions of interpretation. The interest of the Organisa- tion in co-ordinating the funictioing of these agreements and taking care that, they do not interfere with, but, on the contrary, that they really co--operate in the general objectives of the expansion of world trade and the specific objectives for which the agree- ments are supposed to be made will amply gurantee that these agreements will not be administered in such a way as to 23. E/PC/T/C.IV/PV/6 be contrary to the interests of the Organisation as a whole or against the expansion of world trade. In our view this function of the Organisation in establishing certain principles, taking care that they are carried out and in deciding disputes and questions that will arise in the actual function of the ,agreements, should be amply sufficient, and that it will not be at all necessary to establish a very tight organisational rela- tion ship that will not contribute at all to this general purpose but will in fact create great difficulties in the attain- ment of the objectives that every particular agreement is suppos to reach. In this connection the Cuban delegation has certain specifi- amendments to the draft Charter, They relate to the faculty given in paragraphs 3 and 4 of Article 47 to the Commodity Commission. In paragraph 3 it is stated that the rules of pro- cedure and regulations regarding the activities of each Commodity Council shall be subject to the approval of the Commodity Commission. Paragraph 4 provides -that even the non- voting chairman of the Commodity Council shall be appointed by the Commodity Commission; while paragraph 6 provides that even the secretariat of each Commodity Council will be also appointed. by the secretariat of the Organisation If we contemplate that these agreements should in the future cover a much wider field of international trade than they have so far, they will probably include some foodstuffs; forests and even minerals, We have very strong doubts as to the suggestion that the personnel for the administration of every agreement should be provided by the Organisation. In this sense we think that the American draft Charter should be amended: that once the general principles have been approved, that the agreement itself has been approved by the Organisation which will have the power to supervise in a general way the functioning of each agreement, then the parties 24. to each agreement should have the actual administrative powers E/PC/T/C.IV/ in regard to the agreement in which they are interested . The whole spirit of Chapitre VI of the American draft /Chater is that the agreement should provide for the protection of the interests of countries substantially interetted in the inter- national trade in any particuler commodity.We feel that this general principle will be very nuch departed from if the countries party to each agreement do not have the power to set up their own rules of procedure, to set up and appoint, their own personnel for the administration of the agreement, and in general to carry out the functions of the agreement within the scope and framework of the Organisation. Our point of view is here connected with the question of equality of voice within each particular agreement. We think that not only the rules of procedure, the appointmnent of personnel and in general the administration of the agreement, but also the question of voting arrangements should be decided upon by the countries that are party to the agreement. The other day in the general discussion of this principle of equalisation of voting as between importers and exporting countries we advanced some arguments and reasons as to why we opposed such a general rule; and now I we like to state them again, We entirely agree with the point made by the delegation of the Netherlands that it will not be possible within the general organisation to achieve a proper balance of interest, between different countries. It is obvious that a country will have to have a certain voting power in a particular agreement in which its interest amounts to so much, while the same country will have to have a different voting power in other agreements in whichi-ts interestiIs greater or masller. Now, coming really to the question of equality of voice, we efel that if we agree that thei nterests of countries as among themselves constitute a question htat should be decided accoridng to the substanital or non-substantaili nterest tha at 2.5 F-4 E/PC/T/C.IV/PV/6 particular country has in the international trade of a commodity, the same principle should apply to the general equili brium as to the balanceof voting powers as between importing and exporting countries. The reasons for this are several: in the first place, a commodity may be generally considered to be very important from the point of view of importing countries if the import of that commodity happens to be concentrated in a few countries, and, one may add, if the commodity constitutes the raw material of some vital industry of those countries. On the other hand, the supply of that commodity may be so widely distributed among different countries that for any of those countries it will not have such a substantial importance as it has for the producing country, In such cases the just and fair thing will not be to give equality of voice but to give greater voting power to the countries whose interest is more substantial. Inversely, the production and export of a particular commodity may be so concentrated in certain countries and may to such a degree constitute the basis of their economies, that it will be for them vital, while at the same time that commodity from the point of view of consumption may not be so vital, In such a case I would say that. the proper balance should be in favour the supplying countries, 26: We think that we cannot take seriously as a basis or criterion for defining this question of voting Power the mathematical principle of the import and export balance. In general through out this Charter the principal of substantial interest is very much stressed, and we see no reason why, if this is the real criterion for judging the voting power that any country should have within any particular agreement compared with other countries, the same principle should not be applied to consuming and exporting countries as a whole. Finally, it may be possible that in any particular agree- ment some countries, say consuming countries or say exporting countries, may not take part. We should not forget that the agreements are voluntary. If some important consuming countries do not take part in an agreement why should the voting power be in any way equally distributed? The reverse case is the same. Therefore, our concrete suggestion and proposed amendment is that the Commodity Councils should have a greater degree of autonomy than is contemplated in the Charter. That will refer concretely to the question that the rules of procedure and regulations and the appointment of the personnel should be subject to the approval of the Commodity Council, or whatever organization is set up fo: that purpose, if the Commodity Council so request the organization or find it necessary to do se, or otherwise they will have freedom to choose the people who will administer the agreement and to set up their own rules of procedure. The Comodity Commission and the organization in general should have the right of supervision, but not real control, direct control of the activities of the Commodity Councils. Finally, we feel that if we set, up a principle that the interest of consuming and exporting countries should be equally. balanced and, justly balanced, within that principle each 27. OM G2 E/PC/T/C .IV/PV/6 Commodity Council or the countries participating in an agreemen should have the right to set up their own voting arrangements, always remembering that the final decision will be in the hands of the organization, because the agreement in general rill have to be approved, and that will be an opportunity for correcting any lack of balance or any unfair treatment that a group of countries may have extended to others in any particular agreement MR. HALL (United Kingdom): Mr. Chairman, the very interesting and thoughtful speech of the Cuban delegate raises a large number of different points, but I think they fall broadly into three heads First, that of the relations of the Commodity Council to the central organization; secondly, questions concerning the starting of the Commodity Council and the actual rules which it may establish for itself; and, thirdly, the question of voting. On the first point, that of the relations of, the Commodity Council to the central organization, the United Kingdom delegate is very much in agreement With the point of view set out by the Cuban delegation. As we see it, the function of the central body is to see that everything that is done conforms to pre- agreed general principles. The central body has first to provide machinery through which the study groups can be brought together and the possibilities of an agreement discussed. Clearly, the power of initiation there has to lie somewhere, and it seems obviously logical and convenient that it should lie with the central body. Secondly, it has to see that the actual agreements confirm to the general principles which have been laid down for the guidance of all agreements. Thirdly, that when the agreements come to be administered and carried out the actual administration again conforms to the principle, on the ground that it this not efficient merely to lay . - ;- I - mfle-~b thaomeone has to see that those rules are 8 looked at. Fourthly, I suppose that there is a genaral duty on the Central organizations to see that evarythlng that is done Under its aegis should conform to the general spirit of the whole Charter, and I would imagine that particular countries which feel them- selves aggrieved on particular issue might have in all these cases some right of appeal. But then you come to the actual operation of the Oommodity Council it does seem to us that it could be a duplication of function and would make for bad and ineffective administration if the Commodity Council did not have all the remaining autonomy; that is to say, all the duties which were not duties dependent on the general agreed principles, simply because if you actually do get the Commodity Agreement working, its operations partake of the nature of comercial operations. As the Cuban delegation (and I think previously the Netherlands delegation) pointed cut, it is not operating in a vacum: it has to lake decisions from time to time Which are of vital importance to the participating countries, setting ;quotas, relating productions, and me feel that if on those points there has to be reference back to a central organization the effective operation of the Council migit be very largely frustrated. On all those points we are Very much in agreement with what has already been said. I would like also to touch briefly on the other two main points: that of the procedural rules of the Commodity Council, and that we might almost call the staffing of it. On those points we have not seen quite so much danger perhaps as the Cuban delegation seems to see. It seems to us that Article 47, 3, is merely a sensible statement that the Commodity Council should Make its own rules, and we would have been very much surprised if the Commodity Comission had chosen to interfere with those rules, unless it had a fairly good case, refering back to the general principles again. In the same way with 29. OM G4 E/PC/T/C .IV/PV/6 regard to provisions for a non-voting Chairman and for a Secretari to by provided by the Commodity Commission. Well, it depends very largely, it seems to us, on whether the Commodity Commission is- going to behave sensibly or not, but surely we must assume that it is going to behave sensibly. It is an extremely difficult matter to provide an adequate staff and a good Chairman for any commodity agreement. I am sure that all of us who have had experience on those points would agree that the personality of the Chairman and the efficiency of the Secretariat are matters of very great as to importance, but/whether the Commodity Commission is going to regar the staff and the Chairman as its watch-dogs, and as people placed out, so to speak, on all these Commodity Councils to watch their moves, I had not myself felt that there as all that danger. It seems to me to be a matter for discussion, but I could have though that in many cases the Commodity Council or the Commodity Commission would both have been driven inevitably to select on the Whole the same persons, simply because there were not very many people in the world the were qualified for those important posts. On the third question, the question of voting, I must confess Mr. Chairman, that I had felt we had already discussed this in the, discussion on Article 46, Sec. 3, and that this was one of the problems with which the unfortunate Drafting Committee was now struggling. I can see the force of the various arguments advanced by the Cuban delegation, and it might be possible, I suppose, to arrive at some form of words which Could give that degree of elasticity twich the delegate of Cuba so rightly suggests will be required, but on the whole it is very difficult to see any other general principle - if you must have general principle, and perhaps here we must - than equality of the two interests. I think that the general argument applies with particular force there, that whatever objection are raised against the fifty-fifty principle are raised, a fortiori, against any other statement, 30. 5 E/PC/T/C.IV/PV/6 simply beeause anything that you can any against that you can say with more force, with more vigour against any other explicit. formulae. The difficult problem, and the . confess, on which the United Kingdom has not yet made up its. mind, is that of the representation of countries which are substantial consumer producers; but which do not enter into the export trade. On that I can only say that we are hoping to have some brilliant suggestion put forward at the Drafting Committee which will command itself to this Committee when it is brought forward, but we have an open mind there, to the extent that it is governed by what I have already said, that we cannot think of any principle, other than the fifty-fifty one, which will stand up. MR. De VRIES (Netherlands): Mr. Chairman, the Netherlands delegation's very is very much in accordance with the views of Cuba and the United Kingdoom, which do not differ so much, I believe. On one point I should like to support especially the view of Cuba in the amendment which their delegation has already put on paper, that the Secretariat and the Chairman should be provided for by the organization or by the Comission, if requested. I think that covers the field. If there is no necessity they will not make a request. If they find it useful they rill ask for that, and of course if it has been asked for by the Commodity Council or by the members proposing a Commodity Council, the organization cannot leave it in a vacuum. As regards the method of voting, I should like to support the idea of the United Kingdom. I should like to put it H.1. E/PC/T/C. IV/PV/6 I should like to put it in this way. We have discussed it on general principles, and it seems to me no useful purpose would be served- indeed, it would be duplication - by putting it again under the administration rules. When you put it under genral principules there may be some flexibility. If you put it under administration rules again you give it a ragged character.Maybe we can put it in some way in the general principules and leave it put under the administron rules. Why put it twice in the same charter? Mr. McCARTHY (Australia ): Mr Chairman, I think that I have covered most of the points at one time or other this morring, but I would like to have a word on this voting question. It is always a vexed question, of course, and I agree that the principle should be 50-50; but I thiink it would be better if the principle, having been laid down by the Char- ter, did give some scone for the arrangement of voting, according to the special circumstances that might exist in respect of a particuler commodity. I can conceive that there will be probably rather smalell commodity agreements; the commodity might not be a very great one and the number of countries party to the agreement respecting lt might be limited. It might be such commodities as eggs and apples where you. might have four or five countries only, but very representative coun- tries, and they might in the course of the work under an agreement per form very valuable functions. I do not think we should rule put a commodity agreement where there are no importers represented provided the importers have the oppertunity of coming in, and I do not think that if, having been given the oppertunity, they say, "No, it is not very big, and we are satisfied that that agreement should be amongest four or five exporters," it should be disqualified, or ruled out of approval, under the Charter, if it meets the other demands made by the Charter. In that case, of course, equal representation and voting just would not work ,if it were too binding, and this is rather binding. Again, I would suggest that the drafting committee attempt to draft a clause Which states the principles but which gives a certain loophole for 32. THE CHAIRMAN:Purely in order to consist the drafting committee would ., __ge ial circumstl circumstance s and withayou add to ta* w:a eVo al of the Organization".the arorce ustrlia Tt}. a V (France) ( an pr(tatiPn): Mr Chairman, in regard.tiSthe oa o which has jusst been t ebeent madnioed Kingdom delegates, we y he Uti* hthioi,, that bee Organization dseof muisu eyuery watchfultl b v37 to see ethat themmo isv eral codtycould, oobuncils h serve, in their decisiones, all the rulay es wehich m hav been laChaptid by theer, butso e oare a1, cnvinced that thihs gaszc te takOpghskz oion theniaoO mmittb e liznenly to this work andg aso the work ofg seein, t it that the initiative and theo work f the secovmoeray councils mditI should be di reocteor d mre less in tehe samnd waway a tords sameth s objectives, so that the action taken by these diffeorent cuncils should not be dcontraictorying. Hav said w arthi are deeply ceo nvincdthat a vast myantono shoulranda be ged to tghesme areeents so that they fmht unction freely. But itc iasCetain otaatb dcyy doaty wrine work oo acmplosreOi willb Ie one by thm enr isworpukio 8f pu erly technica l nature; nda has beenb rought out by theC ubna delgaete, we sahll be faced withpro bemsl whichwi l l coer upaga i andn agai, annd we shall be faced byp roblemswh ich wlli repeat themselves perpetaluly. Therefore, theF rench Delgeation thinks that it would be wise to leave itto those ocmmddity councils and to give them asm uch freedo ofm action as is possible within theg neeral provisions of the hCarter. On tmhe othterh and, wth rgeard to th proposale which is here subitted o wus, dveparticularly rticle . (3), (4) and (5), I awmat tsat h h wpofr the Fench side certain difficultaie in shcigp ivints whch e becna herated hehre by uthe ilbgaei;ae W bliazeve rr-t tat te grdrftort for tla - wclaisll sily be able gto a ee uonmuaefor= os wuggehich wi us ddll be veury gclose to those here ssted by introdcin into teir rksu a Litele egiditylssaicularlys in u a direction 33. E/PC/T/C.IV/PV/6 as has been suggested by Professer de Vries. I believe that there exist, even now, certain agencies whose experience should be lost to us if we were not allowed to consult them. Finally, I was very happy to hear the declaration of the United Kingdom delegate. Members will remember that when the Committee examined Article 46 I mentioned that a few of the countries could be both producers and consumers without becoming is facter participants in world trade in any special or substantial degree. I believe, and I repeat it, that it is necessary that those countries be represented on the commodity councils and that the right of voting be granted them on an equitable basis. I believe as has been remarked in the course of these latest discussions, that if we mean to establish, in writing, certain principles concerning the right to vote, there are none others to be seen except the ones which would say that producer and consumer countries will have equal voting powers. I, or one, am not quite convinced that this necessarily means that these two groups must between them represent the total of votes within the Committe. MR QERSHI (India): Mr Chairman, in regard to paragraph 2 of Article 47, dealing with voting, we would like to point out that if a country is both an exporter and an importer of a commodity it should get adequate representation and votes for both those interests. Mr MELANDER (Norway): Mr Chairman, I think we would, in any respects, agree with the statements of the United Kingdom and the French delegates in this respect, and I think also that in many respects we would agree with Cuba. To take them in order: First, as regards the relationship between the Organization itself and the Commodity Council, we think it is essential that the Oranization shall supervise and control and see that the Commodity Council exercises its administration and its functions in accordance with the rules which have been laid down in the Charter; and. for that purpose it is obvious that .the Commodity Council will have to report to the Organization, giving the Organization all the facts and all the information that it requires. That being said, I would also 34. agree with the point made by the Cuban delegate and certain other delegates, that the daily administration of the Commodity councile will have to be autonomous within those Iimits which I have just set: that I think follows from the fact the, if we agree at all to establish a Commodity Council the Commodity Council will have rearly to run the agrements and to adiminister them. As regards the proposals of the suggested Charter, Article 47, paragraphs 2, 3, 4,5 and 6 , we would generally agree with the United States proposels. I think that it would be at vantageous to the Commodity Council as well as the Organ- ization that the Organization should provide the staff for the Com- modity Councils, with a non-votin: Chairman and so on. That would also I think make it easier for the Organization to provide each commodity council with information as to how other commodity councils are operating and it will be useful to all the commdity councils to have on their staff people who know really what is going on in the other different commodity councils; as thoy are being: infomed through the Organization,, each staff will of course, be in close contact with the Secretariat on the administration of the International Trade Organization, and that makes possible the maintenance of close liaison which I think is very essential for the practical operation and the close intention of the whole scheme. As regards the voting on the: commodity councils, I think that it is essential that we should stick. to the ,50-50 rule and that we Should agree without exceptions, to the principle that the votes of exporters should equal the votes of im- porters. That is a basic principle, whiich I think should be laid down in the Charter and which should apply to all the commodity councils and agreements. Otherwise we shall risk creating difficulties which we would not like to see created. It is obvious that when we do decide to set up these commodity agreements, the commodity councils we shall have in mind certain problems stated in Article 41 of the suggested. Charter; and I would also particularly draw attention to article 24 of the Charter, It is to my mind obvious that if we are going to fit the 35. --'. I .. I ." " '',;. NI 0 "., H.5 E/PC/T/C. IV/PV6 rules of the commodity agreements into tlhewhole Charter it is essential that we should try to establish a balance between exporters and impor- ters. I agree with the point made by the French delegate, that it would be useful to introduce representatives of producers anl con- sumers who are not exprorters and importers, but I am not quite sure how that could be covered, though I think that is a point which we ought to consider further, It is quite obvious to my mind that if one big country is a producer and a consumer but not an exporter and not an importer, in any case the decisions and the rules laid down by the commodity agreements ard exercised on the world market will be of interest to the particular country which is neither an exporter nor an importer, but is a producer and consumer. 36. E/PC/T/C. IV/PV/6 In order to facilitate the economic policy of the particular country I think it is definitely a good suggestion that we should see how those interests could be fitted into the commodity;agreement scheme: but I think that in pricePle it should certainly be fixed that the votes of the exporters and the. importers should be equal. Whether those votes should be the total voting power of the Commodity Council, I agree, is another matter, and I think the French delegate perhaps had in mind that we could, for example, find that the total votes of the exporters and the importers would make, for example, 8O per cent, and that 20 per cent would be given to countries which are big producers and consumers or not exporters importers. I think that that is perhaps a point that we ought to consider further. THECvHAIRMAN:ThIeetime is now gtting on. I dot ot know whether, the Committee feel that this matter has been sufficiently discussed to leave itt o the Draftign Committee or whdther youw oul:d sooner og on. RM GUERRA (Cuba): I think thta in egnearl it has bee scuicfientbuly t nsdisused, utb I olyn wa tnto clear two ctpisn I hv a ehad in mind throughout the discussion. Iacn the first e e, I agre,wi th thede letega of the United --Kingdo that RMAN:IATE CHZ If hink i- g ngwoirARa on gwithg speeches we must pt this ouff until the exg eeznntrhhwgiand andtw from ithe Drafting Commttee. i I have promised certain delegations I would finish this meeting by a particular time. At any rate, the Drafting Committee, if they mee beforet w me, aMein mht- k aig r elmiminaryp study of this, remembeing th. orne or tw points areo not yet clear. ow, what dC the lmmitotee fecel abut thZnexto meetieng? 37 I.2 E/PC/T/C. IV/PV/6 I.myself would hope that the remainder of our agenda I think could be get through very quickly and/that we would be right to try to do so, so as to 1eave the future clear for the Drafting Committee which, as we have said, have a rather difficult job to do. MR McCARTHY (Australia): I think at an earlier discussion of Committee II a reference was made to shifting into this Committee the matter of subsidies related to primary products. THE CHAIRMAN: We have not heard officially from Committee II about that. When it arises We can be realy for it. MR McCARTHY (Australia): As long as we do not slip between the two of them. THE CHAIRMAN: I might perhaps have a word with my brother Chairman. The future programme put down in the Journal contem- plated that our Drafting Committee might meet tomorrow morning at 10.30. There is a Heads of Delegations meeting at 11, but if this Committee would agree to let me go to that and that the Vice-Chairman should take the Chair, I would hope that this Committee as a whole could finish its first round at a fairly early time tomorrow morning, if we met at 10.30, and then the fieId would at any rate be clear for the Drafting Committee to get to work on what we have done and bring us back a document which we can then proceed to discuss again in full Committee. would that be generally agreeable? MR MELANDER (Norway): Would that mean a full Committee meeting of Committee IV tomorrow morning at 10.30? THE CHAIRMAN: That would be the idea. Then we stand adjourned until 10.30 tomorrow morning. If members of the Drafting Committee would stay for two minutes I have something to say to them. 38 I.3 -ao {Gb (Before the teetin v n eThe meeting oiseat ty12. p F *. . ..h

GATT Library

vv013bp0784

Verbatim Report of the Sixth Meeting of Committee V : Held at Church House, Westminster S.W.1. on Monday, 4 November 1946 at 10.30 a.m

United Nations Economic and Social Council, November 4, 1946

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

04/11/1946

official documents

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

https://exhibits.stanford.edu/gatt/catalog/vv013bp0784

vv013bp0784_90230012.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL. PREPARA ORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SIXTH MEETING of COMMITTEE V held at Church House, Westminster S.W. 1. on Monday, 4.th November, 194 6. at 10.30 a.m. Mr. LYNNR.EDMINSTER (U.S.A.) (From the Shorthand Notes of E.B. GURNEY,SONS & FUNNELL, 58, Victoria Street Westminster, S.W.1.) 1. E/PC/T/C. V/PV/6 CHAIRMAN E/PC/T/C.V/PV/6 THE CHAIRMAN: Gentlem en, I wish to refer first to the matter of translation. The French speaking Members of the Committee have asked that we continue to have successive translations of the remarks made in the Connittee. That, of course, does not mean that we will not also have simultaneous translations, since we have the facilities available in this room. Is that agreeable to the Committee? (After a pause:-) I take it that that is satis- factory. The Secretary has distributed this morning a statement with reference to the progress of the work of this Committee thus far, the present status of our programme of discussion and an agenda for today which was agreed upon on Friday, and some further suggestions with reference to future discussion. Since the Committee has not had opportunity to examine this paper in detail, I think it would be well if we pause for a few moments to give that opportunity; but before doing so, it might be well If I called attention to the major plan of this memorandum. You will notice that the first part of it under point 1 summarises what has been agreed upon thus far, with -here and there a notation concerning some delegation's reservation. The second part lists the articles which have been discussed but which await farther consideration before they can be disposed of. The third part on page 3 i ndicates what it was agreed on Friday would be the next order of business before we resume discussion of the matter of vot- ing which was scheduled for our Wednesday meeting. 2. B1 E/PC/T/C.V/PV/6 On page 4 you will see indicated, beginning at the middle of the page, the Articles which will yet remain for discussion after we have disposed of the items which have been held over from earlier discussions and which are on our agenda today. * On page 6, under point 5, there are some suggestions with reference to our procedure in connection with 'odayts discussion, as well as a reiteration of our agenda for today. I think ygu mi;ht wish to look through it for a moment in silence, and then I wish, if it is agreeable, to proceed directly to rage 6, "Future procedure", which'deals with the matters which we shall discuss today- and where there are some suggestions with regard to the setting up today of two Sub-Committees. MRMAOUTYiN (Belgium) (Interpretation): Mr Chairman, I should like to insist once more on the necessity for the Secretariat of 'he Committee to submit to us documents in the two languages adopted by the Concerenoe, and particularly in French. I have here the two texts you have mentioned, but onry in the English language. I apologize ,or troubling you but I should like to bring shij eub'ect to your attention once mIre. it would be easier for delegates to follow the proceedings if the documenus oUldlbe made available in French. As I have raised a point of order, I would like to add that it is exceedingly difficult for us to follow the agenda of all the different Committees because the Journal does not reach us in time. For instance, the Journal for Saturday did not even mention the. fact that the Fifth Committee had been called together for that day; and again, this morning the secretariat of the Belgian Delegation had not received the Journal for today. I believe other delegations may be facing the same difficulties. The result 3 t B2 E/PC/T/C. V/PV/6 is that delegations are forced to telephone Church-House, call for transport, and rush to the meeting. Many delegates are absent this morning, and I am certain it is for some such reason, independent of their will. I quite understand that all these problems do not really appertain to the work of this Fifth Committee alone but I would be grateful if my request could be submitted to the Secretariat. COMMITTEE SECRETARY: Mr Chairman, I understand the first point raised by the delegate of Belgium was the question of these papers being made available in French as well as in English. You should haved the French paper; it. has been done in French as well as in English. As regards the second point, I am aware that there is a good deal of difficulty encountered by some delegations in getting sufficient advance notice of the times of these Committee meetings, a difficulty which is made greater by the fact that usually Committee schedules for the following day are not finalised until six o'clock or after six o'clock the evening before. As regards today' s meeting, the Journal containing the announcement was issued on Sunday. I do not know what the arrangements are for delegations to receive copies of the Journal. The only. suggestion I can make is that any delegate is always at liberty to contact my office and is entitled to receive and may expect to receive such informa- tion as, we have regarding Committee meetings, and if I cannot be reached at my office I man usually be reached at the Royal Hotel. I will take this matter up with the Executive Secretary's office to see if some better provision car. be made for longer advance notice to delega- tions of Committee meetings. MR HOUTMAN (Belgium)(Interpretation): Mr Chairman, I do not want to insist any further on this point of pure detail, but in order to facilitate the work this Fifth Committee. which interests us most of all, I would suggest that the Chairman arrange with the other delegates the date of the future meetings, so that we. might not find ourselves obliged to miss meetings because we do not know the date of them. THE CHAIRMAN: I would. say to the delegate from Belgium that the Chairman will certainly do his best to arrange for the times of meetings to be made known sufficiently in advance for the various delegates to make arrangements to attend. I should like to add, however, that we are working on a rather pressing time schedule. -We are supposed to complete within two weeks our work on the organisation parts of the Charter, except in so far as there may be a few things that cannot be definitely closed until the completion of the work of the other Committees, notably, the work of Committee II, which is somewhat more delayed than the other Committees. In view of the fact that we are working on a rather pressing schedule, it will not always be possible to give as much advance notice of meetings as would otherwise be desirable. I hope the members of the Committee will bear with us and thus help us to proceed with our work at as rapid a pace as possible. I am afraid we cannot have a state of perfection in this matter, much as I should like to have it, There are no doubt portions of this document which has been distributed upon which members of the Committee will wish to comment, if rot this morning at some later time. The document, of course, discusses future plans and is one which will be useful for reference for some little time to come. I should, however, like to avoid discussion of the other parts of the document if possible this morning and proceed at once to the point on page 6, "Future Procedure", and begin our substantive work this morning with that topic, On the first page of the document the word "amended", in parenthesis, should be inserted after the words "Article 70'. 5 E/PC/T/C. V/PV/6 C.1. E/PC/T/C.V/PV/6. Now, turning to the item Future Procedure, I should like also to call attention to a correction there. Under (a), the last line, where' it says, "Article 2 (except last part of ,paragraph 1)" there should be added the words, "and article 66." It was agreed on Friday that we should proceed this morning with the discussion of Articles 59, 60 and 62, and if time permits Article 2, except the last part of' paragraph 1, and Article 66. I have it in mind that after we have completed that discussion, or so much of it as we cover this morning, I should appoint a sub-committee to consider the suggested changes made with reference to our discussion of those Articles and also all of the suggested changes in connection with the articles which we discussed last Friday. I would also suggest that if such a sub-committee is appointed, the Chairman of the sub-committee on procedure of Committee II might be invited to designate a representative or representatives to sit in with the sub- committee during their consideration of the relevant paragrphs of .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 article 55. MR COLBAT (Norwry): Mr Chairman, T am sorry to make another point of order, but it is almost imwossible to work with this noise. .7ould not it be within the cowers of the Secretgriat to stop it while we are sittinE here? TEE CH:JMiL: I vezy much hone thnn answer is Yes, but I personally camot answer. T, SETRMUiM Chairmen, I have some doubts, because I do not think that the United Nations has. any control over the operations that are going on in this building; but we will make immediate inquiries and, if it is possible, it certainly will be done. MR rCOLB^N (Norway): Very well; let us ty., M CHLIRMA: I night say thmmt I have' been meting in various cocittee rooms, and it meems that these fellows with the hanmers just follow us around." They mpst be opposed to international co-oneration Is it agreeable mmo the Committee that such a. sub-conittee should bengppointed at the close of ouz meatirC this morning? I take it that is 6. agreed to. (AZreed) C.2 E/PC/T/C.V/PV/6 I pass now to. Item C in the English version , the top of page 7, under the topic of Future Procedure. I should like, to clear that matter up before we start our discussion. You will notice that the suggestion there is that "a further sub-Committee be set up to consider the suggestions that have been made with reference to Article 75 (Amend- . ments) and. Article 79 (Withdrawal). A document collating and summar- .ol .nir an w= izinZ these suggestions is being czrculateC " Now thc Chair is aware of the fact that it had been decidca that discussion of these articles should be resumed in full cormittee follovdng consideration of voting, but it scems to us that "the substantive points that have been raised in connection 7th the 1=ocedure f r withdrawal have no necessary or direct connection with voting , arrzaxemnts. If this is so, it might tassist phe Co=:ittee and save ruch ti= if these j=ticular :ointd - could be referred immediately to a sz2ll technical sub-committee whose job would be to work out a re-draft of these provisions, which re-draft, of course, would be subject to further consideration in the light of any decision reachep in the matter of voting or other relevant Charter Tro- visions.e" What is the opinion of this Comittee with referonce to that suggestiong? In the absence of a=7 cornent, I take it that sugestion is also agreed to. (Arreed) We are now reaUV to pass to a consideration of .rticle 59. MR COLBAN (Norwny): ar Chairman, as nobody else wants to speak about it, I would justpaligrapo suggest +hat wa strike out, in the second :raras h, the three last words, "and other officers. " In that way We would get a shairman.d suite clear statement that we elect one C rm A5 tothe ether officers, to ;r mind it weuld- probably be mostly the secretariat, and the secretariat staff will be ch.zgeable and differently comrposed as oanysion may arise. So that I do not think there is ww necessity to provide for that. We have separate rules for the secretariat, If the words "other officers" mean- tho Vico-Chairmn, it would be preferable to say so spccifical2y. 7. Mr HOUTMAN(Belgium (interpretation) Mr Chairman, I wonder whether we could come back to Article 59, Constitution of Executive Board, in. the case Where, according to paragraph 1, a majority can ask for a meeting: to be called. I rather think that the many problems mentioned in the Charter are very important from the economic point of view; many of them, however, -would not, of necessity, be of interest to most of the members of the Executive Board. This -applics, in particular, to the implementation of Article 29, which speaks of unforesoen ases concerning importation of the products there .contioned, and it is clear that even if only a minority of members of the Excutive Board found an interest in theseproblems, it would. be wise, in view. of the influence these problems may have on the economic situation in other countries,to have a meeting convened. This is perfectly well foreseen in the section dealing with private affairs, where particularly in any limited company one-fifth 0f the shareholders is sufficient to have a meeting of the Executive Board convened. I think it would be wise to provide and to give power to a minority to convene a meeting of the Executivc Board if it had sufficient reasons. 8. D.1.. E/PC/T/C.V/PV/6 THE CHAIRMAN: Is there any discussion on that point? AIR PIERCE (Canada): Mr Chairman, as I read the draft, the Executive Board can draw up its own rules. Those rules can include a provision for convening on the request of less than a majority of the members. All this section says is that those rules must include a provision for convening at the request of a majority. I think that, our choice is between leaving the draft as it is, which does prescribe the least that we would like to see in the Executive Board's instructions, or leaving everything to their own discretion, and letting them draw up their own rules. I think it would be a waste of time to go into the detail of those rules here. MR HOUMAN (Belgium)(interpretation): Mr Chairman, I do believe that the (shall I say) interim solution suggested here by the Canadian Delegation -might very well be considered. If we could delete the second paragraph of paragraph 1,we should thus allow the Executive Board to be the sole judges of whether there is or is not good reason for convening a meeting; whether it is a majority, or only a minority which has certain serious and economic interests to present which would justify such a meeting. THE CHAIRMAN: The Committee has heard the suggestion made by the Canadian Delegate and the comments of the Canadian Delegate. Are there any further comments? Mr MALIK (India): Mr Chairman, the Indian Delegation would support the proposal of the Canadian Delegation. I think we might well leave the Executive Board to make its own rules regarding the periods after which it shall meet, provided there is that provision, as suggested in this Article, We think the Article, as drafted, is adequate. MR ALAMILLA (Cuba): Mr Chairman, I am quite in agreement with the proposition of the Canadian Delegate, The only thing is that when we take out that part, what is left Ofparagraphl would become practically a repetition of what is in paragraph 2. Therefore, I would suggest that we just merge both para- graphs in one, saying that the Executive Board shall draw up its own rules in order to fix the frequency of their meetings, and the rules of procedure. What is left of paragraph 1 is practically nothing at all, except the 9. D.2. - ;. - ;-; . s filing of the date, which could also 6ome in the rules of procedure kR COLBAN (Norwavy): -I simply wanned to support the text as it reads, a' d to draw attention to the fact thit the request of a majority of the members'. of the Executive- Doard is only a sahety measure, because in facet if-in tb Executivemberrd,. which consises of, say, 15 mabcz.s, two or three wore to, zay: "We must have a meeting, Mr Chairman", then I cannot imagine that there would be any difficulty at all in getting the necessary majority if theb Chairman tells the other 12 or 13 memers so-and-so about the full meeting. So it is not of very great importance . For that reason I think we should stick. to rye draftwhich certainly has been veer carefully considered, THE CHA. N: I take it thAt thme issue is simply whether this Comittee wishes tbo retain a constitutional provision requiring that if a majority of the Executive Board wish to have a meeting, there must be one? Thismis a matter that the Drafting Comnittee, which I shall designate at the end of this meeting, can wrestle with further. Is there any further discussion? MR PETCE (Canada): We vuestion whether it is wise 'o hare a Chairman elected annually. We think it would. make for a stronger and more effective Organisation if the Executive Board (the Board responsible for carrying out the policies of the Organisation) had a Chairman in office for longer than one year. It toemed to us that if the body is 't carry out the policy, it needs to be thoroughly familiar with the machinery and with the people that are available in the Orgznization to carry out that policy.; and it seemed to us that it would be extremely wiue to provide a measure of continUity for the C an It -was this consideration that led us earlier to suggest that we iht explore the possibility of having the Director-General ex officio non-voting Chairxan of the Executive Board; but that suggestion did not receive consideration. If we are not to follow that line; we would suggest -that we consider very -carefully whether is -might not be advisable for the Chairman to be elected f.r a period of, say, three years4 10, D.3. E/PC/T/C.V./PV/6. -' MR HDLiES (United Kingdom): Mrm Chairan, I notld d" wish, he e an,. now* to express a view on the, very interesting. suggestion by the Canadian Delegate. I would like just to point out that the Article as it is at present drawn does not provide that someone who has been Chairman for one year is ineligible to be re-elected. I wondered whether the point made by the Canadian Delegate would not really have been met by that fact. If the Board came to the conclusion- that it had been very fortunate in its choice of Chairman for. one yeac, it nould always be open to it, could not it, to arrange that he be re-elected? lI LAURENCE (New Zealand): Mr Chairman, there is just one point arising from paragraph 1 to which I thinmma Co.nittee to whichAthis article is referred might give consideration, and that is, whether there is merit in having a provision that a certain number of members of the Organisition who are not represented on the Executive Board could, in certain circumstances, cause a meeting of the Executive Board to be held. We have the express provision that a meeting can be convened on the request of a majority of its members, but, as Article 57 is drafted, 15 members are envisaged. Now if the Organisation is a success, which we hope it will be, it is probable that the membership of the Organiswtion *ill be very much wider than the representation on the Executive.Board, E/PC/T/C .V/PV/6 Mr H.S. MALIK (India): Mr Chairman, with reference to the proposal to have a Chairman for three years, I would like to draw attention to a point which may possibly have some relevance. In paragraph 2 of Article 57 one-third of the membership of the Executive Board is to be elected each year. This means that during the second year of his term as Chairman the Chairman may possibly have been elected only by two-thirds and for the third. year by only one-third of the membership of the Executive Board., Mr. DAO (China): Mr Chairman, on the question of electing the Chairman for three years, besides what the delegate for India has pointed out, I think there are two other considertaions which may make this proposal rather difficult to be accepted. One is that a member of the Executive Board will be the representative of a .member of the Organisation and. as such he may not represent a particular country for three years. If he were elected for three years, then the question would arise as to whether the represen- tative of the Member of the Organisation should be ipso facto the Chairman of the Board . This Is one of the considerations wehave to take into account. The second consideration is that if the proposed provisions of Article 57 were adopted, then only five of the Members of the Board would be elected for three years or will remain for three years in the initial period, Then the choice of Chairman will be limited to the first five Members, who will have to serve for, three years during the initial period, Mr ALAMILLA (Cuba): Mr Chairman, I would like to support the views presented by the United Kingdom, Indian and China delegations and to propose that the Charter should remain as it is: that the election of the Chairman should be for only one year. Mr PIECE (Canada): Mr Chairman, I think there is a way of giving effect to the considerations that we have put forward and also taking into account the valid points which have been raised by other delegations; that is, to take a lead from the observation of the 12. E/PC/T/C.V/PV/6 United Kingdom delegate that there is nothing in this wording that prevents the re-election of the -Chairman, and to go step further and to say that the Chairman shall be eligible for re- election for two successive terms. Now, that would indicate that the drafters had in mind the desirability of continuity of chairmanship for three years, but would not bind them for the three years period and would not raise the complications that spring from other sections of the draft Charter, Mr ERIK COLBAN (Norway): Mr Chairman, I still feel that we should stick to the text as it reads, because the Members of the Executive Council are Government representatives, and, although we may say in our Charter that the Governments who appoint representatives on the Executive Board must be prepared to let the same man stay at any rate a year in case he should be elected Chairman, we cannot impose the burden upon the conscience of the Members, in view of the possibility of their member being elected Chairman, that they should place him at the disposal of the Executive Board - the same person - a person of very high qualities who may be needed for many ot her functions - for as long as three years, I think it is a much more elastic rule that we have in the Charter as drafted, (Interpretation) M. HOUTMAN (Belgium): /Mr Chairman, after having heard the differ- ent opinions of various delegations, I think I can make the following proposal which I think will meet with unanimous approval, or, at least,I hope it will, I think one should simply add to paragraph 2 as it exists now the following sentence: "All Members of the Board can be re-elected". That would allow the delegates of the Executive Board representing the different Governments to judge whether this re-election is desirable or not; but the opportunity of free electionwould allow us to benefit by the experience of a Member of the office who. would have satisfied his obligations during his period on the Executive Board, so that his re-election could be assured. 13. E/PC/T/C.V/PV/6 Mr. KELLOGG (USA): In reply to the suggestion of the delegate for Belgium, I thank your point may be covered by the last sen- tence of paragraph 2 of Article 57. M. HOUTMAN ( Belgium): Article 59 (2) refers to the Members of the office and not only of the Executive Board, Mr ERIK COLBAN (Norway); I suggest that the reference to "other officers" should be omitted from the draft, That has not, been discussed and I still think it is wrong to keep it in, I do not remember now any other important international Charter making such a statement, They say that they can elect their own Chairman, but they do not talk about "other officers". They can save time if they like, but "other officers" is too vague and I think rather dangerous, Mr. MALIK (India): Mr Chairman, may I ask for a clarification from the United States representative of this phrase "and other officers". Mr KELLOGG (USA): On that point, Sir, we did not have anything in particular in mind except possible Vice--Chairman or Rapporteur. I notice that F.A.O. has provision for more than one officer. But we do not feel strongly about it, and if this Committee would like to remove it, we should be perfectly happy to do so as far as we are concerned. 14. E/PC/T/C.V/PV/6 MR PIERCE (Canada): Before we finish with Article 59 (I do not want to speak if there are any other delegates who would like the floor) I would like to have a word in rebuttal of the delegate from Norway, THE CHAIRMAN: Are there any other comments on Article 59 before we proceed with this rebuttal? MR PIERCE (Canada): Mr Chairman, there was only one objection, I think, that was raised to the suggestion that we include in Article 59 a provision that would make it clear that the Chairman was eligible for re-election, and that was the objection raised by the delegate for Norway. He raised it on the grounds that first he wished to retain the elasticity in the present Article. I would point out that I do not think that this inclusion would make that Article any less elastic,. because as it is now worded the Chairman would be eligible for re-election. In. spite of that, I think it worth while to emphasise that, all things being equal, we see some advantages in continuity, and that is why, although that action can be taken here, I still think it important to spell it out and make it specific. The second point he raised was that a member might be willing to runr for one year but would not wish to stand for longer than that, and that his Government might in turn not be willing to have him act for longer than one year. I think that is a very sound point, but I do not think that the wording I have suggested would in any way increase the obligation on the Chairman who, if he found that he could accept re-election, would say so when he was proposed, and if he found his Government could not allow him to serve for more than one year, then he would make himself ineligible for re-election. I would think it valuable to go at least to the length of indicating that we saw some very obvious 15. F.22 advantages in a continuity of Chairmasnhi, because otherwise in this present structure we are going to have -.Ke., . ,*s xt. ,;.; ide..'i the Direct r-Ge eral and dee Secretariat-off -on one si , and there will be continuity there, but I see no provision for continuity in theExecutive Board, which is the business arn of the organisation. MR COLB.N (Nerway): I thank the delegatQ of Canada for his meresss, I feel considerable psJL ede by what he said and I leave the matter to the Drafting Committee. -I am quite sure that in fact we all.gree as to the aim we have in view. BARON ViN TULr (Netherlands):, here is another point which I would like tA raise in connection with article 59. In that ,rtic:l there is no provision for the chairman of the Executive Board to participate in the deliberations of the conference. Such a provision exists, however, with regard to the Chairmen of Commissions, in the fourth paragraph of Article 62. Now, as the Chairman of the Executive Board from the organisational point of view is a more important person than the Chairmen of Commissions, it. may be wise to give him the same privileges as the Chairmen of Commissions. I realise that there is an explanation for the difference in that the Commissions shell be composed of experts while the Executive Board consists of, member countries, but -even then the situation may arise that a member country for certain reasons does not a point as representative at.a conference one of its delegates who happens to be the Chairman of the Executive Board, and in that case there may be advantages in having the Chairman of the Executive Board take part-ic the deli,erations of the Ionferencev without, of course, the ight to vote, as mentionedvin Article 62(4). ER KELOGG (USA): In reply to the suggestion from the "delegate of the Netherlands, it would seem to us quite 16. unlikely, if a country had such a distinguished man that he was appointed as Ohairman of the Executive Board, and acted succedessfully as such, that they would fail to appoint him as.- one of their delegation to the conference. If he had suddenly become persona non grata to his country it might be undesirable to have him there. If the conference wanted the advice and assistance of such a person they could request that he come and consult with them. I would like, however, to hear the comments of the other members of the Committee on- this point. THE CHAIRMAN: Before I hear further comments on this I should like to say that the point has been made off the record and been commented on that we are proceeding at, I think, a rather slow pace this morning. We are going to have a Sub-Committee to discuss these matters further. I do not want to forestall - suggestions or debate, because that is the purpose of the Committee, but I would like to suggest that, when the point has been made and discussed sufficiently so that we can get some idea of the pros and cons, it would be well to leave the matter on record and pace on to the next matter, and allow the Sub-Committee to wrestle further with it. We have been a long time on this Article and I should like to get on to the next as- soon as possible. BARON VAN TUYLL (Netherlands): I quite appreciate the remarks of the United States delegate, but there may be another point there. The Chairman of the Executive Board may be too busy to attend a meeting of the conference but he might wish to -speak on some specific point at some stage of the conference, and in that case it should be possible for him to attend. But I would leave it to the Drafting Committee to consider this matter further. THE CEAIRMAN: Then if there are no further comments on Article 59 we will pass on to article 6C. 17- ~~~~~~~ E/PC/T/C.V/PV/6 NR BURY (Australia): Mr Chairman, it is difficult to deal with Article 60 without perhaps referring, to some extent, to article 62 and the re- lationship of commissions to the rest of the Organization. Therefore, before we begin this discussion of article 60, I should like some clarification from the United States delegate as to the position which he envisages these commissions will occupy. As the Australian Delegation sees the question it is this: You have the Executive Board of the Con- ference on the one hand and the Secretariat on the other. These com- missions consist of experts. It has been our idea on the commissions, that the point of setting them up was that there would be a certain num- ber of people expert in their own spheres who would be not available to the Organization full time but who would be brought in for advice on their own subjects from time to time and would, as a consequence, be in a position to see that the commission should give good advice to the Executive Board. But we feel that there is in one or two places a tendency to give these commissions a certain kind almost of exe- cutive functions, particularly in regard to the form of Article 65, concerning business practices, and Article 66, which almost suggests that the Executive Board could not move in a certain direction without prior advice of these commissions. It is our view that anything approaching executive functions must be exercised by the Executive Board, and that the function of these commissions would be limited to giving advice to the executive Board which would refer questions to them. That applies in general, but we recognize that there would be exceptions to that: for instance, in the case of the commodity commissions it might be necessary to set up some different kind of structure to have an over-all view of the work of the Commodity Council; but if this had any functionsin our view these should be exercised by governments and, in the case of the Commodity Commission, would have to consist of government representatives rather than independent experts. I am addressing myself mainly to the view that these would be just experts; and in that case we should feel it necessary to resist any idea that 18. E/PC/T/C.V/PV/6 that they should perform executive functions. Perhaps, if the United States delegate would elaborate his view of this commission, it would help in the discussion of Article 60, to which I would make specific amendments, following his remarks. MR KELLOGG (USA): Mr Chairman, the impression of the Delegate Aus- tralia is correct, that in the American view we had considered the commissions as primarily advisory bodies acting through the Eecutive. Board. As you will notice by looking at the three paragraphs, Articles 64, 65 and 66; nearly every one of these Articles covers a recommenda- tory or advisory function In such a case as a Commission would find it appropriate to act without going through the Executive Board, such as possibly in the case of Article 66 (5), the Commission would be sub- ject to the review of the Board under Article 61; so that no commission could ever take action without being subject to an immediate review by the Board. In such a case as Commissions would want to perform other - activities, not purely advisory to the Board and would need outside assistance, they would be required to enlist the assistance of the Secretariat by directing the Director-General to supply the information they wanted. To stress our feeling upon this, we have put into Article 72 the statement that the members of Commissions would be purely inter- national in their employment. MR HOLMES (UK):Mr Chairman, may I say that I agree very generally with the remarks made by the Australian delegate? MR BURY (Australia): I should like to thank the American delegate for his advice; but there is one point I will come to on Article 62. In view of his explanation of the fact that he does envisae them purely as ad- visory bodies, I should like to suggest that in Article 60, in order to make quite clear what the position is, that is, that they are quite subsidiary to the Executive Board, the second sentence should be amended. It now reads: "It shall review the activities of the Commissions provided for ini this Charter" that rather suggests that they are bodies set up and acting to a large extent on their own, and although they are acting 19. E/PC/T/C.V/PV/6 on their own they should be subject to review. I should like: to al- ter it, without being very specific as to the exact wording, to read roughly as follows: "It shall refer such matters to the Commissions for advice as it deems appropriate and shall take such action upon their recommendations as it may deem advisable. t MR KELLOGG (USA): I am not quite clear as to the Australian delegate's suggestion. Does he want to take paragraph 4. of Article 60 and in- corporate it with the second sentence of paragaph 1? MR BURY (Australia): Mr Chairman, that might be a way out; but the idea I want to bring out is that the activities of the Commissions should - and in fact do as it were, from the Executive Board and, although they may have to be modified in certain cases, par- ticularly in the case of the Commodity Commission, these commissions shall function sort of completely ard under and subservient to the Executive Board, but it shall not be just a matter of review. MR KELLOGG (USA): MIay I ask the Australian delegate whether be would prevent any commission from taking the initiative to investigate any matter whatever without first obtaining, the permission of the Board? fols. 20. MR BURY (Australia): No, Mr Chairman, that would be going too far. we are not -clear in our own minds quite at this stage what should be substituted There is one thing we might do: that is to out out the first part of that sentence and insert paragraph 4 as at the beginning of that sentence. We would not like to procee too far. On the other hand, being put the form of reviewing activities-rather gives the impression of perhaps a little too much discretion being given to- the Commissions. MR KELLOGG (U.S.A.): In an earlier draft wehad the -word "supervise". Would that meet the Australian Delegatet's point? - MR BURY (Australia): That would meet the point I made, to à. very large extent. THE CHAIRMAN: Is there any further discussion on this point:? If not, are there amy more suggestions with reference to any part of Article 60? MR COLBAN (Norway): There is one very small point: lnparagraph 3 it says: "The Executive Board shall recommend"; I would suggest "may': in order to make it perfectly clear that the Conference itself can take the initiative. -MR MALIK (India): It take it it is quite clear that we are for the moment not touching the last sentence of paragraph 1 of this Article? THE CHAIRMAN: I think that is undoubtedly the case: that it wil not be possible to decide finally on the wording of that sentence, or indeed as to whether there is to be a sentence at that particular place, until more is known as to the conclusions of the Joint Committee on Industrialization. MR BURY (Australia) : I should like to support the Delegate from Norway's suggestion with regard to pararaph 3, that "shall" be amended to "may", MR KELLOGG (U.S.A.): I would like to point out to the Delegate of Norway that, although we have no strong feeling one way or the other on this suggestion, the U.N. Charter provides that new Members must pass through the Security Council. I suppose that might not be a complete authority in this case. 21. H.2. E/PC/T/C.V/PV/6. MR BURY (Australia): I: realize that in supporting the Delegate of Norway, we are rather reviving an old issue, but it is a point on which we do feel rather strongly. We feel that in the case of security Matters there is a lot more to be said for it in that case than there is in this,, THE CHAIRMAN: If there are no further comments on Article 60, let us proceed to Article 62, MR COLBAN (Norway): I have a question of principle. I do not quite visualise the character of the members of the Commissions. I agree entirely, of course, that they must be experts, and the best possible experts, but I do not quite see whether the Commissions shall be bodies independent of their Governments, or whether they will be invited by the Executive Board to join certain important administrative Commissions, still being representatives of their governments, I have no definite opinion either way, but I must have this perfectly clear: whether the Executive Board will simply make a list of well-known experts in the particular matter and invite a certain number of. such experts, irrespective of nationality, and also, for intance, irrespective of whether that nation is a member of the Executive Board, or, on the other hand, whether the Executive Board shall send invitations to the persons and inform their national governments, to enable them to be placed at the disposal of the Executive Board for a specific task, I do not quite see what is intended. But, to come down to a test, it is said in paragraph 2 that the "conditions of office of the members of each Commission shall be determined in accordance with regulations", etc. Will these conditions of office, for instance, contain contracts, conditions, travelling expenses, salaries and that sort of thing, or will that be the business of their respective governments? As I say, I do not insist either.way; I just want to be perfectly clear what is the intended solution. MR KELLOGG (U.S.A): It has been the United States position in this matter that Members of the Commissions should have no connection whatever with their governments They will be acting, as is stated in Article 72, exclusively' as international employees. In that way, they would receive their travelling 22. H.3. E/PC/T/C.V/PV/6. O -'A expenses, salaries and so forthn from the Orgaisation, so as to make it quite clear that they owed no allegiance to any particu.ar governments IS a matter were presented to a Commission which might have political significance, then it was rather thought that such a matter would be handled on the level of the Executive Board, where political representatives would be present competent to deal. with it. THE C&M11N: The Chair, of courses, desires to take no position on these matters whatever. It is not its prerogative to appear as an advocate or an opponent of anything which the Committee discusses. I think , however, for the purposes of clarification only, that I might suggest, in reference to the matter o( Commissions "and perhaps the United States Delegate will correct me if I am wrong) that on one point there may be some lack of clarity and some lack of understanding as to what was assumed with regard to the work of the Com=issions. I believe that the conception of its. functions was that the members of these Commissions would be full-time servants of the International Organisation. Something has been mentioned in the Committee this morning that gave me the impression that it may be assumed by some here thatha memmiber of tne Comssion is somebody who is drawn in rather casually from some other work toado a sort of d hoe job, and then he goes back to hisIother work. i do not believe that is the assumption. I think it is assumed that the work of serving on these Commissions will be very onerous ald that it wilU be full-time, expert work. I cannot conceive, for example, of' membership on, let us say, the Commercial Policy Commission, being such a light task that a man could just devote an incidental part of his year to that, while he does something else that may interest him more. I believe that that is a correct interpretation, but if I am wrong, I would be glad to have the Delegate from 'the United States correct me. I amynot taking an position as to whether that ought to be the case, but I believe that is what is assumed in connection with theopreparation cf these projects. 23. If a Mr BURY (Australia) Mr Chairman, I am very gratefulto you for your explanation, which certainly has kleared my own mind on -the matter; but it does oecur to us that there may be some confusion between these Commissions and the secretariat if the members of the Commissions were just part of the secretariat, Their position as against the Director General would be quite clear cut. If what you have in mind is that they shall be just part of the secretariat under the Director General, in that case it seems perhaps unnecessary in one or two places to spell out in such great detail the kind of people, that the members of the commission should be. Mr Chairman, the Norwegian delegate out of his experience might be able to help us in this matter; because it does occur to us that if they are part of the seore- tariat, if you have something different spelt out distinguishing the members of this commission from the rest of the secretariat some weird kind of distinction might arise in practice which, would not be justified; Aand if the qualifications are spelt out for these commissions, then perhaps they should be. for the other members of the secretariat, because one would presume that in any case the members of the secretariat would be chosen because they were experts in the particular job which they would have to perform within the organisation, Mr ERIK COLBAN (Norway): Well, in my experience we have never had expert committees with a full-time Job, That was done in the League of Nations secretariat by the expert staff of the secretariat, and the delegates,. even those who did not represent their respective governments but ware chosen because of. their international standing in certain matters , met from time to time and got the materials, submitted to them fully prepared and almost digested by the secretariat, So I would like to follow up the idea of the Australian delegate and say that the commissions as provided for by the draft Charter really constitute separate 24. '. ~~~~~~~24, PAE I-2 . . expert branches of the secretariat, and I have no objection at all to make, They must only note that there they are, and we should get back what we are going. to spend on salaries and other emolu- ments for all these experts by avoiding the setting up of corres- ponding expert branches of the secretariat proper. We cannot burden the world with two competing secretariats, one under the name of the secretariat and the other under the name of such-and- such a technical commission- If we only have clearly in mind the work to be done and appoint the right persons to do it, I do not care whether you call it a commission or a secretariat. M. PALTHEY (France) (Interpretation): Mr Chairman, I would like you to allow me to add my doubts to those of the honourable delegate of Norway. I think that in this matter of the organisa- tion of the commissions we touch upon one of th e essential points of the future organisation for trade and employment. As a matter of fact, in my mind two doubts arise concerning this organisation of the commissions, The first doubt is concerned with the relationship between the commissions and the secretariat, If the organisation is constituted of permanent commissions composed of experts who are also permanent and salaried by the organisa- tIon, and, if, on the other hand, these commissions, as is fore- seen in Article 61., are directly responsible to the Executive Board, I do not see very clearly what will be the function from the point of view of administration of this unity of commissions and secretariat, Is this Committee not afraid that there might be friction between the DirectorsGeneral, who have very clear responsibilities for a department, and the Presidents of the commissions, who will bring to the commissions attention various problems? Will the secretariat be informed of this by the secretariat? To whom will the Directors General and their associates be responsible when the Executive Committee have asked for the study of a problem, and who will be responsible for the study of this problem: will it be the Chairman of the interested 25. PAE I-3 E/PC/T/C .V/PV/6 commission or the Director General and his associate., With regard to this creation of two different levels of different and independent organisations, one set up With permanent appointees dependent on the Director General and the other by other groups which are dependent on the organisation and dependent on the Executive Board, I for my part have not yet seen very clearly the function and the relationship between the various organisms, The second doubt which arises in my mind is as to whether it is opportune to have experts of a permanent nature in these commissions. I think one of the advantages of the commission or of the committee and of anything which is collective is that it brings together men who know a problem and who come to dis- cuss it in a temporary manner, Actually members of a committee have to be and are in principle individuals who possess occupa- tions of their own and who bring to the organisation to which they have been sent as experts or advisers a much more general point of view than would civil servants within the organisation. If one makes these experts into civil servants who are located within the Organisation and who take the problems of the organi- sation to heart, do you not think that they will lose contact with whatever is outside the organisation, that is to say, the country of which they are citizens, and, beyond the matter of mere citizenship, with the multitude of organizations and activities which they might have as individuals, which are of the essential nature of their value, and which would allow them to come with much broader views and without any preconceived notions? These are the two points of view which I wish to express before the Committee, I for my part am not opposed in principle to the creation of this system of commissions. It is a very interesting attempt, because I do not know of any other organisation where they exist; but I would like the Committee to study this problem very much, and that our colleague of the United States should put before us some comment on these points - . _ _ _ -< PAE E/PC/T/C.V/PV/6 THE CHAIRMAA, Gentlemen, the time, is now a quarter to 1. We . have come upon a phase of the discussion that is very interest- ing and which would. I think deserve more mature discussion than we have yet given to it, I think this matter of the basic con-. ception of what à commission is, how it should function and how its operations should be related to the secretariats on the one hand, and the Executive Board, on the other, is a very difficult searching matter, -I know enough about the way in which this Charter was drawn to feel that a rather full statement should be made by the representatives of the United States with reference to their basic thinking in this matter, or perhaps you may say basic lack of thinking, if you prefer; but there is not time to do that before lunch. So I suggest that we continue our dis- cussion of this matter at our next meeting. 27 J. 2 E /PC/T/C.V/PV/6 - be excluded from consideration by the Sub-Committeetiliri we have discussed it further. It may bh tIah tiere should be a special Sub-Committee set up later on to. consider that matter exclusively; so for the presents I am suggesting that article 62 be eliminated from the terms of reference but that the other Articles I have designated should be included in the terms of refere.ce, The countries which I suggest be represented on this Sub-Committee ars a> follows:- Australia, Belgium, Canada, India, Netherlands, the United gdo ,smi and the United States. Coming row to the Sub-Committee to consider amendments and withdrawals, I suggest for membership the following countries:- Cuba, France, Norway, the United Kingdom, and the United States. I am cure the Committee understand why I suggest the United States eash time. It is, of course, their document that seems to be the subject of consideration. If there is any delegate here who wishes to have some change made either to be on a particular Sub-Committee instead of the one to which I have assigned him, or to withdraw from membership, I shall be pleased to comply with his wishes on the matter. COMMITTEE RETAELXRY: Mr Chairman, if members who will be serving or. these Sub-Committees could stay for two or three minutes at the end of the meetings I would appreciate it very much. THHAIIELRMAN: If there is no further business, the meeting is ad joudney. The meeting rose at 12.5. p-m. 29. E/PC/T/C.V/PV/6ol~s cTIWIC With reference to our next meeting,hI suggest teat we endeavour to meet tcmoriow to' aontqnue the discussion at the point where we break off today. *6MITTTB SECRETARY: May I say that the tentatmee program for tomorrow, subject to changes laterstosay, io ao follows. There is a meeting of the Joint Committee in th, mornings and there are meetings in the afternoon of the Sub-Committee of Committee III and .the Drafting Sub-Committee of Committee IV. It would appear that there is a fairly good prospect of oxr being able to arrange a meeting either in the morning or the afternoon, depending upon the wish of the members of this Committee. MAE OHIRXsi:. There are indications that some members would like to meet in the morning and others in the afternoon. MR PLTHiY ((rance)'Interpretation): I would prefer that the Committee should meet tomorrow morning. LCG L-IAGG (US&): We must bear in mind that the Indian delegate is the Chairman of the Joint Committee. EEOMMITET; SECRTARY: The only other possibility would seem -to be a meeting this afternoon. MR MLIK (India): It you wish to meet tomorrow morning I shall be happy to send my substitste, a: I will be busy with the meeting of the Joint Committee. . sGn a ohow of hands, the majority of the members were in favour of a meeting in the morning.) THE AHAIRMWNry Vet,- well. We shall meet again tomorrow morning. Now comes the que tion -of appointments to the two Sub-Committees whi h it 'was agreed at the beginning of our meeting should be set up. I suggest that the first Sub- Committee devote its attention to Articles 52, 54, 55, 59 and 60, 'butAthat prticle 62, which we have just been discussing, 28.

GATT Library

dm100hy1225

Verbatim Report of the Sixth Meeting of the Drafting Sub-Commitee of the State Trading Sub-Committee of Committee II : Held at Church House, Westminster, S.W.1. on Thursday, 21 November 1946 at 2.30 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/ST/PV/6 and E/PC/T/C.II/ST/PV/3-6

https://exhibits.stanford.edu/gatt/catalog/dm100hy1225

dm100hy1225_90220019.xml

GATT_157

UNITED NATIONS E/PC/T/C.II/ST/PV/6 ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE TRADE AND EMPLOYTENT Verbatim Report SIXTH MEETTING of the DRAFTING SUB- COMMITEE of the STATE TRADING SUB-COMMITTEE of COMMITTEE II held at Church House, Westminster, S.W.1. on Thursday, 21st November, 1946 at 2.30 p.m. CHAIRMAN: MR. R.J. SHACKLE C.M.G., (United Kingdom) Note: There are no Verbatim Reports of the fourth or fifth meeting for the State Trading Sub-Committee. (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL 58, Victoria Street, Westminster, S.W.1.) E/PC/T/C . II/ST/PV/6 Corrections to E/PC/T/C .II/ST/PV/3. Page 13, line 12, delete "I think it is all right". Page 13, line 13, after "State" insert "enterprise" . Page 13, line 14, to read "for instance, not on commercial" instead of "for instance, it is not done for commercial". Page 13, line 17, after "somewhere" add "in this Article". Page 17, line 8, delete "promote" and insert "procure". Page 17, line 14, delete "them" and insert "it". Page 18, line 21, delete "could" and insert "should". Page 21, line 8, after "whole" insert "substance". Page 22, line 9, after "whole" insert "subject". Page 22, line 17, delete "this" and insert "the". E/PC/T/C.II/ST/1 PV/6 THE CHAIRMAN: We have waited twenty minutes and think we might make a start. The missing delegations will have their chance of presenting their observations in full Committee II. Would that be agreeable to the Sub-Comimttee? MR JOHNSEN (New Zealand): How are we placed for a quorum? THE SECRETARY: There is a quorum . THE CHAIRMAN: I think on the whole we might as well go ahead. If the other delegates have not come in perhaps we can return in our tracks. Is it agreed that we make a start? (Agreed.) I think the best thing is to take this report paragraprah by pagragrapph unless anybody has any other remarks to make on the order of procedure. Is that agreeable? (Agreed.) Shall we first of all take the provision which comes before the numbered paragraphgs on page 1? Has anybody any remarks to make on that? I am referring, of course, to the three lines below the heading "Nondiscriminatory Administration of State Trading Enterprises". I think we might pass now to numbered paragraph 1. Has anyone any remarks on that? Paragraph 2. I have one small point there myself. This is not a change of substance I am suggesting in the least, but I think it would read better if we were to say: "The illustratives examples of commercial considerations' by which the State Trading enterprise of a Member State should be guided in fulfilling its obligation of nondiscriminatory administration, were supplemented to include 'differential customs treatment. I think we might say "illustrative examples" because the list that follows does not pretend to be at all exhaustive but just gives examples and illustrations. I think by saying that we should improve the paragraph. (At this point Mr Tung arrived and the Chairman repeated his suggestion for improving paragraph 2.) Is that change agreeable in paragraph 2? (Agreed.)Before we pass to paragraph 3, may I ask the delegate of China whether he has any remarks on the opening provision or on paragraph 1? MR TUNG (China): No. I am sorry I was unable to be present at the beginning of the meeting. MR TERRILL (USA): Could I return to paragraph 2 to make a very small point? "Differential customs treatment" now heads the list of the illustrative examples. THE CHAIRMAN: That refers to the text of the Article? 2 E/PC/T/C . II/ST/PV/6 MR TERRILL (USA): Yes, I am referring now to the text. THE CHAIRMAN: I had thought we might go through the text separately, but shall we take the point now as you have raised it? MR TERRILL (USA): I am sorry if I am out of order, but I would suggest that, since it may not be as important as the other illustrative examples, it should be put further back towards the end of the list? THE CHAIRMAN: Yes. Where would you suggest putting it? MR TERRILL(USA.): I had not any particular place in mind. THE CHAIRMAN: Let us add "and also differential customs treatment" at the end, which rather dissociates it from the other one. MR JOHNSEN (New Zealand): That will be all right. THE CHAIRMAN: That is five lines from the end of paragraph 1 of Article 26. It will now read: "such as price, quality, marketability, transportation, and other terms of purchase or sale, and also differential customs treatment". Is that agreed? (Agreed.) ShalIl we now return to the introduction? Are there any points on paragraph 3? Perhaps we could pass to paragraph 4. Has anyone any remarks on paragraph 4? I heave some verbal points on the third sentence. That reads: "The discussion on this latter point was prompted by the consideration that in some countries large purchases of industrial equipment from abroad might well be effected through the medium of State enterprise and that" - I will break off there because my remarks apply to what I have already read. It seems to me that the word "large" before "purchases" is unnecessary, because it may sometimes be large and it may sometimes be small. Also I think that in the next line "industrial equipment" is perhaps too specific. It seems to me that many kinds of equipment might come into this. The likeliest kinds would be, I should expect, things for communications, telegraph equipment, telephone equipment, railway equipment, and so on, and that therefore it would be better to say "equipment of various types"; so that the phrase would read, instead of "large purchases of industrial equipment", "purchases of equipment of various types". Is thaet agreed? (Agreed.) Are there any further remarks on paragraph 4? MR TUNG (China): The word "large" is deleted? THE CHAIRMAN: Yes, and the word "industrial", and after "equipment" the words "of various types'' would be put in. 3 A2 A3 E/PC/T/C. II/ST/.- /PV/6 MR TUNG (China): May we say "purchases of industrial equipment or equipment of other types"? THE CHAIRMAN: No, I would knock out the word "industrial", so that it would read; "purchases of equipment of various types". MR TUNG (China): That means Excluding "industrial"? THE CHAIRMAN: Yes, that would cover everything. Are there any more points on paragraph 4? Paragrah 5 is a Statement of fact. Paragrah 6. Now we have a little report from the Sub-Ccomittee on Marketing Boards. I do not know whether everybody has a copy of it, but it is very short so I might perhaps read It is as follows:- "The Sub-Committee on Marketing Boards, composed of the representatives of the Netherlands, the Union of South Africa and the United States, met once informally. The Seb-Committee considered two kindts of activities of the Marketing Boards: as trading and as regulating bodies. in the first case when such Boards buy and sell prpducts, they would come, under the provisions relating to State Trading. In the second case, when they lay down-regulations governing private trade, their activities would be covered by the relevant Articles of the Draft Charter." May I take it that the report of the Sub-Committee gives rise to no observations? MR JOHNSEN (New Zealand): I think it is apparent that before they would come under state trading they would have to come within the final paragraph of Article 26; that is, the operations would have to be under effetive cntrol by a member government. You could visualisc Boards over which a Government had no control whatever. THE CHAIRMAN: Yes. What would that mean - to exercise effective control? I suppose in the last resort a member government can always effectively control anything within its jurisdiction, can it not? It can pass an .Act of Parliament to control anything. MR JOHNSEN (New Zealand): Yes. THE CHAIRMAN: The trouble is that if one says that anything that can be controlled by Act of Parliament is a state enterprise one has covered everything. MR JOHNSEN (New Zealand): Yes; but I think that is the first condition - that these boards are subject to effective control of member govrnments. THE CHAIRMAN: Does it not depend to some extent on the wording about the exclusive A .4 E/PC /T/C .II/ST/ PV/6. special privileges, because they might be covered, might they not, under that? It is in the third line of paragraph 1 of Article 26: ". . if any Member grants exclusive or special privileges, formally or in effect, to any enterprise to import, export, purchase, sell, distribute, or produce any product", and so on. Well, these marketing boards, I should imagine, in most cases would come within these words, would, they not? MR JOHNSEN (New Zealand): But that sentence you refer to is still qualified by the final paragraph of that Article. THE CHAIRMAN: Yes. There is a clash in that case, is there not, between the second sentence of paragraph 1 and paragraph 3? I had the idea that, so to speak, the two sentences were meant not to exclude anything but rather that the one would supplement the other; but I do not know whether that is agreed as a matter of substance. Do we agree as a matter of substance, on the one hand, that any enterprise to which a Government has given exclusive and special privileges to import, export, purchase, sell, etc., shall be regarded as coming within the scope of this? Is there anyone who takes the view that that goes too far? MR JOHNSEN (New Zealand): I should think that, if the Government merely gave it some exclusive right to manufacture, it would still not come within this Article unless it had some effective control over its operations. THE CHAIRMAN: Yes. I was trying for the moment to got behind what one might all the interpretive aspect of these two passages to the substance that we want to lay down. Do we agree as a matter of substance with the words "if any Member grants exclusive or special privileges, formally or in effect, to any enterprise to import, export, purchase, sell, distribute , or produce any product". Do we regard that as going too far or not? What would you sa y to that, Mr Johnsen? MR JOHNSEN (New Zealand) : I would say that is all right, only if it is still held qualified by that last sentence; in other words, the effective control must operate at all points. 5. A.5 E/PC/T/C .II/ST/ J/PV/6 THE CHAIRMAN: Of course, I can see this objection being taken on reading it that way, that is that it would be possible for a Government to set up some kind of monopoly and then wash its hands of everything it did thereafter -- in other words, to say: ``You can go off and do what you jolly well like". Surely we can hardly mean to envisage that sort of situation, can we, otherwise one would open up a very large loophole in this whole provision. All the Government would have to do would be to give exclusive monopoly rights to some concern and then renounce any further control over it. It would rather drive a coach-and-four through the whole of this Article, would it not, if you could do that? MR JOHNSEN (New Zealand): If it operated as a private trader, of course, it would be subject to the normal conditions under which private traders carry on transactions, so far as imports and exports are concerned. THE CHAIRMAN: I think it is a state-sponsored monopoly and in that way it is in a rather different situation from that of a private concern in any normal circumstances. MR JOHNSEN (New Zealand): It is a monopoly of imports or exports, of course; that is covered by the next Article. THE CHAIRMAN: Yes. It does just occur to me that there is a way in which as a matter of drafting we could get over this apparent inconsistency rather easily, and that is by amending 3 to read: "A state enterprise shall be understood to include any enterprise". That, of course, assumes that we have got to make paragraph 3 supplementary to the phrase in the first sentence of paragraph 1. If we say "shall be understood to include any enterprise", then I think the inconsistency disappears, but, of course, it does leave a question of substance, I suppose, as to whether we are prepared to see any enterprise to which a member grants exclusive or special privileges to import, export, purcha se, sell, etc., covered by the provisions of the Article. I think our intention has been that they should all be covered, otherwise we should have had some qualifying words already, if that was A.6 E/PC/T/C .II/ST/K/PV/6. not so MR JOHNSEN (New Zealand): I think they are already qualified by the remainder of the sentence, which indicates that the effective part of it is really a question of imports or exports. I doubt whether you can bring transactions by a private organisation within the terms of this Article. I think the first condition must be that the state should exercise some measure of control and be in a position to direct the enterprise as to its policy respecting imports or exports. THE CHAIRMAN: I think the concluding words "purchase, sell" are the crucial ones, are they not? If there is a body set up with exclusive or special privileges in various matters enumerated, then with regard to its purchases or sales the provision is that it shall observe equality of treatment. The question then is whether the enumeration of the things which the monopoly does is excessively long or not. The enumeration is "to import, export, purchase, sell, distribute, or produce any product". I seem to remember that we have had this sort of discussion once already in this Sub-Committee and that we decided to leave the words as their are. MR JOHNSEN (New Zealand): We decided to eliminate the word "produce" at one stage and then, on the representations of the United States Delegate, we re-inserted it. THE CHAIRMAN: Yes. MR JOHNSEN (New Zealand): That is in the second place, but it is still governed, I think, by the condition that the member Government must exercise some control over its operations in relation to sale and purchase. THE CHAIRMAN: I wonder, in reading this very narrowly, whether that is necessarily so, because you see in the first sentence of Article 26 you say: "If any Member establishes or maintains a state enterprise". That is one thing. Then you go on to the second thing: "or .... grants exclusive or special privileges to any enterprise". So that paragraph 3 must qualify the words 7. A.7 E/PC/T/C.II/ST/PV/6 "state enterprise" in line 1 of paragraph 1, and, therefore, also, I think, the things referred to three lines lower down, that is to say, the monopolies to which exclusive or special privileges are granted. Surely, the reference to "state enterprise" in 3 must qualify "state enterprise" in the first line of paragraph 1? MR JOHNSEN (New Zealand): The final sentence qualifies the whole lot. THE CHAIRMAN: I should have said, seeing that a state enterprise is exclusively in the first sentence contrasted with other enter- prises to which exclusive or specivVal prileges are granted; if in paragraph 3 you define the term "state enterprise", it must refer to the place where the term has been used before, which is in contradistinction to the enterprises to which exclusive or special privileges are granted. MR JOHNSEN (New Zealand): I see your idea there. THE CHAIRMAN: I have a little feeling that it has so far been the intention of the Sub-Committee that all enteprises to which exclusive or special privileges in these matters of importing, exporting, purchasing, or selling or distributing or producing apply should be covered by the scope of this Article. I think we rather re-open the question of substance, do we not, if we try what to limit them? On the whole, /I should be inclined to suggest (perhaps not with a chairman's accustomed impartiality) is that we amend paragraph 3 by substituting the word "include" for the word "be" -- "shall be understood to include any enterprise". I think we have then abolished any inconsistency and that we should probably be giving effect to the general line of thought which we have been following hitherto in the Sub-Committee. Would you see any grave objection to dealing with thie matter n that way? MR JOHNSEN (New Zealand): I think we run into immediate difficulty if we endeavour to make this apply to any private organisation operating under. some right given it by the Government, unless the Government exercises some control over its policy. of importation, 8. A .8 E/PC/T/C .II/ST/ V/6. exportation, selling or purchasing. The Government would have to do that, you see, otherwise it would not be effective. but THE CHAIRMAN: Yes;/I think there is a point that, if a Government gives exclusive privileges to a concern to do these various things and then retains no effective control over it, it would take it outside the scope of these provisions altogether, and, therefore, it could carry on monopoly-trading in a way which would be quite inconsistent with the intentions of this Article. Is not that so? MR JOHNSEN (New Zealand): Not if it was a private trading organisa- tion operating, for instance, under a licence to manufacture goods. Its overseas trade in that case would be regulated by normal private commercial practices. THE CHAIRMAN: Supposing it were a monopoly importer or seller, that would not happen, would it? MR JOHNSEN (New Zealand): A Government would probably direct the policy there. THE CHAIRMAN: Yes, but for the purpose of this we have to have something a little stronger than probability, do we not? I see the point, as regards the manufacturing concern, that you have covered all you need when you cover its purchases and sales, but--- THE RAPPORTEUR: Would not a private monopoly be covered, if I understand Chapter V aright, by Chapter V? THE CHAIRIMAN: The Chapter on Restrictive Business Practices? THE RAPPORTEUR: Yes. I believe they have now included some words to the effect that a single monopoly, provided it does have a monopoly, is subject to the provisions of Chapter V. THE CHAIRMAN: I think the provisions of Chapter V are very general, are they not? They are simply that, if the monopoly indulges in practices which frustrate the purposes of the convention, then there is a procedure of complaint. That is roughly the substance of Chapter V, is not it? This attempts to be a good deal more specific, and one might take the view that one needs something more specific to control this particular type of mono- poly, which is, so to speak, a state-sponsored monopoly - one 'which the state has seen fit to set up. It is rather in a special position as compared with purely private monopoly. 9. B.1 E/FC/T/C. II/ST/- PV/6 MR. TUNG (China): I think Mr. Johnson' s point is worth following up. I wonder if we could improve this interpretation by qualifying the word operation." "For the purpose of this Article a state enterprise shall be understood to be any enterprise over whoses operations in respect of import and export a Member Government exercises effective control." That lays down the operations. THE CHAIRMAN: It is in respect of external purchases and sales rather than imports and exports. MR. TUNG (China): Just say "trading operations", or "operations in respect of importation and exportation." I do not know whether Mr. Johnson has that in mind. MR. TERRILL (United States): That would be narrowing it a little too much, because the Government might exercise control over the policies of a firm which would affect indirectly the imports or exports. To narrow it quite as specifically as you have suggested might be going a little too far, and raising an opportunity for later cases in which there might be conflicts' of interpretation of this Article. THE CHAIRMAN: Should we say, "over whose external trading operations"? MR. TUNG (China): External? THE CHAIRMAN: It is external, because so far as the trading operations are purely internal it does not some within the scope of this Charter, MR. TERRILL (United States): My point is really on that matter. In practice it is unliekly that you can differentiate between purely internal and external operations in the case of a given industry. THE CHAIRMAN: Shall we say "over whose trading operations"? MR. JOHNSEN (New Zealand): I think that Would be more satisfactory. MR. TUNG (China): I think the main purpose of this Article is to deal with trade, export and import trade. I think this has been fully explained by Mr. Hawkins in previous meetings. If we say "For the purpose of this Article we do not intend to deal with any other operations of a state enterprise, in any financial matters or in any other respect", what we are wanting to deal with is the external trading operations, and I think if we say say "external trade operations" it would be quite sufficient for the purposes of this Article. 10. B.2 E,/PC/T/C.II/ST/ PV/6 THE CHAIRMAN: I am not quite sure it is as simple as that. I was going to say that under Article 27 there is provision for the internal trading operations, but I do not think that is right. It is not related to internal operations, and not related, for example, to the buying of home products. MR TUNG (China): Is there any connection with the internal operations? THE CHAIRMAN: No, I do not think there is. At first I thought there was, but I think that is probably wrong. MR.GUNG (China): Of course, if they want to sell things they have to buy from the home market. Is that also included in the same operations of exportation and importation? THE CHAlRMAN: It is a little hard to say, because if they are exporting presumably they are buying the things they export in the home market - or at least, they may well be doing so. MR. TUNG (China): Say "trade operations". THE CHAIRMAN: ". . over whose trade operations." Has anybody any observations on that suggestion? MR. TERRILL (United States): I think that is a rather critical point, and also a very difficult one. It is one on which we would not want to just make any might snap judgment. This provision in this Article/relatex to and be actually in conflict with other provisions in the Charter, and we ought to have due time to reflect on the matter at issue. If it were possible to do so without prejudice to the report it might be well to leave this fur further study by the Drafting Committee to be sure that this definition given in paragraph 3 in proper. THE CHAIRMAN: Yes. We could, I suppose, put the word "trading" in square brackets in paragraph 3, and call attention to the position in which we have left the word in the report. That would be a possible way of doing it, would it not? MR. JOHNSEN (New Zealand): I think so. THE CHAIRMAN: We can hardly hope to discuss all these implications of substance now, so we could put the word "trading" in square brackets. When we have done this I do not think we have particularly tidied up this question, 11. B.3 E/PC/T/C.II/ST/ PV/6 because what we have done is to introduce a possible qualification into the definition of a state enterprise. That still leaves us with the other half of the question, which is the enterprise to which exclusive or special privileges have been given. There think have the question how far such an enterprise should be governed by the provisions of this paragraph. If I understand right, this paragraph says that type of enterprise, even if it be, a manufacturing enterprise - a distributing, enterprise shall we say - shall in regard to its purchases or sales observe the relevant equality of treatment. MR. JOHNSEN (New Zealand): Obviously unlesse there is some control exercised by a Member Government you could not regulate the purchases or sales. THE CHAIRMAN: Is that necessarily so? I take it when the member granted an exclusive and special privilege to a concern to do these various things there would be some kind of enabling act, or something, which would define the power given to the enterprise. Now, if this paragraph were accepted it would be quite possible for the member Government to write into that act, or draft Charter, or whatever it was governing the enterprise, something which said "You shall observe the rules of paragraph 1 of Article 26 of this Convention, or Charter." That would be entirely possible. R. JOHNSEN (New Zealand): I think the intention here would be that a state would exercise some control over its trading operations. I can give you a specific example perhaps. I do not know whether I have given it before. That is, in connection with an industry for manufacturing rubber tyres. We have what is called an Industrial Efficiency Act, under which an examina- tion is made of the production of certain industries with a view to putting them on the most efficient basis. The Goevernment issues licenses to certain manufacturers to produce the products. That is as far as it goes, you see. It says that in that particular industry there shall be three manufacturers. The footwear industry is another. I think it would be very difficult to insist that in a case like that, that the manufacturers, over whose operations the Government exercised no control at all - apart from giving the licences to manufacture - should conform to some special requirement. You could not really administer it. 12. B.4. E/PC/T/C .II/ST/ PV/6 THE CHAlRMAN: I feel that here there is rather large question of substance. This is a question we cannot hope to settle now. We shall have to somehow place the point on record and leave it for further considera- tion. This is bound to be our final meeting and I think you would agree, Mr. Johnson, there is a question of substance here. I feel it would be quite open to someone to say that if the state gives a monopoly power to a manufacturing enterprise, or even two or three manufacturing enterprises, that, so to speak, it can hardly disassociate itself from that responsibility as to the trading practices they follow. It puts them in the status of partial monopolies, and as such they should be regarded as rather special. cases, and therefore possibly subject to rather special obligatlons. I think that is a possible point of view to take as regards that. I wonder if any other Delegation wishes to say anything on that point? MR. JOHNSEN (New Zealand): It all depends on the special privileges. In regard to footwear, for instance, there might be over 100 manufacturers. MR. TERRILL (United States): To the extent that the number was increased and you had competition regulating transactions, the provisions of this particular section would be less likely to come into force. MR. JOHNSEN (New Zealand): There is competition, you. see, and that is generally the object in granting licences to manufacturers - to create competition. MR. TERRILL (United States): I submit that the delegation of soverign powers by. a Government to private industry does thereby relieve the state of the responsibility for its subsequent acts in the industry, even though it does not conduct detailed day to day Operations. Anyhow, it can never be proved as to what its influence is in the day to day operations of the industry. THE CHAIRMAN: Has any other Delegate any observation on this point? Mr. Johnson, would I be right in thinking that your point would be met if we put some square brackets round some of the words in the fourth and fifth lines - distribute or produce"? You would want to put "produce" at least into brackets. Would you want to bracket any of the other words? Purchase" and "sell" should clearly remain in, and I suppose "export and import" as well. 13. B.5 E/PC/T/C.II/ST/ PV/6 MR. JOHNSEN (New Zealand): where the member is exercising some control over the trading operations - internal trading operations - there would not be any doubt about it. MR. TERRILL (United States): I would not like to see distribution eliminated from this section. THE CHAIRMAN: I am not for a moment suggestions the elimination of any point or words, but only placing them in square brackets with a view to further consideration at the next stage. Mr. Johnson, would you wish to include "disbribute" in square brackets, or would it suffice for your purpose if we simply put the word produce" in square brackets? MR. JOHNSEN (New Zealand): I think "distribute" has not the same force as "imports, exports, purchases, sells." If there is going to be any word subject to further consideration I think "distribute" should be included with "produce." But "produce" is the main one, if there is any suggestion that a private trading concern over which the Government has no control in respect of its external trading operations is to be subject to this Article. THE CHAIRMAN: In that case you would prefer to see both words included, that is "distribute or produce" in the square brackets? MR. JOHNSEN (New Zealand): Yes. THE CHAIRMAN: We will put the square brackets round them, and introduce a little explanation into the report. I am afraid this is the only way to deal with this point. Does the Sub-Committee agree generally as to that? One feels one would rather have attempted to narrow the point further, but I do not think we possibly can. MR. JOHNSEN (New Zealand): I think that when we discussed this previously were Were all of opinion that this final sentence qualified all, those operations. THE CHAIRMAN: If so, it would require redrafting, would it not? MR. JOHNSEN (New Zealand): It would, yes. THE CHAIRMAN: We shall need to introduce something to cover that in the report of the Rapporteur. That raises the question whether we shall have to have another session too agree that. I take it we cannot have another session, so possibly we ought to attempt to agree some sentence on the spot. 14- B.6 E/PC/T/C.II/ST/ PV/6 THE RAPPORTEUR: I was going to suggest that if we did not waste too much time we might agree some words here. THE CHAIRMAN: We had better deal with the points as they occur, reading down the Article "Paragraph 1, the words distribute or produce in the first sentence have been placed in square brackets, for the reason that".- is it one Delegation or certain Delegations? MR.TUNG (China): May I also join wiith that view? THE CHAIRMAN: ".. certain Delegations consider that it should be possible for a Member country" - perhaps we had better say ``Member Goverment to confer exclusive or special privileges upon" - shall we say "certain types of entr- prisd? MR. JOHNSEN (New Zealand): Yes. THE CHAIRMAN "e.g. for carrying on certain types of manufacture without at the same time exercising effective control over the operations." Is it "over the operations" or "over the trading operations"? MR. JOHNSEN (New Zealand): "trading operations." THE CHAIRMAN: " . over the trading operations of such enterprise. I think we have to say a word about the other point of view, have we now? "Other Delegations, however, consider that in such circumstances it would be proper that the Government confering the exclusive or special privileges should" - shall we say assume the responsibility for exercising effective control over the trading operations of the enterprise." I will read that through once more. "Paragraph 1: 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 enterprises e.g. for carrying on certain types of manufacture without at the same time exercising effective control over the trading operations of such enterprise. Other Delagations however, consider that in such circumstances it would be proper that the Government confering the exclusive or special privileges should assume the responsibility for exercising effective control over the trading operations of the enterprise." Does that sufficiently express the points of view? 15. B.7 E/PC/T/C .II/ST/ PV/6 MR. JOHNSEN (New Zealand): I have a small suggestion to make in respect of Article 26, which might cover the point. The third line reads, "or if any Member grants exclusive or special privileges, formally or in effect, to any enterprise to import, export, purchase, sell, distribute, or produce any product" - and could you then add "and exercises effective control over the trading operations of such enterprise"? THE CHAIRMAN: I quite see the point of that. On the other land, I think that leaves the question of substance untouched, does not it? That is one way in which the drafting, could be amended so as to express the one point of view. On the other hand, I think it leaves the question of substance untouched. MR. JOHNSEN (New Zealand): I was going to suggest you might put those words in there in square brackets, just to indicate that point of view. THE CHAIRMAN: We can insert the words in square brackets if it leads to clarity; but I do not know that we need to do that if we set out the different points of view in the covering report. I think the nature of the substance is clear enough from the passage which we have just written down. I am quite prepared, if you prefer for clarity sake, to include the further words in square brackets. MR. JOHNSEN (New Zealand): Would you read that again, Mr. Shackle? I did not take it down. THE CHAIRMAN: This is the passage we propose to put into the report: "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 Mr 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. Other Delegations, however, consider that in such circumstances it would be proper that the Government confering the exclusive or special privileges should assume the responsibility for exercising effective control over the trading operations of the enterprise." MR. JOHNSEN (New Zealand): Could we say "the external trading operations"? THE CHAlRMAN: Perhaps we had better say "external trading operations" there. I think that is a necessary qualification on that point. MR. TERRILL (United States): what about "over operations affecting the external trade of the enterprise"? 16. E/PC/T/C. II/ST/ PV/6 THE CHAIRMAN: Yes. "over operations affecting the external trade of the enterprise." Does anybody think that does not make the point sufficiently clear? C fols 17. C1 E/PC/T/C.II/ST/PV/6 Do you think, Mr Johnsen, that does not make the point sufficiently clear? MR JOHNSEN (New Zealand): There is only this point that I would like to make: that if the member grants exclusive privileges to any enterprise to import, export, purchase or sell, it still must control the operations of that enterprise before it can give effect to this Article. THE CHAIRMAN: Yes. Do you think it should not have to control the import, export, purchase or sale? MR JOHNSEN (New Zealand): If you put these words in that I suggested there it would indicate that it should. THE CHAIRMAN: We may write the words down that you proposed to insert? MR JOHNSEN (New Zealand): After the word "product" I would suggest the insertion of "and exercise effective control over the trading operations of such enterprise". THE CHAIRMAN: Those words again would come in the square brackets and we should write them into the passage and insert a reference to them in the covering report dealing with that passage. We finished the first sentence by saying "without at the same time exercising. effective control over the trading operations of such enterprise". I think we should want to put in some such words as those: "In order to make their point of view clear these delegations wish to add in the same sentence the further square bracketed words" - and then we have your phrase, "and exercise effective control over the trading operations of such enterprise". MR JOHNSEN: That is right. THE CHAIRMAN: Will that meet your point? MR JOHNSEN: That, I think, would meet it. THE CHAIRMAN: Then we go on as before, "Other delegations, however, consider". Can we now pass on? We have not introduced so far any further amendments apart from the word "trading" in paragraph 3. We shall have, I suppose, to put in a reference to that word as well. I am not sure whether the addition of "trading" is now necessary, is it, with the addition which you have proposed in paragraph 1? MR JOHNSEN: No, I do not think it is. THE CHAIRMAN: I think the word could be cut out, could it not? MR JOHNSEN: Yes. the THE CHAIRMAN: There remains the earlier suggestion to substitute "include" for "be". I am not really certain that affects it, on second thoughts, because we are still talking about state enterprise, therefore anything we say in paragraph 3 18 C2 E/PC/T/C.II/SF/ PV/6 will only quality state enterprise in paragraph 3 and will not affect the state enterprise to which exclusive privilege is granted either one way or the other; so I think we may delete that suggestion and leave the word "be" as it is. Can we now go back to where we were in the report? This passage that we have just written down will need to come probably after paragraph 4, will it not; or should it be after paragraph 5? No, I do not think so, because paragraph 5 is dealing purely with the definition of state enterprise at the end; so I think this will have to come between 4 and 5; or does it come even before 4? THE RAPPORTEUR: I should have thought betwee1 and 2, as they are early words in Article 26. Just for case of reading I thought we might have it at the beginning. THE CHAIRMAN: We talk about commercial considerations" in paragraph 2. I think the correct place would be after paragraph 1, so that it will become a now paragraph 2. Shall we, then, make that a new paragraph 2? (Agreed.) I think we have already passed paragraph 3. Now w e have paragraph 4, which I think we provisionally passed. MR TUNG (China): I have a point in regard to Paragraph 4, where the words "govern- mental contracts" appear. In our previous discussions it was clearly understood, I think, that it not only included Government purchase for administrative use but also things like public works and so on, so long as they are not for re- sale. I will accept that paragraph on that understanding. THE CHAIRMAN: May I ask if other delegations have observations on that point? My impression is that there was recognised to be some ambiguity about the word "governmental" but that nothing could be done to make it clearer. That may not be an accurate impression. Your point is really what we are to under- stand by the word "governmental", is it not? MR TUNG (China): Yes; especially if you consider the following sentence in paragraph 4, where we are talking about equipment of various types, and so on, and "purchases". THE CHAIRMAN: That leads one me to assume a comparatively wide interpretation of the word "governmental", does it not? MR TUNG (China): Yes. THE CHAIRMAN: If anybody thinks that that wide interpretation should not be possible, may I ask that he now speaks? MR TUNG (China): May I put it on the record that the interpretation should include the various types? 19 C3 E/PC/T/C. II/ST/PV/6 THE CHAIRMAN: I venture to think that the sentence, now that we have taken out the word "industrial", does leave us in doubt once more. If the word "industrial" had been there it would have made it clear, but now that it has gone it becomes obscure once more. MR. TUNG (China): I should like to have the word "industrial" there, so that we shall talk about purchases of industrial equipment another types of equipment or supplies from abroad. THE CHAIRMAN: "Purchases of industrial equipment and other types of equipment or supplies from abroad"? MR TUNG (China): Yes. THE CHAIRMAN: Perhaps we could say "purchases of industrial and other equipment of various types"? MR TUNG (China): Yes. THE CHAIRMAN: Are there any comments on that suggested amendment, that instead of "purchases of equipment of various types" we should read "purchases of industrial and other equipment of various types"? MR JOHNSEN (New Zealand): It really does not alter the sense of it. THE CHAIRMAN: I think it does by implication, because, once you have written that in, it appears that, at any rate in the view of this Sub-Committee (though that may not count for anything in the last resort, because I do not know that the Proceedings of this Sub-Committee would ever be taken into account in interpreting the provisions of the Charter) the word "governmental" has a sufficiently wide interpretation to include the purchase of industrial plant. MR TUNG (China) : Yes. THE CHAIRMAN: Shall we leave the words as suggested, then? (Agreed.) Are there any other points on paragraph 4? Paragraph 5: any comments? Paragraph 6: any comments? Here we have the question of marketing boards, and I have read to you the report of the Sub-Committee on Marketing Boards. Are there any comments on that? MR JOHNSEN (New Zealand): Where do we stand on that now? THE CHAIRMAN: I think the question whether a body is a marketing board or not does + in itself affect the question whether it falls with in the terms of Article 26 not does it? Whether you call it a marketing board or something else, if or not, . 20 C4 E/PC/T/C. II/ST /PV/6 it is an enterprise which is on the one hand a state. enterprise or one to which exclusive or special privileges have been given, then they will fall within the terms of 26(1), and the question becomes one as to what the terms of 26(1) are, that is to say, whether they include on the one hand the words "distribute or produce" or whether they omit these words and include the words "and exercise effective control over the trading operations of such enterprise". We have now, in effect, two variants of paragraph 1 of Article 26, one of which would cover all these bodies, including all the marketing boards. On the other hand, the other version would include those marketing boards over whose operations there was not government control. So that question would not affect it, would it? MR JOHNSEN (New Zealand): As a matter of fact, I find it difficult to understand why a special question should be raised in regard to marketing boards. It would be a question of fact in cach case as to whether it was covered by 26 or 27. THE CHAIRMAN: If I remember rightly, this question arose in the discussion in the full Cormmittee, did it not, and I think Mr Hawkins then undertook to have this point gone into by a small Sub-Committee. What is said here may very well be no more then en interpretation of the provisions of Article 26. On the other hand, if it is agreed to be a right interpretation, it may as well stand there, more particularly because we have to refer to the work of this Sub-Committee on Marketing Boards in any case, have we not - it is a historical fact that it has met and produced this report, so we have to tack notice of it. THE RAPPORTEUR: Might I remark that there is a delegate from the Union of South Africa present? Perhaps he can help us on what was meant by this. MR HEYLEVELD (South Africa): There is rather a big difference between ourselves; and Holland about this. In our case, all these marketing boards are set up under a single Act and it would be relatively simple; to fit them in, except that someof there have not quito accepted all the functions; but the Dutch system is far more complicated. As I understand it, in the case of their dairy industry, for example, they collect a tax on the importation of feeding stuffs and then ultimately they . refund the greater part of that tax to the producers who export these products. We had a separate discussion with Mr Speekenbrink on all the complications of the Dutch system, and it is far more involved than ours. THE CHAIRMAN. : The crucial question really is whether those boards engage in purchasing or selling on their own account is it not? 21 C5 E/PC/T/C. II/ST, PV/6 MR BEYLEVELD (South Africa): Most of ours do but the Dutch boards do not necessarily do it. They have this complicated system of not really buying and selling; it is a board but they get the tax adjustment through the duties levied, and then it is re- paid to their ultimately as a sort of a duty repaid. THE CHAIRMAN: I see - or, at least, I see in a general way. But is there anything which is awkward, when one looks at the terms of this report, in what you have just said? This divides the boards into two classes, the ones which buy and sell products and the ones which do not but lay down regulations governing private trade. I take it your marketing boards would fall within the class which buy and sell? MR BEYLEVELD (South Africa): We are largely in the first class, and I think the Dutch are largely in the second group. THE CHAIRMAN: If so, their activities would be covered by the relevant Articles of the draft Charter. Of course, "relevant" leaves the matter a little in the air, but I presume that the subsidies Article would be the relevant Articlce THE RAPPORTEUR: I changed it to relevant"; originally it was "the other". THE CHAIRMAN: "Relevant", on the face of it, seems to imply relevant to the state trading provisions; at least, it leaves it entirely in the air. THE RAPPORTEUR: Mr Hawkins' manuscriipt words, I think, were "would be covered by . other articles of the draft Charter". THE CHAIRMAN: Would it be better to restore the word "other"? I was going to say that the trouble is that we would be altering a document which comes from another Sub-Committee, but is that so? THE RAPPORTEUR: It was very informally handed to me after being hurriedly scribbled by Mr Hawkins. THE CHAIRMAN: May I suggest we re?store the word "other" in both places, then - both in the Sub-Committee's report and in the text here? MR TERRILL (USA): You could say "other relevant". THE CHAIRMAN: With that change of "relevant" to "other relevant" are we sentent with these passages? MR JOHNSEN (New Zealand): Should not that in each case indicate that the operations of the boards would require to be under effective control by the member government before they come within the definition of state trading? THE CHAIRMAN: When such boards buy and sell would they come within it? "Would you wish to say, "In certain circumstances boards might buy and sell without any effective government control"? 22 C6 E/PC/T/C. II/ST/ PV/6 MR JOHNSEN (New Zealand): A marketing board might, easily. MR BEYLEVELD (South Africa): I do not know how the Dutch board is constituted but in our case all those boards have a director or representative who is an official of the Department of Agriculture, and at the same time the Minister exercises control over the board as a whole. THE CHAIRMAN: So that you would be in a position to see that the Board observed equality of treatment in commercial considerations? MR BEYLEVELD: Yes, I think so - through one member of the directerate being an official and the Minister have a general power over the board as a whole. whether that applies to the system in Holland or how they would constitute their boards, I do not know. 23 E/PC/T/C. II/ST/ PV/6 THE CHAIRMAN: I think we shall have, to leave that for the Dutch to raise if they wish to when this report comes up in the full Committee. I was wondering what we need to do about this paragraph. what we could do conceivably, I suppose, is, instead or saying "it was agreed' say "the Sub-Committee agreed", and leave the rest of the paragraph as it stands; and then add "In the Sub-Commiittee on state trading one Delegation was of opinion that the provision regarding marketing boards which buy or sell should be confined to these boards over whose operations the Member Govern- ment concerned exercised effective control." Would that meet the point? MR. JOHNSEN (New Zealand): I thought that would be understood. THE CHAIRMAN: I think it really is the counterpart of what we have discussed earlier, is it not? If the Government confers exclusive powers upon a certain enterprise or enterprises it would, more or less ipso facto make itself responsible for seeing that those bodies followed the principles of commercial consideration and equality of treatment in their trading operations. There are two distinct points of view. One is that which holds that one is, so to speak, a corollary to the other; and the other is that they need not be interconnected in that way, and that it should be possible for a Government to give exclusive trading powers to a particular enterprise or enterprises without taking any responsibility for the way in which it conducts its trading operationis. Those are the two views, if I understand them rightly. I hope I have not misrepresented them. Broadly speaking, I think that is the position. MR. JOHNSEN (New Zealand): I think that is right. THE CHAIRMAN: In that case, shall we xx amend. paragraph 6 so as to read: "That Sub-Committee" -- say "That ' because it makes it clear -- "agreed", and then we shall have to add a new sentence. MR. JOHNSEN (New Zealand): I was going to raise a question in regard to what Mr. Beyleveld said. I assume when you discussed this you spoke about boards operating under some sort of Government control? MR. BEYLELVED (South Africa) In our case I am talking of the Act which established the Boards. Mr. Hawkins has a copy of that Act. 24 D.2 E/PC/T/C.II/ST/ PV/6 THE CHAIRMAN: Shall we write here: "When the report of the Sub-Committee on Marketing boards" -- it is really a sub-sub-committee, but we do not need to go to those lengths -- "was considered by the Sub-Committee on State Trading one Delegation expressed the view that if a Member Government did not exercise effective control over the operations of a marketing board the provisions of Article 26" -- it is Article 26; Article 27 is not involved -- "should not apply to the operations of such a board." I think that covers the point, does it not? MR. TERRILL (United States): In my country we have a smart trick which we call "riding without handle bars." It seems to me we are here creating a situation in which Governments are, as it were, riding without handle bars; we are creating a sort of no-man's land. THE CHAIRMN: Would you like to add some words? MR. JOHNSEN (New Zealand) The point I wanted to make clear was that this state trading provision would apply only if these Marketing boards were created by the Governments, or were under the contrlo of the Governments. THE CHAIRMAN: I think that is covered by the words we have written in. MR KUNOSI (Czechoslovakia): There cannot be any doubt upon that. If it is not created by the Government it is a private business. MR. JOHNSEN (New Zealand): It says here "The Sub-Committee agree that such boards buy or soll", but it does not say the type of boards. The only doubt in my mind was whether that was too comprehensive. I do not know of any actually myself, but there may be circumstances when an industry might set up a marketing board of its own. To say, without qualifying it, that such boards would come within state trading, I thought to be goiing a little too four. That is the point I had in mind really. THE RAPPORTEUR: When the main Committee set up this Sub-Committee my definite understanding was they meant governmental marketing, boards. THE CHAIRMAN: Boards organised, so to speak, under Acts of Parliament? THE RAPPORTER: Yes, not private marketing boards. THE CHAIRMAN: Not one which happened to be set up by traders without any Government authority. 25 3 E/PC/T/C . II/:.ST/ PV/6 MR. JOHNSEN (New Zealand): That was the distinctionI wanted to make MR. KUNOSI (Czechoslovakia): I do not think there can be any doubt about it. THE CHAIRMAN: Could we say "Government sponsored"? MR. TERRILL (United States): It can take on any name under the Company Act; it can call itself a company, or a corporation, or any other name. Any organization establishing itself under a company Act - even if it calls itself a board - remains under that Act. It is not under any special arrangement, or under special marketing legislation. Are not you covered on that, on Mr. Johnsen's point? THE CHAIRMAN: I think we cover it in this sentence: "The Sub-Committee agree with the report of the Sub-Comittee on Marketing Boards on the understanding that it referred to marketing boards established under Government sponsorship" or "authority", or something of that kind. MR. JOHNSEN (New Zealand): I merely raised the question from the point of view of clarifying the point. The CHAlRMAN: Has any Delegation any comment on that suggestion, that we should add a sentence to the effect that, "The Sub-Committee on State Trading agree with the report of the Sub-Committee on Marketing Boards subject to the understanding that it refers to Marketing boards established under Government" - THE RAPPOTEUR: That about "established by the Governments"? MR. BEYLEVELD (South Africa): I do not know whether you want to establish tlhem arbitrarily, like a Government issues proclamations or orders. Do you want then under that arrangement, or do you want them under some specific legislative plan which has more permanency about it? MR. JOHNSEN (New Zealand): You could say "sponsored by Governments" or "over which Governments exercise control." That is really what is meant. THE CHAIRMAN: That leaves one category uncovered, does not it? That is, the case where the Government might conceivably pass some sort of Act which establishes a marketing board and specifically leave open the trading operations to its own discretion. Is not that so? MR. JOHNSEN (New Zealand): Well, it would spensor the x board in that case. THE CHAIRMAN: The board is "established under Government suspices" I should have thought was perhaps all right. The word "auspices" is value, but 26. D.4 E/PC/T/C.II/ST/ PV/6 sufficiently intelligible. MR. JOHNSEN (New Zealand): If that one paragraph was left out, r if there had been no report, it would have taken care of itself. THE CHAIRMAN: We have to take note of it because I think we have been asked to take note of it, for one thing. I do not know whether we can quite content ourselves with simply reproducing what it says and leaving it. If we feel that there are definite observations which ought to be made -- and from the discussion I think there are definite observations which ought to be made -- we have to settle the nature of the comment we make. I will read my first sentence again: "When the report of the Sub-Committee on Marketing Boards was considered by the Sub-Commitee on State Trading one Delegation expressed the view that if a Member Government did not exercise effective control over the operations of a marketing board the provisions of Article 26 should not apply to the operations of such a board." Does that cover the case? MR. JOHNSEN (New Zealand): That is not what I had in mind. MR. TERRILL (United States): Would I be right in thinking: you had in mind the case where a board was established under governmental suspices, either by order or by specific legislation, or both? MR JOHNSEN (New Zealand): Yes. The Government exercises some measure of control ever it, you see. I do not know of any case where a marketing board will be set up by an industry without some measure of Government control, But this does not allow for such a type of board. It was purely a matter of drafting, that is call. THE CHAIRMAN: We could add 6 further sentence on these lines: "Certain Delegations considered that where a marketing board was established under Government suspices the Government concerned should assume effective control over its external trading operations". MR. TERRILL (United States): We have raised that general issue before. I wonder if we could not merely say we have noted the report of the Sub-Committee, with the understanding that the term "marketing board" was confined to boards established under governmental suspices, as you suggested a few 27. D.5 E/PC/T/C.I1/ST/ PV/6 minutes ago, because that is really another issue in the earlier point about responsibility. THE CHAIRMAN: Of course, that assumed that the boards established under \ Government suspices would be under effective Government control. Is not that so? MR. TERRILL (United States): That is right. THE CHAIRMAN: I am not sure whether that would cover Mr. Johnson' s point. MR. JOHNSEN (New Zealand): It might be as well here to provide for, or indicate that there may be cases where boards might be established by an industry Without coming under any control at all. THE CHAIRMAN: In that case it would be covered by the reference to "Government suspices", and we shall not need to say anything about Government control. MR. JOHNSEN (New Zealand): That is right.. THE CHAIRMAN: "The report of the Sub-Committee on Marketing Boards was noted by the Sub-Committee on State Trading" -- I think you had some words, Mr. Terrill, did you not? MR. TERRILL (United States): "with the understanding that the term 'marketing board" or "boards" "was confined to boards established under governmental auspices." THE CHAIRMAN: "The report of the Sub-Committee on Marketing Boards was noted by the Sub-Committee on State Trading with the understanding that the term 'marketing boards' was confined to 'boards established under governmental suspices." Does that cover it. MR. BEYLEVELD (South Africa): Does that really take you much further? Co- operative companies are mostly established under the suspices of the Govern- ment, but you cannot call a co-operative company a marketing board. THE CHAIRMAN: It is the word "suspices" that is ambiguous. In a sense every company that ever was incorporated is set up under Government suspices because it is set up under company law. MR. BEYLEVELD (South Africa): Exactly. THE CHAIRMAN: ". . governmental sponsorship" is better than "suspices." "Sponsorship" is vague, but it does imply a more active interest on the part of the Government than "supices." MR. JOHNSEN (New Zealand): In each case could not the Executive Board of 28. D.6 E//PC/T/C .II/6T/ PV/16 the Organization determine whether any particular board came. within the terms of the Articles on state trading? MR. TERRILL (United States): I am not quite sure how to do that. A firm operating, under a patent falls within paragraph 1 of Article 26, because that is an exclusive grant by the Government to produce, make or sell; it includes imports and exports. It clearly is not the intention to bring patented articles into the Article there, yet it might be interpreted to include them. MR. BEYLEVELD (South Africa): Would not you be covered in paragraph 6 if where you say "would come under the provisions" you simply say "would come under and be subject to the provisions. ."? THE CHAIRMAN: For the moment we are considering what the Sub-Committee on Marketing Boards is supposed to have said. We may be in a position to amend what they are supposed to have said. MR. TERRILL (United States): How about saying "confined to those of officially established under governmental auspices", to avoid the implication that they result from private initiative in the matter and merely conform to certain regulations that may exist? Mr. Young suggested "by Governments", but I suggest "officially established" is more explicit. MR. JOHNSEN (New Zealand): You could visulise boards operating where the industry itself works in conjunction with the "Government, THE CHAIRMAN: Shall we say "established under Government encouragement by specific legislation", or somthing like that - "by express legislation"? MR. TERRILL (United States): "Express legislation" or "other governmental action." THE CHAIRMAN: "Established by express governmental action"? MR. TERRILL (United States): Yes, and that would include legislation. THE CHAIRMAN: If we put that sentence in have we sufficient covered the marketing board point? There being no comment I take it it is agreed. We now pass to the note on Article 27. (The introductory paragraph was read). Any comments? (Paragraph 1 was road) 29. D.7 E/PC/T/C. II/ST/ PV/6 "2. The terms landed cost before payment of any duty of such products purchased by the monopoly from suppliers in Member states' was substituted for the wording of that Article reading 'the price at which such product is offered for sale to the monopoly by foreign suppliers, ' since it was considered that a more offer did not provide a firm basis for the calculation of the margin. Moreover, since in certain countries imports by State monopolies are subject to customs duty, it was considered appropriate to choose a definition which, while taking into account all costs up to the moment of entry, excluded duties and other charges (e.g. internal taxes, transportation and distribution. It was generally agreed, however, that it would be open to countries to negotiate, if they wished, a margin representing the difference between the total cost of a product, i.e. including, profit, internal taxes, costs of distribution and transportation etc.) and the monopoly's first hand. selling price in the home market." Are there any points on that? I have just one remark. The words "including- profit imply that profit may be negotiable. On the other hand, I do not read it as implying the profit is invariably to be negotiable I think, as I have said before, I can envisage cases in which the state trading concern or the ministry may not want to negotiate about profit, while on the other hand quite recognising there would be an appeal to the I.T.O., say, if its rate of profit was considered to be unreasonable. 30 E fols E1 E/PC/T/C II/ST/. / PV/6 MR TERRILL (USA): Perhaps we could put "profit" at the end and then say "and where appropriate"? THE CHAIRMAN: Yes; I think that is better. We take out the words including profit at the beginning, and it reads at the end, "costs of distribution and transporta tion, etc., and, where appropriate, profit". That is just before the bracket. MR TERRILL (USA): Yes. THE CHAIRMAN: Then we come to paragraph 3. (Paragraph 3, as amended, was read.) There we say "were" instead of "was". Any comments? Now paragraph 4. (Paragraph 4, as amended, was read.) Any comments? Now paragraph 5. (Paragraph 5, as amended, was read.) Any comments? Paragraph 6. (Paragraph 6, as amended, was read.) Any comments? Now we pass to "Expansion of trade by complete state monopolies of import trade", I suppose the qualification import trade" is right is it, because, ii I remember rightly, Article 28 is concerned with importing and exporting, is it not? THE RAPPORTEUR: It is headed "Expansion of trade by complete state monopolies of import trade" in the U.S. draft charter. THE CHAIRMAN: Let us leave it, then. MR JOHNSEN (N.Z.): I am wondering whether in this paragraph we should refer to the name of a particular country. THE CHAIRMAN: I was wondering. It might be more tactful not to. You can easily get round it by saying "in the absence of the country chiefly concerned". MR KUNOSI (Czechoslovakia): I would prefer to say that "an immediate adoption of this Article was impracticable", and leave it there. THE CHAIRMAN: Just leave it there, with a full stop? We could say that "During the discussion of Article 28 of the Draft Charter it was found that an immediate adoption of this Article was irmpracticable", and just put a full stop there. MR KUNOSI (Czechoslovakia): Yes. We have some doubts, too, about the following sentence. I just do not know what the purpose. would be of leaving this Article in the report. THE CHAIRMAN: I think in all the discussion we have had so far the idea has been to leave it in square brackets without taking a decision about it one way or th other, and, as it were, waiting to see what happened next. Is not that so? MR JOHNSEN (N.Z.): Yes, the question of inclusion or deletion would be considered 31. E2 E/PC/T/C. II/ST/ PV/6 at the next meeting of the Preparatory Committee. MR KUNOSI (Czechoslovakia): I do not thin, we need this last sentence. THE CHAIRMAN: Do we not need to put in something which, so to speak, gives it its status or lack of status? Even if it is printed in square brackets one will need an explanatory sentence. MR KUNOSI: The American draft charter has now been discussed in general and it becomes in its new form the report of this Preparatory Committee. Now, this is a draft Article which has not been discussed at all. It does not mean that it has been adopted in any kind of form, oven provisionally, by the Preparatory Committee. It will have to be covered by some kind of text but I do not like this one. THE CHAIRMAN: Except that the text of it has been mentioned, even if its substance has hot been discussed.. MR KUNOSI: I do not think it is practicable to put it in this way. if THE CHAlRMAN: I think/we decide not to put anything we shall be putting forward a point of view which was not the feeling of the main Committee, if I remember rightly. I do not think anybody went to the length of suggesting actual . deletion. THE RAPPORTEUR: If my recollection is correct, I think there were suggestions by the Canadian delegation that only the first sentence should be left to stand; and there was, as I recollect it, a long discussion in Committee II as to what should bo done with this, and my understanding was that it should not be dealt with and it was impracticable to deal with it in the absence of the state chiefly concerned, and that it should. appear in square brackets. I think this was the decision finally, on the grounds, as Mr Hawkins explained, that this charter had already been given publicity and one could not therefore leave a complete blank. MR KUNOSI: But the type of publicity given to a draft article submitted by one country is not the same as that which will be given to an article put forward by seventeen nations after discussion together. THE CHAIRMAN: I think the object of this paragraph here surely is to show that this is not agreed with or disagreed with but simply left to stand because the American draft charter put it in there. That is the object of this paragraph, I think. MR KUNOSI: Will the other Articles which have not been discussed also be left in square brackets? 32. E3 E/PC/T/C. II/ST/ PV/6 THE CHAIRMAN: I do not think there are any others and oven this has been discussed in a sense, and it is quite inconclusive. MR TERRILL (USA): Would it meet Mr Kunosi (s point if we amended the second sentence to road, "It was decided therefore to let the Article stand provisionally and without discussion as it appears in the draft Charter." THE CHIRMAN: We might say that it was decided that it was impracticable to discuss it. MR KUNOSI (Czechoslovakia): What is the importance of it to have it standing there? What does it mean? It is only an indication of the conception of the U,S. Government on this problem. THE CHAIRMAN: I do not think article 28 as appearing in the Charter is necessary from the point of view of the U.S. Government because, so to speak, it was thrown out as a basis for discussion and nothing more than that. MR TERRILL (USA): It was, of course, nothing more than the basis of discussion, and there was no formal decision on the latter. It was discussed, as you know, with the Governments of all the countries present as a general matter for inclusi at this Conference, and if it did not appear at all in the charter the charter would be left with a gap, which would seen to me to arouse a great deal of perhaps unbounded questioning, and that the best way to deal with the problem would be to let the article stand bracketed, with the note that Mr Kunosi has provided us with, to the effect that the matter has not been discussed in any substantive way. MR KUNOSI (Czechoslovakia): That would satisfy me. THE CHAIRMAN: Shall we write some words down? MR TERRILL (USA): My idea was very simple: That we decided to let the Article stand provisionally. We could introduce a sentence with the words, "Although the Article was not discussed as to substance, it was decided that it should remain provisionally in the draft Charter and subject to consideration at a later stage" THE CHAIRMAN: "Subject to possible consideration at a later stage"? MR TERRILL (USA): Yes. THE CHAIRMAN : That takes the place of the top words here. We leave the heading, Which corresponds. to the text of the draft Charter. Is that agreed now? (Agreed.) Now we have Article 26. We have already discussed some points on it, but I do not think we have necessarily covered the whole ground. I will read it 33. E4 E/PC/T/C .II/ST/ PV/6 through rapidly in the form in which I believe it now stands. (Article 26 as amended was road.) Can we pass on to Article 27? (Article 27 as amended was read.) THE RAPPORTEUR: I would point out one shall error which has, crept in. Should it not read "landed cost" instead of "total lanced cost"? I think; that was agreed. THE CHAIRMAN: Yes. In the sentence which reads, "For the purpose of determining" and so on, and ends recent period of years", I suggest that we alter the word "determining" to "applying". I think it is more appropriate. (Agreed.) MR JOHNSEN (N.Z.): Then, just after that, in the last line, I think the word "they" should go before the word "can". THE CHAIRMAN: "can be made" is passive, is it not? MR JOHNSEN (N .Z.): So that we say, "to the fullest extent that they can be", and so on. The word "they" relates to quantities. 34. F. 1 E /PC/T/C. II/ST/ PV/6 THE CHAIRMAN: I think it is rather an open question whether you put in "they" or do not. If you do not it is the extent that can be made available; if you do it is quantities. I think it is "they'' clearly - "to the fullest extent that they can be made available.'' In the phrase. "pricees, charged under such maximum margins'' I do not think "under" is quite right. I think it would be buter to say "prices charged sichin maximum such/margins" or subject to such maximum margins.'' What it means, I take it is, the price is inclusive of the maximum margin. I do not think "under" is the right way to express that. MR..TERRILL (United States) I think the Words "subject" would meet it. THE CHAIRMAN: It is "subject to and iinslusive of", is not it? MR.JOHNSEN (New Zealand): I think within would be better, THE CHAIRMAN:I think "within is right, because you define your margin as the difference between the lended cost and the first selling price. Let us say "within" instead of "under'' in both places. Paragraph 2: "In applying. the provisions of this Aticle due regard shall be had for the fact that some monopolies are established and operated solely for revenue purposes." Are there any further comments? MR. TUNG (China): I have a matter of substance which I overlooked in the past discussion, in regard to a sentence in the middle of paragraph 1: "For the purpose of determining, these margins in respect of imports, regard may be had to average landed costs and selling prices by the monopoly over a recent period of years." I think we should include "exports', and omit the word "landed", so that it would read: "For the purpose of determining those margins in respect of imports or exports regard may be had to average costs and selling prices by the monopoly over a recent period of years." I do not know what the opinion of other Delegations may be, but I think that covers imports and exports. If we have the average for imports we should also have, an average for exports. THE CHAIRMAN: First of all will ask if any Delegation has any observation on the point of including exports" as well as "imports". We should get that point clear, and then consider the wording. Is it agreed to include exports as well as imports? 35 .2 E/PC/T/C. II/ST/1 PF/6 MR. JOHNSEN (New Zealand): I do not know whether it :applies in the case of exports. THE CHAIRMAN: I think it might, because you can conceive of a negotiated export margin. Suppose you had a state selling: exporting monopoly, it might conceivably want to practise some kind of price stabilisation, and for the purpose of that it might want to increase its expert margin, or export tax one might say for the sake of simplicity, which fluctuated according to the price which the experting: produce was fetching. That is the point, is not it? MR TUNG (China): Yes. THE CHAIRMAN: For that reason you might want to run over an average of a period instead of fluctuatin from day to day. I think that is the point. MR. JOHNSEN (New Zeland): Yes. THE CHAIRMAN: If we agree that exports go in the question is, I think, whether we can simply say "in respect of imports and exports regard may be had to average costs and selling: prices", or do we need to be a little more specific and say "regard may be had in the case of imports to average landed costs and selling prices, and in the case of exports" follow the wording of (b). I do not think that leaves any serious ambiguity. It would read - substituting "applying" for determining" - "For the purpose of applying, these margins in respect of imports and exports regard may be had to average costs and selling prices" and instead of "by the monopoly" "over a recent period of years." MR. JOHNSEN (New Zealand): I hardly think that applies for exports. In the case of export monpolies the margin is the different between the price at which the product is normally sold for domestic consumption and the price for export . The CHAIRMAN: I think perhaps we will have to be a bit more specific. I take it there, is no other point of substance left. "For the purpose of applying these margins," (comma) "regard may be had," "comma", respect of sports to average landed costs and selling prices over a recent period of years " bringing, those words in there - "and in respect of exports to the average prices offered by the monopoly to purchasers than other Member states." 36. .3 E/PC/T/C . II/ST/ PV/6 MR. TUNG (China): Could we cover it by shaply saying, "regard may be had to average costs and selling prices for imports or exports as defined above" - something like that. THE CHAIRMAN: The trouble is in (b ) we are not comparing costs but comparimg the charge, in respect of a commodity in a home market. You might say "to average export prices offered for sale'. THE RAPPORTEUR: Could you say charged instead of "offered"? THE CHAIRMAN : I think perhaps we ought to alter "offered" to "charged;" in the text. That is just the same argument. Is it a agreed that we make that change? What I am suggesting is that in (b) for the words "a product offered for sale by the monopoly to purchasers" we road "a product charged by the monopoly to purchasers'' - substituting "charged" for offered". Is that agreed. MR. TERRILL (United States): The only difference between the two cases is that under the first one the act is a prospective one, and so it would include offers there as well as the actual negotiated price. It is not on all fours with the latter use,, which is a statistical one, where you are using only prices that have actually been charged in the market. It may be a very small point, but I think there; is that difference. I do not know whether the drafters intended the word "offered" to have a real significance or not. THE CHAIRMAN: If may say so, I think it was quite consistent in the original draft, because there it said "offered" in both places; whereas we have altered "offered" in (a), and that rather changes the case, does not it? MR. TERRILL (United States): The charge could not be more than the maximum, because the initial offer could not be, so it would not make any practical difference. I see no immediate objection to it. THE CHAIRMAN: If we make that changes I do not. know whether we have to refer to it in the introductory note. I think we have referred to it there, THE RAPPORTEUR: It is in paragraph 2- "similar changes made in respect of exports." THE CHAIRMAN: I wonder whether we ought to refer to (a) and (b), and say "A similar change was made in (b) 37. E/PC/T/C.II/ST/ THERAPPORTEUR: "A similar change was made in (b) in respect of exports." THE CHAIRMAN: Let us go back to where we were. The point to which we had got in writing down the sentence is: ". . regard may be mad, in respect of imports to average landed costs and selling prices over a recent period of years, and in respect of exports to average prices charged for exports and sales in the home market respectively." MR TERMILL (United States): Could we qualify "average" by "reccent average prices''? THE CHAIRMAN: Yes - "over a recent period of years" "Recent average prices" does it well enough. It would be a little more tidy if we could make "recent period of years" qualify the sentence. We can take out the words "over a recent period of years" where they are already in, put a coma after respectively and then write in "over a recent period of years." It would then road: " regard may be had, in respect of imports to average landed costs and selling prices, and in respect of exports to average prices charged for exports and sales in the home market respectively, over a recent period of years.;' MR. TERRILL (United States): This is intended to cover all kinds of commodities and markets. .We might just say "over a recent period." I do not know whether it is monthly average or yearly average prices. THE CHAIRMAN: We have had a somewhat perfunctory discussion about that. They may be different for imports and exports. I have read paragraph 2. We now pass to Article 28, Is there any point in regard to Article 26? That is just as it was in the draft Charter, in square brackets. That completes our - task apart from one point, to which I have to refer, and that is a note from the Secretary of Committee II, which says: "I wish to draw your attention to the Verbatim Report of the Sub-Committee on Quantitative Restrictions and Exchange Control for November 15th (E/PC/T/C .II/QR/PV/4), pages 29 -31. 38. PV/6 E/PC/T/C .II/ST/ PV/6 "In short, the point there raised appears to be that since Articles 20 and 21 would (in the case of pressure on the balance of payments) ive greateter freedom to countries to use quantitative restrictions (even with a certain degree of discrimination) then would be committed to state tradors under Articles 26 - 28, it would be recquired. to add to the last mentioned Articles a provision that in such cases state traders would be allowed to restrict further than allowed under Articles 26 - 28 (up to the limit allowed in 20 and 21). You will observe that while Mr. Helmore had the provisions of Article 21 in mind, the rapporteur considered that reference should be made to Article 20 (and only to Articlce20)." I think that matter is already covered, because in the relevant passage we have referred not to any particular Articlce by number but to the other provisions of the Charter. That is paragraph 1 of Article 27, commencing "With regard to any monopolised product . ." The subject of the other provisions of this Charter clearly takes in all these qualifications, and therefore must cover the point raised by Mr. Helmore. I think that brings us to the end of our work. It remains to retype this report with the amendments we have made and submit it to the full Committee. (The meeting rose at 4.48 p.m.) 39.

GATT Library

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Verbatim Report of the Sixth Meeting of the Sub-Committee of Committee II on Quantitative Restrictions and Exchange Control : Held in the Convocation Hall Church House Westminister on Thursday, 21 November 1946 at 10.30 a.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/QR/PV/6 and E/PC/T/C.II/QR/PV/5-6

https://exhibits.stanford.edu/gatt/catalog/vc065hd2263

vc065hd2263_90220027.xml

GATT_157

E/PC/T/C.II/QR/PV/6 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTENATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SIXTH MEETING of the SUB-COMMITTEE of COMMITTEE II on QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL held in The Convocation Hall Church House Westminister on Thursday, 21st November, 1946 at CHAIRMAN: DR. H.C. COOLBS (Austalia) (From the Shorthand Notes of W.B. GUNNEY, SONS & FUNNELL, Solis &. 58, Viectoria Stret, estrWnIstor .'..) 1. B1 E/PC/T/C .II/QR/PV/6 THE CHAIRMAN: Our first task today is to deal with draft Article 22. You will recall that at our last meeting we left this question because at that stage the best the Rapporteur had been able to do then in the light of the discussions was to produce an Article with three alternative drafts. Since we were able to pick out three countreis who represented the main types of economic situation contemplated by this Article, we asked the United Kingdom and the United States and France to see if they could, after re-examining this matter, reduce the number of alternatives. They have now submitted a draft Article on which the Rapporteur has prepared a report. I suggest that we might ask the Rapporteur to explain to us what it is that this Committee has done. THE RAPPORTEUR: Mr Chairman, as you say, the draft Article itself is not put forward really by the Rapporteur but by the "working party" of the three countries; but they have explained it to me and I hope that I understand it, and I will say a word on it, if I may. There are certain points on which there are no difficulty. If you will look at draft Article 22, 1(a) and (b) present no difficulty; they are common ground to everybody, I think. Let me leave (c) on one side for a moment and turn to (d)(i) and (ii): they are again points on which there is no difficulty, I think - they have been common ground throughout the discussions. The ones which did present more difficulty (and on which, I am glad to say, the three countries have put up a single text) are 1(c) and 1(d)(iii) and (iv). I will say something about that in a minute, if I may. If we pass to 1(e), there is another point which we have got to decide, and that is a provision for discrimination which was suggested by the Australian delegation, and I am not quite sure, as Rapporteur, whether the Australian delegation wish to press that or not, in view of the work which has subsequently been done on the other Articles for nullification and impairment. That is one of the points we have got to take up. I think I am right in saying that the three countries did not include that in their draft and therefore (I do not know whether I am speaking for them or not) it might be difficult for them to accept; but I put it in in square brackets because the Australian delegation had in fact put it forward for consideration. I would like to take up them along with paragraphs 2 and 3 and deal with/those bits which I have not yet discussed. May I now say a word or two on what I think is the solution which is put before us? The difficult problem that has had to be dealt with is the problem really 2 B2 E /PC/T /C.I I/QR/PV/ 6 of inconvertible currencies and the closely related problem of the transitional period. The solution that has been adopted is not to make any specific reference to the transitional period as opposed to inconvertible currencies but to run the two together; and the problem really boils down to this: how far and under what and conditions/safeguards shall countries be permitted to discriminated in their import restrictions - and there are certain corresponding problems on the export side we must boar in rind - in order to. make use of inconvertible currencies or inorder to avoid piling up inconvertible currencies? There has been general agreement, I 'believe, between the three countries concerned on the two major propositions: first, that there must be some provisions of this kind, particularly to begin with, because many countries have got inconvertible currencies, and secondly, in the case of those countries who do a lot of trade with countries having inconvertible currencies, they would find it impossible to develop their economics without some power of discrimination. On the other hand, I believe all have agreed that unless this power to discriminate is subject to very considerable safeguard, it right lead away from multilateral trading to a perpetuation and even extension of bilateral deals of a kind which it is clearly the purpose of the Organisation to reduce to the barest minimum; and this is the solution which I understand is proposed. On the export side, under 1(c), it is proposed that any country should be able to attach conditions to its exports which make it necessary for the purchasing, country to pay in the currency of the selling country - a perfectly reasonable preposition - but it is necessary take to as one of the steps that a country might/avoid, if it wishes to, piling up inconvertible currencies, and, it either will not be called discrimination or will have a let-out here, as it were, if a country selling, its goods to another country says, "You must pay in my currency". On the import side the problem. boiled down to this. The safeguards which are put into this Article are, first, that a country should impose discriminatory elements in its trade restrictions only in so far as that was necessary to enable that country to buy more imports from the countries with inconvertible currencies without cutting down its imports at al from the countries with convertible currencies, and that is the purpose of 2(d)(iii). The second safeguard as that these import restrictions should correspond to exchange restrictions which would be permitted to the member under the Articles of Agreement of the Fund; and this, of course, would deal with a country in the transitional period under Article 14 of the Fund; -3 B3 E/PC/T/C .II/QR/PV/6 and that only in exceptional cases and with the prior approval of the Organisation, in agreement with the International Monetary Fund, would a country which was not imposing such restrictions be permitted to use the discriminatory elemaent in the import restrictions for this purpose. Now, so far that would leave to country with an inconvertible currency really simply under Article 14 of the Monetary Fund but paragraphs 2 and 3 of the Article introduce further safeguards. It is generally recognised that as the Charter as a whole would give all countries greater possibilities for from and multilateral trading, it was right and proper to say that right from. the word "go" any discriminatory measures of this kind would be subject to review by the Organisation consulting with the International Monetary Fund and subject to be withdrawn if' they were found to be used in a manner which discriminated unnecessarily against the trade of another member. Finally, in paragraph 3, in order to reduce this use of discriminatory restrictions to the minimum, it is proposed that there should be a review of the whole situation when three quarters of the members of the Organisation have convertible currencies - it being, of course, then much easier for other countries to do without discrimination -. and in any event before the end of 1951. I hope I have understood it; that is my understanding of it. THE CHAIRMAN: Thank you. Would any of the countries whose delegates participated in the preparation of this compromise like to add anything to the Rapporteur's explanation? MR CLARKE (U.K.): I think the Rapporteur has explained it extraordinarily well. MR GUNTER (USA): I agree. MR BARDUC (France)(Interpretation): Mr Chairman, I should only like to add a few words. I think that the three delegations which have worked. together in order to prepare this text should thank Mr Meade for the understanding with which he has translated the proceedings into a text, and we must say that this text is a remarkable piece of work. THE RAPPORTEUR: Mr Chairman, the Rapporteur would like to reveal the secret that not every word in the text was written by himself'! THE CHAIRMAN: I think it might simplify the proceedings if we get the Australian delegate to tell us what his view is about the paragraph in square brackets. 12 PHILLIIPS (Australia): In view of the changes that we understand have been made in Article 30 (that is the nullification and impairment Article) we are 4 B4 E/PC/T/C.II/QR/PV/6 prepared to withdraw this Article. We think the provisions of Article 30 would allow the Organisation, if it was satisfied that discriminatory restrictions would be to the general advantage of world trade, to approve them under that Article. We think there could be circumstances where discrimination would be justified with the approval of the Organisation, and since that, as we understand, is possible under Article 30, we would withdraw this section here. I am not certain whether there right be some reference in the report to the point. It is a matter which might perhaps be considered, but as far as the Article is concerned, that is quite satisfactory to us. 5 C.1 E/PC/T/C.II/QR/PV/6. THE CHAIRMAN: Is it acceptable to the Committee that we ask the Rapporteur to make a reference to this matter in his report? MR. GUNTER (USA): We have no objection to a reference in the report. THE CHAIRMAN: I take it that is generally acceptable. MR. LOKANATHAN (India): I should like to have further clarification of paragraph 7 (b), and I would like the Rapporteur to tell us more precisely the conditions contained in paragraph 7 (b) of the report. THE CHAIRMAN: Could we leave that for a moment? I think it would be wise if we disposed of the Article and then dealt with the report when we are fairly clear as to how much of the Article we are agreed about. MR. BRONZ (USA): There is a typographical error in the draft Article which may be confusing. In paragraph 1 (d),iii, the reference to Article 29 should be to Article 20. MR. LOKANATHAN (India) I should like to have some clarification and explanation on both subparagraphs iii and iv on page 6. MR. CLARKE (UK): I think the point here is that there are two conditions which discriminatory import restrictions have to meet. The first is the condition that the restrictions are expansive in the sense that they enable the country to import more than it would otherwise have been able to afford to do. The second condition is that the discriminatory restrictions are not more stringent than exchange restrictions which would be permitted to the Member under the Articles of the Fund. The first of those con- ditions is (iii); the second is (iv). There is then a proviso that where the country is not imposing exchange restrictions, only (iii) applies, but its general balance of payments situation has to be reviewed by the Fund before it is permitted to improse the discrimination. MR. GUNTER (USA): Noe. iii & iv refer to both exchange restrictions imposed under Article 14 of the Fund - transition period -- or Article 8. MR. LOKANATHAN (India): I was going to ask whether, in order that a country may use discrimination, it should satisfy both(iii) and (iv) 6. C.2 E/PC/T/C.II/QR/PV/6. MR CLARKE (UK): If it is imposing exchange restrictions at all under Article 8 of the IMF Agreement, or under Article 14, then it must satisfy both conditions. If it is not imposing exchange restrictions, it is only allowed to discriminate in special circumstances, and under condition (iii), and for a country which is not iposing exchange restrictions, (iii) has to be satisfied in regard to the expansive nature of the discrimination, and the discriminations also have to carry with them the agreement of the Fund as well as of the Organisation. 7. D fols. D.1. E/PC/T/C .II/QR/PV/6 MR. CLARKE (U.K.): The reason for the whole thing is the complex situation which arose because of the existence of some curren- cies being convertible and others being unconvertible, and the view taken is that if a country with a convertible currency wants to impose discrimination, then the particular set-up of its trade with convertible and inconvertible currency has to be examined by the Fund to get permission for the discrimin- ation. MR. LOKANATHAN (India): My only difficulty is that by applying both 3 and 4 together as a satisfying condition, you are practically inviting a country to create a little exchange difficulty and get satisfaction. MR. CLARKE (U. K.): It could not do that without the approval of the Fund. MR. LOKANATHAN (India); I know that. Anyhow it is all right; I just wanted to know. THE CHAIRMAN: Are there any other questions for clarification? Then can we take the Article paragraph by paragraph? Perhaps the Rapporteur will read the first paragraph. The Rapporteur then read from "1. The provisions of this section.... " on page 6, to "....only with the prior approval of the Organisation in agreement with the International Monetary Fund. " on page 7. THE CHAIRMAN: Are there any comments on this paragraph? MR. CLARKE (U.K.): There is just one question on (d)(1), and that is whether imports from other countries should be imports from other members. If you say "countries", you are possibly prejudging the question of relationswith non-members. Frankly, it is a matter which the Sub-sub-committee has not discussed. THE CHAIRMAN: I should have thought you were prejudging it more if you put "members". M. BARADUC (France); I think so. THE CHAIRMAN: If you put "members", you imply that it would not apply to non-members. - 8 - E//PC/T/C.II/QR/PV/6 MR. HELMORE (U.K.): I think the point is this: that this is an obligation on members to do something. The question is whether one wants to specify that this only applies in the non- case of members as against/members or members as against all countries. In this particular case probably you are right, that we should leave it as countries, since it refers to a freedom. If this point is noted in the Minutes, but notin the report, the Minutes will be available to the Interim Drafting Committee and they will note the discussion and the idea, and if they want to raise it as a matter of drafting they can, but it would be better not to raise this tricky point in the report which will probably be published. THE CHAIRMAN: As an alternative, it might merely be noted for reference to the appropriate committee of the Second Session, that when the matter of relations with non members is being dealt with, that this paragraph is one of the paragraphs to which attention should be given. MR. HELMORE (U.K.): Yes. Could that be noted in the Minutes of this Committee and not in the report, which will be published? I think it would be undesirable. MR. GUNTER (U.S.A.): I understand the text will stay as it is? THE CHAIRMAN: Yes, the tent will stay as "countries". MR. PHILLIPS (Australia): These are exceptions from Article 21, are they not? And Article 21 only prevents you from imposing discrimination against members. The question is already stated in 21, is it not? M. BARADUC (France); Yes. MR. HELMORE (U.K.): I think that further question - which I agree is a penetrating one - is all the more reason for not trying to settle this now, but leaving it to be looked at as almost an editorial matter. THE CHAIRMAN: Is there anything else on this paragraph? Can I take it, then, that the paragraph is agreed? Agreed. E follows. -9- D. 2. E-1 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: Paragraph 2: "If the Organisation finds, after consul- tation with the International Monetary Fund on matters within the competence of the Fund, that import restrictions or exchange restrict- ions 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 discrimin- ates unnecessarily against the trade of another Member, the Member shall within sixty days remove the discriminations or modify them as specified by the Organisation: Provided, that a Member may, if it so desires, consult with the Organisation to obtain its previous approval for discriminations, 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 para- graph". Any comment? I take it that paragraph'2 is agreed. Paragraph 3. THE RAPPORTEUR: "When three-quarters or the Members of the Organisation 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 all discriminations which restrict the expansion of world trade." THE CHAIRMAN: Any comment? Mr. LOKANATHAN (India) : It seems to me these last two lines "with a view to the earliest possible elimination of all discriminations which restrict the expansion of world trade" are much too general. I mean, it seems to before a pious wish. I thought that with regard to this specific matter of discrimination it would be desirable to confime our- solves to specific restrictions which are likely to hamper trade rather than the general statemrent "with a view to the earliest possible elimination of all discriminations which restrict the expansion of world trade", because we are dealing with Article 22. I would suggest we restrict it in that way: possible elimination of all discriminations under this Article. Mr CLARKE (UK): May I make a suggestion here with a view to meeting 10. E-2 E/PC/T/C. II/QR/PV/6 the Indian delegate? Instead of saying "with a view to the earliest possible elimination of all discriminations which restrict the expan- sion of world trade", say "earliest possible elimination of all remaining discriminations which restrict the expansion of world trade". THE CHAIRMAN: "Discriminations" is a very general term. It would cover not only the discriminations provided for in these exceptions, but all sorts of other discriminations. I mean the fact that it comes under this general heading may be sufficient, but it would appear to me necessary to say "the elimination of the discriminations provided for in this Article". THE RAPPORTEUR: I would even go so far as to suggest that it is the discriminations under 1 (d) of this Article. THE CHAIRMAN: Presumably some of them - 1 (a) - you would not want. THE RAPPORTEUR: 1 (a) would stay, surely. 1 (b) is commodity agree- ments. 1 (c) is hardly a discrimination. Mr CLARKE (UK): It is really (iii) and (iv). THE RAPPORTEUR: I should have thought it was 1 (d) (iii) and (iv). I mean, let us say what we mean. Is not that so? Mr CLARKE (UK): Yes, that is right. THE RAPPORTEUR: I should say "with a view to the earliest possible elimination of discriminations under sub-paragraph 1 (d) (iii) and (iv) of this Article". THE CHAIRMAN: The Rapporteur suggests that we delete the word "all" and delete the words " which restrict the expansion of world trade", and insert after " discriminations" the words "under sub-paragraphs 1 (d) (iii) and (iv) of this Article". Mr GUNTER (USA): Is it clear that the provded clause is part of (iv)? THE RAPPORTEUR: Mr Chairman, I should say it is certainly part of (iii) and ( iv). Mr CLARKE (UK): I should have thought youstill do need the words "which restrictthe expansion of world trade". THE CHAIRMAN: Restrictions under those sub-paragraphs which restrict the expansion of world trade? Mr CLARKE (UK): Yes. 11. E-3 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: I think that will do. Mr CLARKE (UK): -"of discriminations under sub-paragraph 1 (d) (iii) and (iv) which restrict the expansion of world trade". THE CHAIRMAN: Well, will that meet your point? Is that acceptable to the other delegations? (After a pause:-) Is paragraph 3 as amended agreed? (After a pause:-) That completes Article 22. THE RAPPORTEUR: Mr Chairman, I suggest that we should take Articles 16 and 24 next, because they are the same type of subject. I do not think they will take any time, because we have been through them before. There is one chance suggested in Article 20: a new para- graph has been added at the end since. Otherwise it has been approved by the Subcommittee, and I doubt whether we need go through it again. It is page 29. There is a new paragraph put in at the end of Article 20 which was suggested by the working party of the three deleagtions which put forward the proposal we have just been discuss- nig for Article 22 . The ponit was that in that nicely balanced compromise, if I may so call this, it was thought that the addition of these words here would just make the balance perfect. I think perhaps they speak for themselves. THE CHAIRMAN: Any comment on this suggested addition to Article 20. THE RAPPORTEUR: I will read it: "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 Organisation 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." F 12 OM E/PC/T/C.II/QR/PV/6 MR. HELMORE (UK): As I was not a member of the working party perhaps I might be allowed to suggest that their enthusiasm for a nice balance made them forget that they ware writing this as an Article of a Charter, and it seems to me rather inappropriate that a Charter should just make a statement of fact, and if it does not upset thd balance I suggest that we ought to adopt the drafting procedure which has been followed in nearly all other Articles by beginning "Members recognise that". THE RAPPORTEUR: As far as the Rapporteur is concerned, Mr. Chairman, I should suggest that is an improvement. MR. PHILLIPS (Australia): I might point out that the Articles of the Fund have a rather similar provision which is in the form of "The Fund shall recognise". MR. BARADUC (France) (Interpretation): It is for this reason, Mr. Chairman, that the French delegation is sorry not to be able to agree with the Chief of the United Kingdom delegation, and we ask that the present text be maintained. MR. HELMORE (UK): I do not press my amendment in the least. I can only express my sorrow at this departure from logic on the part of the French delegation. THE CHAIRMAN: What did you say the provision was to which you referred, Mr. Phillips? MR. PHILLIPS (Australia): Article 14, Section 5. THE RAPPORTEUR: Is there not some misunderstanding? I understood the United Kingdom delegation suggested that the first sentence should begin with "Members recognise that", but that the second sentence should stay as it is, and it is the second sentence which says "During this period the Organization shall . . . . . . . . take full account of the difficulties" . It is merely the first sentence which says the Members recognise there is this difficulty. MR. PHILLIPS (Australia): If so I withdraw my point. I misunderstood. THE CHAIRMAN: Does the French delegate still feel that the United Kingdom suggestion impairs the sentence? MR. BARADUC (France) (Interpretation); We can accept it, Mr. Chairman. 13 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: It is suggested we insert before the words In the early years" the words "Members recognise that", the second sentence beginning, "During this period the Organization shall" etc. THE RAPPORTEUR: Should I remove the square brackets then? THE CHAIRMAN: It is proposed that we remove the square brackets. Is that agreed? THE RAPPORTEUR: Mr. Chairman, the rest of the Article is exactly as we have left it with the changes that were proposed, verbatim, last time. I do not know whether the Sub-Committee would wish in those circumstances to go right through it again. I suggest it is not necessary. THE CHAIRMAN: Is it agreed that as we have dealt with this Article, with the exception of that one additional paragraph, before, and approved it, we pass now to Article 23, page 33 of the document? Is that acceptable? THE RAPPORTEUR: Article 23, Mr. Chairman, is in exactly the same state as Article 20; that is to say, I have incorporated the verbal changes which were all agreed at the last meeting of the Sub-Committee, and I doubt whether it is necessary to go through it again. THE CHAIRMAN: I notice a square bracket in the middle of Para. 3. THE RAPPORTEUR: Yes, but you will see Note 2 at the end of the Article. We suggested this should be maintained and that it was really at a later meeting of the Preparatory Committee that one should consider whether it came up or not. I suggest the Article might stand as it is, with/the notes as they are. Oh, I beg your pardon: the two notes to the Article are two new pieces of drafting for which I am responsible. THE CHAIRMAN: Could we look then at the notes? MR. GUNTER (US): I was just wondering if/there were not more than one delegation which reserved its position on the question of common 14 E/PC/T/ C.II/QR/PV/6 membership. Australia did, I thought, and we meant to reserve our position on that, too. THE CHAIRMAN: Will the delegations which did wish to reserve their position please indicate? MR . LOKANATHAN (India) : I think we did, not because we are opposed to it, but because we have not made up our minds about this. THE RAPPORTEUR: Shall I say, Mr. Chairman, "some delegations wished to reserve their position"? THE CHAIRMAN: Yes. MR. HELMORE (UK): Mr. Chairman, if you want to make this appear less of a disagreement on principle and more as an inability to make up our minds in present conditions, so far as my delegation is con- corned I would be willing to have the words "The Committee wished to reserve its position", since it largely depends on a question of fact, as in note 2. (Australia): MR. PHILLIPS : / : Perhaps we could accomplish what we have in mind by changing the word principle" at the end of the first line to "requirement" . I do not think anybody has any real objection to the principle. It is just the question of whether it should be MR. GUNTER (US): We have some doubts about the principle and wish to reserve our position on the principle. MR. PHILLIPS (Australia) : Our minds are running on the requirement, and not the principle. THE CHAIRMAN: I think it would be reasonable to say that all delegat- ions were agreed that it would be convenient if all the Members/of the organization were members of the Fund, but there were doubts about whether it should be made a requirement. MR. PHILLIPS (Australia): That is right. THE CHAIRMAN: : I am not sure whether that does not constitute a principle. It would be, as a matter of expediency very helpful if everybody was a member of both. 15. F4 E/PC/T/C .II/QR/PV/6 MR. HELMORE (UK): I believe when we come to look at the Rapporteur's draft Report on Article 23 that the words there will be found generally acceptable to all the members of the Committee, and that these notes to the text might just be omitted. Can we return to this when we have looked at the Rapporteur's Report, and in the light of that deside whether an actual note to the text is necessary? THE CHAIRMAN: I do fool there is some merit in a case like this in having a note to the actual text. It differs rather from some other comments which are made on the text, because it does affect the whole basis of the text, and I think it would be valuable, therefore, to have a note to it, but we might return to the wording of the note after we have had a look at the Rapporteur' s/Report, since we may be able to just transfer from one place to the other the appropriate words. Would that be agreeable, that we return to Note 1 after we have dealt with the Rapporteur's Report on this matter? is the second note all right? THE RAPPORTEUR: It might be treated in the same way, Mr. Chairman. THE CHAIRMAN: I suggest we leave this then until we have dealt with the relevant note in the Rapporteur's Report. 16. E/PC/T/C. II/QR/PV/6 THE RAPPORTEUR: I suggest we consider whether we want to look at Article 21. I imagine not. lt is a non-controversial Article which I think we passed, as it stands, at our last meeting. I presume that stands. There is one verbal change which the United Kingdom Delegation suggested, which I incorporated. We agreed that verbally? MR. HELMORE (United Kindom): Yes. THE CHAIRMAN: Is that agreed? No one wishes to reopen Article 21? THE RAPPORTEUR: we come now to Article: 19, which is I believe the only one remaining, on which there are to my knowledge two points which I believe certain Delegations may wish to raise. MR. HELMORE (United Kindom): Before we go on to Article 19, which might be distinguished from the remainder of the Articles as being more a matter of general commercial policy, and less a matter arising out of the general exchange trouble, I wonder if it would be convenient for us, while he exchange clauses are fresh in our minds, to look at the Rapporteur's report on the Articles we have just dealt with, and keep Article 19 and the report on those Articles separate. THE RAPPORTEUR: I think there is very much to be said for that we shall be dealing with the whole system of thought together, which is very much casier. THE CHAIRMAN: That seems a useful suggestion to me. Is that agreecable to Delegates? Then let us turn to the Rapporteur's report. Shall we work through from Article 20 on page 8? THE RAPPORTEUR: I would suggest working, through from Article 20. THE CHAIRMAN: I suggest we take this paragraph by paragraph. I think it would probably assist Delegates if we asked the Rapporteur to read the paragraphs. It takes a little longer, but it make certain that people are familiar with it. MR. TUNG (China): I was requested by the Secretary to be present here as an observer. I do not know whether I am to be allowed to present my views to the Sub-Committee or in the full Committee. THE CHAIRMAN: I think the reason we asked the Secretariat to invite the Chinese Delegation to be represented here today was that they did put forward in a document certain proposals affecting Article 19, which the Sub-Committee 17. G.2 E/PC/T/C .II/QR/PV/6 considered at its last meeting. But it was felt that in fairness to the Chinese Delegation it would be wise for the Sub-Committee to have the opportunity of hearing the Chinese view expressed personally, and we did ask the Secretariat to invite the Chinese Delegation to be represented here. That, as I pointed out, affects Article 19. MR. TUNG (China): We have also suggested amendments to Article 20; and we also suggested certain additions to be inserted on Article 20 of the American Draft Charter. I do not know, how far the Rapporteur has taken consideration of our amendments to Article 20. The amendments suggested by the Chinese Delegation were circulated as document C.II/W./49. If I am permitted to speak here I would like to explain that briefly. THE CHAIRMAN: If you would allow us a moment we may be able to tell you, before you begin, how far the points that you have raised in the memorandum have in fact been provided for in the revised text. For instance, the first says point which you set out in that document/, "We suggest an amendment to paragraph 2" . I think it is correct to say that the point you make in that amendment is provided for in the revised draft. Therefore, if you could just allow us a moment we might be able to tell you what the position is with regard to the remaining amendments, and thus save your time and that of the committed. Could I ask the Rapporteur to comment on how far the present draft does embody the Chinese suggestions? THE RAPPORTEUR: I think that in our draft we have met the first point which the Chinese Delegation raise in their document on Article 20, paragraph 2. The Chinese delegation say that under the United States draft Charter the application of the measures for protecting the balance of payments would last up to 31st December, 1945. In our draft there is no distinction of period at all. The country can at any time impose import restrictions, both before or after a transitional date. In fact, there is no distinction between a past transitional period and a post transitional period. In the light of the criteria which we put down in paragraph 2 of our redraft of Article 20 the member decides whether, in accordance with those criteria, it should or should not impose restrictions, and it does that at any time. 18. E/PC/T/C.II/QR/PV/6 The second suggestion made by the Chinese Delegation, for the deletion of sub-paragraph (c) of paragraph 2 of Article 20 in the United States draft Charter, is a point that we have not met; because if I understand it aright, this means removing the right of a member to bring a complaint, and to get the Organization, in consultation with the Fund, to say that the restriction is being imposed in a way in which it should not be imposed, and to get the restrictions modified or withdrawn. The third suggestion made by the Chinese Delegation, for the deletion of paragraph 4 of Article 20 of the United states draft Charter, is really met in substance I think. At least, half of it is met and half of it is not met. I am not sure which half it is the Chinese Delegation wishes to delete. Paragraph 4 of Article 20 of the United States draft Charter says: ". . . the Member maintaining or imposing sucn restrictions shall apply them to all important products in a manner as nearly uniform as practicable and shall in no event apply them in such a manner as would prevent the continuous importation in minimum commercial quantities of any product (a) if imports of the product are supplied principally or in important part by any other member or Members, or (b) if imports of the product are important to the maintenance of the economy of any other Member engaged in exporting the product to the Member maintaining or imposing such restrictions." 19. H fols H- I.1 E/PC/T/C.II/QR/PV/6. In our draft we have made it quite clear beyond, all doubt that a country can select the imports for restriction which it wishes to import, and to that extent we have quite changed the balance of this suggestion in the United States draft Charter. On the other hand, we have maintained the idea that minimum quantities of the imports shouId be allowed in even when you are restricting, them. I think the answer is that on the three points, the first point is really covered, the second point is not covered -- and there is general agreement in the SubCommittee that it should not le covered -- and in the third point, one of the two ideas is covered, and the other of the two ideas is not covered. I do not know whether that is at all intelligible. MR. TUNG (China): What about the additional Article which he have suggested with regard to industrial development? THE RAPPORTEUR: I have said in any report that the work of the SubCommittee was based on the assumption that the problem of ensuring adequate support for industrial development, which was the subject of study by the Joint Committee of Committees I and II, would be adequately covered in other Articles. I think that was the assumption on which we based ourselves. THE CHAIRMAN: It should be noted in connection with that, however, that we did receive from the Joint Committee on Industrial Development a message asking us to make certain provision in the quantitative restrictions section for the position of a country going through a process of industrial development there that was likely to create balance of payments difficulties for it. The Committee examined that question, an provision has been made to cover that point in the relevant Article of this section. Therefore, I would feel that it would not be proper for us here to consider any further change relating to industrial development. It was the function of the Joint Committee to consider industrial development, and I believe it was proper for them to advise us of what provision they wished us to make. If the provision that they have asked us to make is not adequate, then I believe the fault lies with the Joint Committee, and we would not be, in any opinion, acting 20. I.2 E/PC/T/C.II/QRPV/6 within our rights in adding anything further for the purpose of providing for industrial development. I suggest, therefore, to the Chinese Delegate that he does not raise that matter here. If he feels it is unsatisfactory, I think the proper place to reopen it is either by reservation on the report of the Joint Committee on Industrial Develop- ment, or in the full session. MR. TUNG (China): May I raise one or two points arising out of the Rapporteur' s answer? ..s I understand it, in the draft there is no fixed date. It is the transitional period you are talking about. THE RAPPORTEUR: what I meant to say was that our draft Article 20 contains no transitional period at all. The rules are the same all the time. country can impose import restrictions to safegrard its monetary reserves and its balance of payments. It can impose them on its own initiative all the time. MR. TUNG (China): Until the goal is achieved? THE RAPPORTEUR: Until that is done. I am sure that point is met. But we do maintain, and have put a great deal of stress on, two points. The first is that the International Trade Organisation, in consultation with the Fund, can arrange, whenever it wants, for consultation between it and the member imposing, the restriction, and can suggest other ways in order, not to take them off, but in which it might meet the problem. Secondly, we have maintained -- and I think I am right in saying the Sub-Committee has attached quite considerable importance to this point -- a procedure whereby any country which can make a prime facic case for the ract that its commercial interests are being adversely affected by the action of the other member can make a complaint that the import restrictions are not necessary to the other member on balance of payments grounds, and when that has been considered by the Organisation, in consultation with the Fund, the Organisation can recommend the withdrawal or modification of the import restrictions, and if they are not withdrawn or modified, then the Organisation can release other Members from some of their obligations towards the country imposing the restrictions. 21. I. 3 E/PC/T/C .II/QR/PV/6. MR. TUNG (China): May I ask whether such a consultation is a previous or a simultaneous consultation? THE RAPPORTEUR: The consultation is to be normally previous consultation when it is a question of a country imposing import restrictions for the first time, which has not already imposed them, except that we say there that where that is impracticable, the country undertakes to consult as soon as possible after it has imposed the restrictions. In the case of a country which is already imposing restrictions on balance of payments grounds, the consultation is taken on the initiative, not of the Member, but of the Organisation, and the Organisation will ask the Member to consult at any time. MR. TUNG (China): We are opposed to previous or simultaneous consultation, for the folloiwng reasons. When we say that Members are affected, how do we know they are affected, until a certain measure has been imposed for a certain period of time? It is only when it has been imposed for a period of time that we can tell from the facts and statistics whether that Member's trade is affected. If we provide for previous or simultaneous consultation, a Member might put forward pretended reasons which we would have no means of checking. In principle I am not opposed to consultation, but I on opposed to previous or simultaneous consultation. In my suggested draft of Article 20, there is provision to the effect that after a certain period of time, any Member affected may bring up complaints. What is what I meant. MR. HELMORE (UK): I think there has been a misunderstanding here. There are two kinds of consultation which apply under this Article. The first is, broadly, the question of whether three should be balance of payments restrictions or not, and that is consultation with th Organisation and, through it, with the International monetary Fund. There we do aplly the procedure described by the Rapporteur. The other kind of consultation is where another Member considers his trade is unnecessarily damaged, and clearly that is subsequent consultation, because it is not until the 22. I.4 E/PC/ T/C .II/QR/PV/6 restrictions are on and the damage has taken place that he has any complaint to raise. First, there is the question of whether the application of restrictions is justified by the facts of a Member' s balances or reserves, and on that there are provisions as described by the Rapporter; but secondly, consultation on whether there is unnecessary change to the commercial interests of another Member takes place on the initiative of that Member, and clearly it is subsequent to the imposition of the restrictions. MR. TUNG (China): Thank you, but with regard to the imposition of restrictions, shall we consult with the Organisation, or not? THE CHAIRMAN: The requirements are that you should consult the Organisation beforehand, if it is practicable. If it is not practicable, then you undertake to consult them as soon as possible afterwards. Those are the provisions of the Article as at present drafted. MR. PHILLIPS (Australia): The Organisation -- not the other Members. THE CHAIRMAN: Discussions with the Organisation, and not necessarily with the other Members. MR. TUNG (China): How does the Organisation know the effect of any quantitative measures or even tariff adjustments? I am not opposed to the principle of consultation. I believe it is right. But if it is previous or simultaneous consultation, I think that consultation will delay the measures, and the Member affected may have to wait years to impose a measure that it wants to put through in weeks. THE CHAIRMAN: We have a big programme of work, and I think we should note the Chinese Delegate's point on this matter. It is a matter which has been discussed here. We realise some of the difficulties, 23. I.5 E/PC/T/C .II/QR/PV/6 and it may be necessary fur the Chinese Delegation, and other Delegations, to reserve their position on this. If we embark now on a discussion of this point, which has already occupied The Sub-Committee a considerable time, it will not be possible for us to go through the report of the Rapporteur on the matters which, as Chairman of Committee Iam very anxious to get finalised, even though we are aware it may entail some reservations. Could we note the Chinese Delegate's point and invite him to reserve his position on that? MR. TUNG (China): Yes, I will reserve my position, and also on the additional Article. THE CHAIRMAN: We will now go through the report on Article 20. Paragraph 1 reads: (The Chairman read Paragraph 1) Is there any comment on that paragraph? If not, I take it that it is agreed. (Paragraphs 2, 3, 4, 5, 6, 7, 8 and 9 were read, and agreed) 24. J fols. J. 1. E/PC/T/C.II/QR/PV/6 Pragraph 10 was read by the Rapporteur MR. HELMORE (U.K.): In the last line but two, should not "Member" be in the singular? THE RAPPORTEUR: Yes, I beg your pardon. THE CHAIRMAN: That correction will be noted. In the sixth line of paragraph 10 - "agreed between the member and the organization". Paragraph 10 agreed. Paragraph 11 was read by the Chairman. MR. PHILLIPS (Australia): May I make a drafting suggestion? The second and third lines seem to me to carry an implication that a member can complain about another member because it is trying to safeguard its position. Mr.Phillips then read a suggested alteration to this sentence. THE CHAIRMAN: It would be better to say "that another Member was applying restrictions in circumstances which did not warrant.." or "were not necessary". MR. PHILLIPS (Australia): Anything of that kind. I will leave it to the Chairman. THE RAPPORTEUR: What about "applying restrictions unnecessarily"? MR. HELMORE (U.K.): I would prefer the suggestion made originally by the Australian delegate. THE CHAIRMAN: It seems to me that a complaint must refer to an action. I think Mr. Neade's suggestion that another member was applying restrictions unnecessarily, or applying restric- tions when they were unnecessary to support its external balance of payments, is better. MR. HELMORE (U.K. ): Yes. THE CHAIRMAN: Then the first sentence would read: "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." Is that amendment accepted? Any other comments? - 25 - J. 2. E/PC/T/C. II/QR/PV/6 MR. LOKANATHAN (India): I have a little difficulty with the second sentence. In the first sentence we allow a member to bring a complaint, but only if its commercial interests are affected, on the basis that the other Member is using restrictions which are net necessary to safeguard its finan- cial position. If that is the criterion, we ought not here to bring a new criterion that its own commercial interests should be adversely affected because it is quite conceivable that its own commercial interests might not be adversely affected and yet, on a point of international organization, it is open for the Organization to say that such and such a member is not entitled to use restrictions because they are unnecessary. THE CHAIRMAN: I would remind the Indian delegate that this point was discussed very fully. Members will recall that that condition arose from the suggestion that there was some obligation on a complaining member to establish some- thing of a case. It was pointed cut that they could not be expected to show that a country was or was not in balance of payments difficulties but, in order to protect the Organization from trivial complaints, and in order to place some obligation of proof on the complaining member, it was felt that the last that should be required of then was that that they shouldshow/what another country was doing was in fact imposing some harm on them. While I appreciate the point made by the Indian delegate, I would point out that I would not like to see the matter re-discussed here. MR. LOKANATHAN (India): I am not concerned with the substance at all unduly. My only point is that in one case we allow a member to complain on one ground, and the complaint itself is to be judged on, an entirely different ground. My objec- tion is more formal than substantial. I am not really concerned with the substance of it. - 26 - J.3. E/PC/T/C. II/QR/PV/6 MR. VIDELA (Chile): I think there are two questions. One is to open to a member - THE CHAIRMAN: Would you excuse me, Mr. Videla, for one comment? Is not this the same case? I do not think there is any difference. The first sentence in paragraph 11 establishes the right to complain. The second sentence establishes the may in which the complaint shall be made, or the way in which it shall be considered. That would mean that the right to complain is untrammelled but the Organization is instructed in the second sentence not to take any notice of the com- plaint, not to consider the complaint unless it is satis- fied that the complaining Member has made out a crima facie case that its commercial interests are adversely affected. - 27 - Mr LOKANATHAN (India): Do not think I am pressing this matter unduly, but I am only saying that in that case it is the commercial industry not so much of that complaining member but of any other members. That is the real point. We are concerned with two matters: one is the international aspect and the other is the complaining member's own case. I do not want to press it, however. THE CHAIRMAN: Could we leave that point for later examination? Mr LOKANATHAN (India): Yes. THE CHAIRMAN: Anything else on paragraph 11? Mr PHILLIPS (Australia): One very short point about 8 lines from the and of the paragraph. You remember, we changed the Article to read "such other members of the Organisation will be released from such obligations", I wonder if we should use the same phrase here - "such instead of "the" in the 8th line of page 12. THE CHAlRMAN: Yes, The 8th line from the top of the page should now read: or modify them appropriately"-. The word "the" should be deleted and the word "such" inserted; so that it should road "such other Members of the Organisation would be released from such obliga- tions towards the Member in question as the Organisation might appeared. That is In accordance with the wording of the Article. Is that agreed? Anything else on paragraph 11? Paragraph 12? Mr LOKNATHAN (India): Mr Chairman, this is a vital section for us, and I should like to know whether my interpretation is correct, because it is on that that our approval or disapproval should rest. There are twoquestions, that I want to raise for my own clarification. Now we have eliminated this transition period here. Therefore if a country wants to take advantage of what is contained in paragraph 12, then it should have to satisfy the Organisation that it needs all the restrictions which are permitted under certain safeguards. It will have to prove all that. If there were a transition period, of course that proof would not be necessary. The general proof would be one established under the fact that the I.N.F. has permitted the tran- sition period to continue. Therefore I ask myself whether it covers enough safeguard for countries which, without too much proof being called for, would be in a position to select imports. It seems 28. E/PC/T/C.II QR/PV/6 to me it is a very real difficulty for several countries, which, unles there is a transition period at least as a safeguard, would be subjee to a severer standard. I do not know whether I have made myself clean The point is this: if there were a transition period for four years, let us say, then it is obviously entitled to use those restrictions and therefore it can use the idea of paragraph 12 without much diffi- culty; but, since the transition period will not be in operation so far asthis Article is concerned, then a country, if it wants to be selective in its imports must necessarily conform to all the somewhat justifiably rigorous conditions which are imposed on it. THE RAPPORTEUR: Mr Chairman, as I understand the position, it is this: I think the point raised by the Indian delegate is really covered. The country in question would not have to obtain the prior approval or agreement of the Organisation or of the Fund. It would have itsel to believe that it was in a financial position which would not permit it to allow the free imports of both capitaI goods and consumption goods. If it itself judged that it was not in such a position, then it could put import restrictions on, and it could put them on as selectively as it wished, subject only to the fact that if another member said "You are doing it in a way which unnecessarily damages our interests", it would be prepared to consult with them, and subject also to the procedure that another member could bring a complaint the it was not necessary for the country inquestion to restrict imports because it could afford all imports; but there is no question that, whether during the transitional period or hereafter, if the country in question itself considered that it was not in a financial position to afford both types of imports, it could stop one type of import without stoppping the other, subject, as I say, both to the consultati as to whether it was doing it in a way which unnecessarily damaged the other country's interests and subject to the procedure of com- plaint that it did not need to restrict either type of imports because it had the foreign exchange. Mr LOKANATHAN (India): I understand that point, Mr Chairman. A little unfortunately, I myself helped in the drafting of that provision. It is a pity. But the other question I should like to ask is, what 29. 3 ssssl we do? It does not take away the right of any country to have the transition period under the I.N.F I think that is a proper safeguard, because as long as that transtion period lasts, then they can still use the principle in this paragraph. Is my understanding correct? That is to say, supposing the transition period under I.N.F. is available, then so long as the same restrictions are allowed in that transition period, the imports could still be selected. MR. HELMORE (UK): Mr Chairman, may I have a shot at this one? The two things, it seems to me, are essentially different. Nothing in this Article affects a Member's rights under the I.M.F. We are not altering the articles of agreement of the I.M.F. What this Article says is that if a country has not got or expects that it will not have the external resources to pay for all the imports thatwould otherwise arrive, it can select the ones that are most suitable to its domestic employment reconstruction development or social polices, and that right to select, as long, as the country is in the balance of payments diffi- culty or, as I have described it, is without lilmit in time. Mr LOKANATHAN (India): I have no further comment to make on this, except to say that we may have the same position in the transition period, because I personally believe that for us from our point of view -- and not morely india but various countries which are in a similar position -- what is contained in the American draft Charter would be rnore helpful to us; but, of course, at this stage it is certainly not possible for me to introduce a new factor; but I do reserve our position. HE CHAIRMAN: We will take a note of that. Mr VIDELA (Chile): Mr Chairman, I think the machinery for consultation or sanctions is already described in paragraph 11. HE CHAIRMAN: Yes. Mr VIDELA (Chile): Therefore perhaps the Indian delegate or other members from will not need to make any reservation if we delete the words/"subject to consultation with other members" up to the end, because really all this machinery is covered already in paragraph 11. If a country thinks that. any measure is unnecessary, it has a right to apply to consult, and so on. Then these three lines at the end of the paragraph are not really clearing the position; on the contrary, I am doubting the 30. K-4 E/PC/T/C . II/QR/PV/6 position because the interpretation made by the Rapporteur is the right one, but it does not say that here. I am referring to the question of consultation. It says "subject to consultation". But when will the consultation arise -- before the taking of the measure or after the taking of the measure? I think it is not very clear - these three last lines. 31. L L1 OM E/PC/T/C .II/QR/PV/6 THE RAPPORTEUR: Yes. In the paragraph in Article 20 it says in respect to this selection of imports that the Mebers shall avoid unnecessary damage to the commercial interests of other Members and will accept an invitation to consult with any other Member which considers its interest iwll be so damaged. This does not perhaps properly record that. MR. VIDELA (Chile): Paragraph 11? THE RAPPORTEUR: Yes. Shall we leave it out here? MR. VIDELA (Chile): That it should be open to any Member to bring a complaint, and so on. THE RAPPORTEUR: Yes, it is really already covered. MR. VIDELA (Chile): It is not necessary to put in again the same machinery. THE CHAIRMAN: I think the point of the Chilean delegate seems reason- able. Paragraph 11 covers adequately machinery for consultation, etc, and I think it is unnecessary to repeat it in paragraph 12. Would it be agreeable that we delete the words from "subject" down to "members" in paragraph 12? All right, the words from "subject" to "members" deleted. Any other comment on paragraph 12? MR .BRONZ (US): Mr. Chairman, we have for some time had some misgivings about the machinery language in the provisions to which this Report refers, but there has been a lot of difficulty about trying to pin it donw more precisely, and I wondered whether another sentence in this Report might not help in that respect. What we have in mind is this: The reason for putting in the clause, as has been expressed by a number of delegations, was to meet a situation like a country proposing a general programme of reconstruction involving modernization of machinery and which might rant to import capital goods, and in order to do that, because of its balance of payments position, would have to restrict the import of consumer goods; and, similarly, an undeveloped country that wanted to develop industry and had 32. E/PC/T/C.II/QR/PV/6 to spend a lot of foreign exchange to get imports of machinery night want to restrict the import of consumer goods; but the language of the section itself might be mis-used in a situation for protectionist reasons, to exclude imports which might compete with domestic manufacture in a particular field, which would have nothing to do with the general programrne of development and reconstruction of the country. I wonder whether we could include a sentence in this paragraph to that general effect, that the intention of this clause is to permit of discrimination between capital and consumer goods, but not for general protectionist reasons? MR. HELMORE (UK): Mr. Chairman, I think we should be, very unwise to try to explain in this paragraph of the Report all the various reasons which night be adduced. It is not only reconstruction policies that we are talking about here. It is also social policies, and if we really set ourselves out to explain just how this Article might operate I think we should be here for another week. THE CHAIRMAN: After all, the essential point is that given a situation in which the limitation of imports is judged to be necessary in accordance with the other provisions, this is to protect the right of a country in doing that to choose the imports which it considers necessary in the light of matters which are essentially domestic in their character, and I feel pretty much as Mr. Helmore does, that while I agree your interpretation of the discussion is accurate, in that those two situations are the ones which have been most frequently developed here as an illustration of the need for a provision of this sort, I think if we made provision for/them you would probably find there were others and/that our discussion might run on considerably. MR. BRONZ (US): Well, supposing we try to state it negatively, and say that it as not intended that this Article would be used where 33. L3 E//PC/T/C.II/QR/PV/6 the only domestic policy involved was one of the protecting of domestic industry against competition from foreign goods. MR. VIDELA (Chile): You have to have to view whole situation. MR. LOKANATHAN (India): This is a very difficult question, Mr. Chairman. I do not think we can dispose of it in a few minutes. I think it raises a number of issues. I agree that it is a very important Point, but it is not a matter which can be agreed to in two minutes or even an hour. MR. HELMORE (UK): I would really make an appeal to the United States delegate not to press this point. The commitment that a country is going to undertake and the situation which any country will have to consider in the light of the Charter as a whole will be decided by what Article in the Article and not by what is which Report, which is to give a description to the public of what we have been doing, and I should have thought that to re-open this question at this stage might destroy what I think in this Sub-Committee I can call cate somewhat delicate balance between the various views that have been expressed, and it really would be better to leave it as wee it as we have it. I The Article is going to be made public. people can see the translation ai taneaohof hthhitot ougt inhe wordsof the tdf thcgeoste wwe mwn t anmsdhad uch btter leave i.t at hat, IDELA r(Clh): Hear heari:ea BRONZSw.S)2U t In ew ov ice oihoctions beweaisewe will..d rop the int nowl, apthughiw ghitconceivably want to re-raise it n Coitmme.eII. THE CHAIRMAN : Any thing else on this paragraph? MR. (Australia): Just a small drafting point. Can we leave out "on these grounds". I am not clear rhat the words mean. THE RAPPORTEUR: Yes. MR. HELMORE (UK): I Would much sooner make it clear they meany mean and say "On balance of payments grounds". 34. E/PC/T/CII/QR/PV/6 MR. PHILLIPS (Australia): Yes. THE CHAIRMAN: Delete the word "these" in the second line of Paragraph 12 and substitute "balance of payments grounds" . Anything also on Paragraph 12? I take it Paragraph 12 is agreed. Paragraph 13? (Paragraph 13 road and agreed without comment) . 35. N.1 E/PC/T/C.II/QR/PV/6 THE RAPPORTEUR Paragraph 14. "It was generally agreed that the principles and procedures for restricting imports under 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 organization. It should, however, be provided that the disclosure of information which would hamper the commercial operations of such a State trading organization would not be required." THE CHAIRMAN: Are there any comments on paragraph 14? Mr.HELMORE (United Kingdom): I have what is simply an editorial matter. You might wish to transfer to the end of paragraph the note on the text. I have no views on that, however. It is just whether we want the comment in the report of a comment at the end of the text. THE RAPPORTEUR: We could leave that, to bring it in line with other reports. MR. HELMORE (United Kingdom): I would like that left to be handled purely as an editorial question. THE CHAIRMAN: "[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]" I presume the square brackets will be removed in the same way as from the Article itself? THE RAPPORTEUR: Yes. MR. HELMORE (United Kingdom): Could we insert the words "in varying degrees", which come from the paragraph we put in this morning, so that it would - read "with which the Members would be confronted in varying degrees." THE CHAIRMAN: Is that agreeable, to add after confronted the words "in varying degrees"? THE RAPPORTEUR: "The Sub-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 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 capital goods unless it imposes regulations in respect of certain classes of 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 there suggested that in interpreting this 36. A.2 E/PC/T/C.II/QR/PV/6 "principle due regard should be had to any commitments or other circumstances which may be affecting a country's needs for reserves. It follows that a country which 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." THE CHAIRMAN: Are there any comments on paragraph 16? MR. HELMORE (United Kingdom): I believe that at the final meeting of Committees I and II the precise wording of that message was slightly amended. May we ask the Secretariat to be sure that the quotation is correct? I think one or two other members here were present at that meeting, when there was no alteration in the substance and the note is perfectly in, order. THE CHAIRMAN: With that request to the Secretariat can we take it that paragraph 16 is approved?. "17. In paragraph 1 of the draft Article 20 it is recognized that 'Members may need import restrictions as a means of safeguarding their external financial position ... particularly in view of their increased demand for the imports needed to carry out their domestic .... development .... policies'; and in paragraph 3 (c) of the draft Article 20 it is laid down that 'the Organization , . . shall' not recommend the withdrawl or general relazation of restrictions on the grounds that the existing or prospective balance of payments difficulties of the Member in question could be avoided by a change in the Member's domestic development policies'. Thus it is clear that a Member could not be required to modify its domestic develop- ment plans on the grounds that they imposed a strain on its balance of payments and this made some control of imports necessary." Are there any comments on paragraph 17? . MR. KAFKA (Brazil): There is a drafting matter. Could we strike out the word "some" in the last sentence? THE CHAIRMAN: Yes I do not think it has any meaning. Is it agreed we delete the word "some" from the last sentence, making it read ". . and this made control of imports necessary"? THE RAPPORTEUR: "this" there should be "thus" - "and thus made control.". THE CHAIRMAN: Are those two amendments in the last sentence agreed? Is there any other comment on paragraph 17? Then I take it it is agreed. 37. M. 3 E/PC/T/C.II/QR/PV/6 THE RAPPORTEUR: "18. In paragraph 4 of draft Article 20 it is expressly laid down that 'a Member may select imports for restriction in such a way as to promote its domestic ...development ... policies', so that a Member could if necessary restrict the import of certain consumer goods without restricting, the import of capital goods." THE CHAIRMAN: Are there any comments on paragraph 18? MR. KAFKA (Brazil): Could we strike out the word "certain" in the last sentence? THE CHAIRMAN: Delete "certain" to make it read '. . the import of consumer goods." Is that agreed? Is there anything else on paragraph 18? MR. VIDELA (Chile): Is "without restricting the import of capital goods" imperative? I do not know English very well, but it m seems to me that when if you say "without restricting the import of capital goods" it means/there is a restriction on consumer goods it also applies to capital goods? THE RAPPORTEUR: Oh no. THE CHAIRMAN: It is quite all right. MR. HELMORE (United Kingdom): I think in the light of the comment by the United States Delegation we might consider whether it would note be better to leave out the explanation and just say: "18. Moreover, in paragraph 4 of article 20 it is expressly laid down " -- down to the end of the quotation and omit the end. R. VIDELA .(Chile): I think that is better. MR. BRONZ (United States): I think we prefer it as it is. THE CHAIRMAN: It does seem to me it has particular relevance to the question being dealt with in the report here. We have a message from the Industrial Development Committee, which places before us certain requests to make Certain provisions. I think it is proper for us to explain in some detail the way in which those requests have been met. I think the point here is not a general one explaining paragraph 4 Article 20. It does in fact meet a point put forward from the Industrial Development Committee and therefore I think it is proper to include that explanation. THE RAPPORTEUR: VI may say it is the message from the Joint Committee which contains the word "certain." 38. E/PC/T/C. II/QR/PV/6 MR. HELMORE (United Kingdom): But is it,Mr. Chairman, because I believe those were the words in the message from the Committee which were altered. I do not press my point at all. It is perfectly all right as it is. THE CHAIRMAN: Paragraph 18 is agreed then, with the deletion of the word certain." THE RAPPORTEUR: "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 to restrict only to the extent necessary to safeguard its monetary reserves. Up to this point it would have to 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." MR. VIDELA (Chile): I want to make my reservation on this paragraph. THE CHAIRMAN: The Delegate of Chile notes that he wishes to records his reservation on paragraph 19. Are there any other comments on this paragraph? I take it that, with that reservation, paragraph 19 is agreed. (Paragraph 20 and 21 were then read and agreed to without comment). THE CHAIRMAN: That completes the section of the report which deals with Article 20. Before we pass to the next stage of the business our Rapporteur has a personal statement to make. THE RAPPORTEUR: I am extremely sorry that it should be so, but the work which I have to do in another office in this town makes it quite impossible for me to carry on. When I accepted the post of Rapporteur of this Sub-Committee I imagined that it would all be over by yesterday. It would be quite impossible for me to be here this afternoon or tomorrow, or indeed at any time for the rest of this week or on Monday. Even after that it would be almost impossible. N. fols 39. N1 E/PC/T/C.II/QR/PV/60 I am extremely sorry not to see this job through, having embarked on it. All I can say is that I have get to the stage when I have presented a complete report on all the Articles. I think it is quite inevitable that I should, as gracefully as possible, withdraw. THE CHAIRMAN: Well, gentlemen, I do not think we can do anything: but express our very great regret that Mr. Meade is unable to carry the task which he has performed so admirably through to its final stages. I know, you would wish me to tell Mr. Meade, however, that we are exceedingly grateful to him for the remarkable skill and devotion with which he has carried through his task here. We could not possibly, I am certain, have found a Rapporteur who would have fulfilled the obligations of such a position so perfectly; and I hope Mr.Meade will know, therefore, that we accept the inevitability of his departure with very great regret and with the must sincere appreciation of what he has been able to do for us; and we are comforted at his departure by the knowledge that the job has been so well done that to whoever falls the task of completing the mechanics of this job will be concerned only with mechanics, because he will be taking over a job practically completed in all its respects. MR VIDELA (Chile): I very much regret what has happened. May I suggest that we send a special message to his boss? THE RAPPORTEUR: I am deeply grateful for what you say, and very grateful" indeed to the Chilean delegate for his words. I am afraid it is no good sending; a message to my boss. My boss has made it quite clear that no such message would avail. (Laughter). In a sense - I will admit frankly - I am my own boss in this matter. (Laughter). But I have in fact a duty to perform for my bosses which I have to perform by a certain date, and it would be no use suggesting to them that it should not be performed by that date; and I have a certain meeting this afternoon which is starting it, and unless I attend it it simly cannot be done. I really think it is inevitable, much as I appreciate the very kind thought of the Chilean delegate. MR HELMORE (U. K.): Could I just say shortly that my Government is extremely sorry that this unfortunate change (as I think I can say, in the light of the general views of the Committee) should have to take place; and, whether Mr. Meade is his own boss or not, it will give me very great pleasure to convey to the proper authorities what has been said about his work, at this Committee, THE CHAIRMAN: Thank you. I will be grateful if the members of the Committee will 40 N2 E/PC/T/C.II/QR/PV/6 make suggestions as to how we can look after the final stages of the Rapporteur work. It will be necessary for someone to outline the reports to the full Committee and to look after any changes which may be suggested in that Committee and a number of other miner tasks that it would be desirable to have .some person or persons responsible for so would any delegation like to suggest someone who could take over? MR KAFKA (Brazil): Mr Chairman, may I suggest that the delegate from the United States, who has been working very closely on this, might take over the job? THE CHAIRMNA Is that areeabgle to the Sub-Comitttee (Agreed.) And is it agreeable to th3 Unietd States delegate? MR GUNTER (US)A: Yes. THE CHAIRMAN: Would you take the opportunity, if you can, to bring the delegate of the United States up to date with his duties? TEH RAPPORTEUR: Yes. HE CHAIRMAN: WIat is the wish of the Committee? He still have a number of chapters of the report to deal with, and I think also we still have some matters to consider arising out of Article 19. The position this afternoon is that there is a meeting of the Drafting Sub-Committee on State Trading at 2.30, which I understand is likely to be formal only. At 3 I think there is an informal meeting between the Chairman and Rapporteur of the Procedures and Tariffs Sub- Committee of Committee II and representatives of those delegations who were not members of the Drafting Sub-Committee for the purpose of enabling the Chairman and Rapporteur to inform those delegations of the progress of the work and to answer any questions, so that when the question comes before the full Committee tomorrow they will be fully informed and we may be able to save some time in discussion. That is likely to continue, I should think, for at least a couple of hours. Then I think there is a Heads of Delegations meeting at 4.30. Tomorrow Committee II. will be meeting. Can we meet this afternoon? Are there any of the delegates who would be affected by the Drafting Sub-Committee on State Trading or by the informal discussion arising out of the Procedures-Committee MR KAFKA (Brazil): I shall have to be present for a short while at the Procedures Sub-Committee meeting. On the other hand, my only interest here is in Article 19 so perhaps we could dovetail this somehow. THE CHAIRMAN: Could we meet at 2.30, and we could leave till fairly late the discussion of Article 19, that is, until after we have disposed of the other 41 N3 E/PC//T/C.II/QR/PV/6 matters; and by that time the Brazilian delegate would have returned. MR KAFKA (Brazil): You would start with the other Articles, then? THE CHAIRMAN: We would continue with the report and dispose of that and with 22, 23 and so on, and we will come back to 19. MR KAFKA (Brazil): You would perhaps call me from the Procedures Sub-Committee when you come to Article 19? THE CHAIRMAN: Yes, we will let you know. Now, is that agreeable to the Committee? (Agreed.) MR TUNG (China): I will be on the State Trading Drafting Committee, so I will not be able to come. THE CHAIRMAN: I think we can meet your difficulty in the same way. I understand that is likely to be a very short meeting., and we would not come on to Article 19 until some time later. We will inform you when Article 19 is coming under discussion. MR TUNG (China):, Thank you. THE CHAIRMAN: Then we will adjourn now until 2.30. The meeting rose at 12.50 p.m. (For Verbatim Report of Afternoon Session, see E/PC/T/C.II/QR/PV/6 - Part II). 42 O-1 E/PC/T/C.II/QR/PV/6 - Part II The meeting, resumed at 2.30 p.m. THE CHAIRMAN: Gentlemen, we pass now to the section of the Report dealing with Article 21. I suggest we proceed as before and take this paragraph by paragraph: " 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 general rule being listed in the subsequent Articles". Is there any comment? I take it that this paragraph is approved. Now paragraph 2. Is there any comment on paragraph 2? Mr VIDELA (Chile) : I do not know whether to raise this particular point in this part of the discussion. The draft report of the Subcommittee on the matter of quota preferences is still under study on the small Subcommittee; but I think we have to leave this part of the Article 21 open, when the Subcommittee will reach a conclusion and will present to Committee II the decision or the work done. THE CHAIRMAN: I think that is correct. The report of the treatment of preferences in the form of quotas will come back to the main Committee, and if it is the opinion of any delegate when he has examined that report that there remains the necessity to deal with those preferences in the form of quotas in any way other than that provided for in this section, it will be open to him to raise it in general Committee or to reserve his position on it. Mr VIDELA (Chile) : I may add that at the present moment the Chilean dele- gation is satisfied with the work of the Subcommittee, because, as you . know, Mr Chairman, there are two parts involved: one is the inter- relation between the Empire countries, particularly Australia and New Zealand and the United Kingdom, and the other part the interrelation between the South American countries as exporters of meat. I would not go further until we have reached that agreement. THE CHAIRMAN: Well, it is quite clear that the Chilean position is such that it would be completely open to the Chilean delegates to raise the matter in relation to quotas if he thinks the report of the Committee dealing with preferences in that form is in any way inaccurate. 43 0-2 E/PC/T/C.II/QR/PV/6 Mr VIDELA (Chile): Thank you: THE CHAIRMAN: Is there any other point? Mr CLARKE (UK): What about these square brackets in 2 (c)? THE CHAIRMAN: I think they can be omitted. They were net in previously and I think largely because the form of the paragraph was different. Is it agreed that we can delete the square brackets in sub-paragraph (c) of paragraph 2? That is agreed. The square brackets are removed. Is there anything else on paragraph 2? Then I take it paragraph 2 is agreed, Paragraph 3. Is there any comment, I take it, then, that, with due recognition of the typist's error, we accept paragraph 3. Is that agreed? That is agreed. We will take 23 next, as it is next 5 the Report, I think we will proceed straight through. Article 23, paragraph 1. Mr HELMORE (UK) : I take it that the typing errorhas been picked up; in the last complete line of 1 it should be "inevitably" not "inevitable". THE CHAIRMAN: I take it that that paragraph 1 is agreed, Paragraph 2. I think this is a point that may require some modification, in view of the views which have been expressed this morning. I think perhaps it would meet the point if it were said: "The problem would be much sim- plified if all members of the Organisation were also members of the International Monetary Fund". I do not think there would be any dis- agreement from that Suppose we delete the next paragraph and then say: "However, some delegations felt that it would be necessary to allow freely for independent membership of the Organisation and the Fund". If it is desired, we could put the wide agreement in the first, sentence and say: "There was wide agreement: that the problem would be much simplifed"- Mr LOKANATHAN (India:) Also there are other delegations which are unable to make ulp thire minds on this matter new whether there should be common membership or whether there shuld be equal membership. We should like that to be left over for the present. THE CHARMAN:I Mr Helmore suggested that we might in fact take the second sentence so far as to say expressing a general view, that doubt was expressed as to whether it would not be necessary or O-3 E/PC/T/C.II/QR/PV/6 whether it may not be necessary to provide or to allow freely for independent membership. Mr HELMORE (UK).: I think my words were that the Committee came to no decision: there was no final decision. THE CHAIRMAN: Might I suggest this: "It was agreed that the problem would be much simplified if all members of the Organisation were also members of the International Monetary Fund. The Committee came to no decision, however, as some of the delegations Considered that it may well be necessary to allow freely for independent membership of the Organisa- tion and the Fund". Mr HELMORE (UK): I think, Mr Chairman, if you put in "The Committee came to no decision on the quest on of requiring common membership then we have expressed the thing, to give general effect to what was a decision on which people were not adopting violent points of principle but were genuinely troubled about how to deal with this. Mr Chairman, there is a consequential amendments I think, if we could now bring up paragraph 4. THE CHAIRMAN Can we just finish that and see if we have got agreement on that first. The suggested paragraph now roads: "It was agreed that the problem would be much simplified if members of the Organisa- tion were also members of the International Monetary Fund. The Committee came to no decision, however, on the question of requiring common membership, as some of the delegations considered that it may well be necessary.. to allow freely for independent membership of the Organisation and the Fund". Is that acceptable to delegations? Mr HELMORE (UK): I think that would be acceptable to the United Kingdom, Mr Chairman, if we could new the paragraph 4 as paragraph 3, beginning "Consideration was therefore given"-. THE CHAIRMAN: I think the Australian delegation were concerned about this question. Would that wording be acceptable? Mr PHILLIPS (Australia): I think so, but I should just like to look at i.t (After a pause:-) We felt perhaps it should be a little stronger than "it would be desirable"; but I do not want to press that point. THE CHAIRMAN : "it may well be necessary"? Mr PHILLIPS (Australia): "it may well be necessary", yes, that would O-4 E/PC/T/C.II/ QR/PV/6 THE CHAIRMAN : Are there any other comments on that? Then I take it that that paragraph is approved. I understand the United Kingdom delega- tion suggests that we take paragraph 4 before paragraph 3 Mr HELMORE (UK): I have said my approval of paragraph 2 as amended was rather contingent on moving up paragraph 4. THE CHAIRMAN: Let us take it in that order. There would be some inci- dental alteration to paragraph 4 as it apears here? Mr HELMORE (UK): Yes; the first "also" I suggest should become therefore, and the second "also" in the second line should be omitted. THE CHAIRMAN: "Consideration was therefore iven to the question whether special provision should not be made for a country whichwished to become a Member of the Organisation without becoming a Member of the Fund". That becomes paragraph 3, Is that all right: is that agree- able? The new paragraph 3 is agreed. Now paragraph 4. Is there any comment on that? Mr HELOMRE (UK): Mr Chairman, may we at this point turn to the notes on Article 23 which were left over in the light of that discussion? THE CHAIRMAN: I am just wondering whether the sentence that con- cludes the new paragraph 3 should not also be added to the new paragraph 4. (UK) Mr HELMORE: Mr Chairman, I wanted to suggest that we should say: "With referecne to the paragraph in square brackets in paragraph 3, see the report on Article 23, paragraphs 2, 3 an d 4", or paragraphs 2 and 3". I think then we avoid repeating ourselves. THE CHAIRMAN: Yes. Will the delegates adopt the reference. It is on page 34 of the report. At present it reads: "Some delegations wish to reserve their position" &c -" on the principle that Members of the Organisation should also be Members of the International Monetary Fund". Now, Mr Helmore, will you just read out how you suggest it should read. Mr HELMORE (UK): I am just writing it down, I hope correctly this time, Mr Chairman", With respect to the words in square brackets in paragraph 3 reference should be made to paragraphs 2 and 3 of the report covering this article" Mr Chairman, I would hope that that -5 E/PC/T/C.II/QR/PV/6 reference back to the report and to fact that the words in square brackets would satisfy both sides of the House, since we say in the report that the Committee came to no decision on this point. THE RAPPORTEUR: Are you proposing that the second item in the notes remain, or could it be deleted? Mr HELMORE (UK): I think the whole , of the note could be deleted. HE CHAIRMAN: Substitute the new note for notes 1 and 2. That seems to me to meet the case. Are there any further comments on those notes? Then shall we refer back to Article 23, paragraph 4. Is it necessary to add anything at the end of paragraph 4 similar to what is at the end of the new paragraph 3? Is it necessary to make any reference to a review of this question? THE RAPPORTEUR: This definitely is to be provided for in any event. THE CHAIRMAN: Yes. Paragraph 5. Is there any comment on this para- graph ? Mr PHILLIPS (Australia): A small point about 7 lines from the bottom: The Fund could not be frustrated"-. Would that be "would" or should" ? THE CHAIRMAN: "would" instead of "could"? Mr PHILLIPS (Australia): Yes. THE CHAIRMAN: Is that acceptable - yes. Anything else on this paragraph? Then I take it paragraph 5 is agreed. We come to Article 23. Mr CLARKE (UK): Mr Chairman, I think there is no reference in the report to draft paragraph 2 of the draft Article about members agreeing that they will not seek by exchange action to frustrate the purposes of the Charter, and vice versa. We do not feel particularly strongly that it should go into the report, but I do not think we should leave it unnoticed. THE CHAIRMAN: It may be that is covered by the first sentence of 5, the acceptance of that obligation. r CLARKE (UK): Then let us leave it as it is, Mr Chairman THE CHAIRMAN: I think so. Mr. LUTHRINGER (I.M.F.): Mr Chairman, could not that be well covered at the end of the first paragraph of the report by saying: "It is 47. O-6 E/PU/T/C.II/QR/PV/6 further desirable tnat the members agree that they should not try to use one organisation to frustrate the other". THE RAPPORTEUR: Can I say: "It was widely agreed' that members should not seek by exchange action tofrustrate the purposes of the Organisation or the Charter"? THE CHAIRMAN: I think that would probably be sufficient if you just said that - that members should agree. THE RAPPORTEUR: "It was widely agreed that members should undertake"- ? THE CHAIRMAN: Yes, add that to paragraph 1 or a short paragraph to follow Paragraph 1. Mr PHILLIPS (Australia): A new paragraph. THE CHAIRMAN: I think it would be better in a new paragraph, since the first one is not in that form. We make that new paragraph 2 and alter the others accordingly: 3, 4, 5 and 6. Now let us look at Article 22. This is in a separated document - document 64 add 1. Take paragraph 1. 48. E/PC/T/C .II/QR/PV/6 THE CHAIRMAN: Any comment on this paragraph? It is practically a quote from the relevant Article. MR. HELMORE (UK): Yes. There is one point in which it is not a quote - a point which I raised this morning. Paragraph (d)(ii) refers to a country ,whose economy has been disrupted by war. I think we should repeat that word in the Report. In Paragraph 1(c) we refer to a Member whose economy has been disrupted by war. I think we meant to say a Country. And, Mr. Chairman, I am bothered from time to time on an editorial point. Here we are writing a Report on all these Articles, and at the end of Paragraph 1 (d) we make a reference to an Article. I think it would be desirable, if we could, to make a reference to the paragraph of the section of the Report. That is to say, the Report should, as far as possible (it is not always possible) refer to the Report,and the Articles to the Articles. THE CHAIRMAN: Is that possible in this case? Is this note the paragraph in the Report that deals with it? MR. HELMORE (UK): No. THE CHAIRMAN: Yes, I see - "See Paragraph so and so of the Report" - or paragraphs. Well, we can leave that to be filled in - "See.Paragraphs x, y and z of the Report." MR HELMORE (UK): I think itwould be preferable to do that, THE CHAIRMAN: Yes. MR. PHILLIPS (Australia): Another very small point on (b): "A group of territories which may have" should be "'which have". MR. HELMORE (UK): Yes. And there is a rather odd word in para. 1(c) . I am not quite sure what is the significant of the word "now" - "should now have a closing date" . I think it should be should have". THE RAPPORTEUR: Yes. I stumbled over that when I was reading, it. MR. HELMORE (UK): I think it is probably a reflection of an appalling argument that went on behind closed doors, and the Rapporteur was so pleased that agreement had now been reached. 49. E/PC/T/C.II/QR/PV/6 THE CHAIRMAN : Then Paragraph 1(b), delete "may" in the first line; paragraph 1 (c),, delete "Member" in the third line and insert country", in the fourth line delete "now"; and in 1(d), the second last and last line, delete "See Article 19, 2(a) (i) and 2(d) " and insert "See Paragraphs so and so of this Report", the blanks there to be filled in by the Secretariat. Anything else on that paragraph. I take it it is agreed. Paragraph 2 read and agreed without comment.' Paragraph 3 read. Is that agreed? MR. BRONZ (US): There should be another "or" at the end of (b). THE CHAIRMAN: Yes; semicolon and "or" . Paragraph 4 read and agreed without comment. Paragrph 5 read. Any comment? MR. BRONZ (US): Yes, Mr. Chairman. Unfortunately we have to suggest a change in Paragraph 5 because we are going to suggest a change in the relevant section of the Article. The Article was agreed this morning, but since then one of the delegations not represent- ed on this Sub-Committee has come to us and pointed out that we were apparently going to stop a practice which they follow, which would generally be conceded to be unobjectionable; that that country generally prohibits the acceptance of its own currency for exports in order to prevent the use of black market currency of its own in buying these exports, and the three countries that constituted the Sub-Committee which brought in this Article 22 this morning have agreed on a rewording of Section 1 (c) which would meet this difficulty, and we would like to propose that re- wording and an appropriate change in the Report to cover that re- wording. 50. E/PC/T/C.I I/QR./PV/ 6 THE CHAIRMAN: Let us look back at Draft Article 22, 1(c), and if we can fix it in the draft Article then we can make the appropriate change in the report. MR. BRONZ (US): On page 6 of this document (c) would read:- "(c) conditions attaching to exports which are necessary to ensure that an exporting country receives its own currency or any foreign currency of Member of the International Monetary Fund specified by the exporting country." THE CHAIRMAN: And then continue on; and it might be worth while shifting "for its exports" and putting it after "receivces" - "which are necessary to ensure that an exporting country receives for its exports its own currency or any foreign currency of a Member of the International Monetary Fund specified by the exporting country". MR. LUTHRINGER (IMF): I wonder if it could not be better to delete the word "foreign"? THE CHAIRMAN: Yes "or any currency". I think that is a useful suggestion. Small I read the clause as it now stands? "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." That would enable Australia to ask for sterling, which is its customary practice. Is that acceptable? As regards the corresponding change required in Paragraph 5 of the Report, are you going: to suggest a wording for that? MR. CLARKE (UK): I should have thought we might have precisely the same wording. MR. BRONZ (US), Yes. THE CHAIRMAN: Yes. Is that change in Paragraph 5 agreed? (Agreed). Paragraph 6 read. 51. E/PC/T/C.II/QR/PV/6 MR. CLARKE (UK): I think in the second leg of this paragraph, where it begins "On the other hand, it was agreed"., I think the original draft was "argued", not "agreed". I do not know whether that is within the recollection of the Rapporteur. THE RAPPORTEUR.: I think it should be "argued". MR. HELMORE (UK): Especially as it says later "and it was furthed argued". MR. BRONZ (US): Yes, and the previous sentence says "It was argued". THE CHAIRMAN: Is that accepted? Any other change in Paragraph 6? MR. BARADUC (France): Line 6, Mr. Chairman - "which would effectively prevent". THE CHAIRMAN: Yes. Is that agreed? Any other change in Para. 6? Taken as agreed. Paragraph 7 read. We should alter " (See Article 23)" to "(See Paragraph 23)". Anything else on this paragraph? MR. CLARKE (UK): Just one point on the first line of (a) - "that the discrimination should increase the Member's imports" - I suggest should be "total imports". THE CHAIRMAN: Yes. Anything else on Paragraph 7? Paragraph 8 read. Any comment? MR. BRONZ (US): I think it would be more accurate to take the parentheses and move them a few words forward, to come in after the word "provision" at the top of page 5. You see, the trade restrictions are applied under this provision, so that it would read" in any trade restrictions provided under this provision (or exchange restrictions have equivalent effect)". THE CHAIRMAN: Yes. A.nything else on Paragrapeh 8? . I take it Para- graph 8 is agreed. Paragraph 9 read. It should be, in the first line, "A main obective", not "objection". 52. E/PC/T/C.II/QR/PV/6 Some modification of the first sentence may be necessary in view of the change in the relevant section of the Article. MR. BRONZ (US): And in the last sentence the same. THE CHAIRMAN : "elimination of discriminations provided for in this Article" MR. CLARKE (UK): Is this not the may to put it: "It is therefore generally agreed that the provisions of sub-paragraphs 1 (d) (iii) and (iv) of this Article should be reviewed" ? THE CHAIRMAN: Yes, and then the first sentence could stand. MR. CLARKE (UK): Yes. THE CHAIRMAN: I suppose that is right, is it? After all, some discriminations will remain, will they not? You see, this Article itself provides for certain discriminations which will be permanently possible, and it seems to me that the same objection which we raised previously can be raised to the first sentence of Paragraph 9. MR. BRONZ (US): Well, the first sentence is limited to all discrimina- tions which restrict the expansion of world trade. MR. CLARKE. (UK): We are stating there an objective or the Organiza- tion, in the first sentence. That does cover all discrimination of all kinds, does it not? MR. HELMORE (UK): I think it is correct as a statement of fact, Mr. Chairman. THE CHAIRMAN: In that case we will let it stand. Any further comments on Paragraph 9? I take it paragraph 9 is agreed as amended. That completes Article 22. Anything else on Article 22? MR. CLARKE (UK): There is a consequential change in the Report on Article 22 referring to the Australian clause - the paragraph in the Draft Article which we deleted this morning and agreed should be referred to in the Report. THE CHAIRMAN: The suggested draft reads as follows:- "It was suggested to the Sub-Committee that if there were E/ PC/ T/.C.II/QR/ PV/ 6 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 this general situation existed and warrantee/their application. After consideration it was agreed the Organization would have adequate powers under/the revised Article 30 to meet this contingency." Only one change, it series to me, would be desirable to be made in this, and that would be, to refer also to the paragraph in the Section dealing with employment. There is a paragraph - I have forgotten the precise wording which says that in the event of this situation, the decline in effective demand, the Organiza- tion shall use this powers, so I suggest - "After consideration it was agreed that the Organization would have adequate powers under the revised Article 30 taking into account (so and so out of the Employment Section) to meet this contingency", or "It was agreed that taking into account the provision in the Employment Section (to which we refer) the Organization would have adequate powers under the revised Article 30. MR.HELMORE (UK): Yes, I think that is right. MR. PHILLIPS (Australia): Yes. THE CHAIRMAN: Then that is agreed, That would be paragraph 10. THE RAPPORTEUR: That would be 9, I would suggest, and our present 9 would become 10. THE CHAIRMAN: Very well. Anything else on Article 22? I think that completes our work, with the exception of 19. I think we undertook to advise the Brazilian delegate and the Chinese delegate when Article 19 was reached. 54. E/PC/ T/C.II/QR/PV/ 6 MR. VIDELA (Chile) Before we call our friend the Brazilian delegate I have a small point here, with your permission, Mr. Chairman. I suggested at the main Committee and it was agreed that I should present here the point of view of the Chilean Delegation. I think it is more connected with Article 21. Yesterday morning at the meeting of the Procedure sub-Committee they approved a general recommendation on the avoidance of now tariff measures, and I called to the attention of the Sub- Committee that a sort of truce or recommendation of truce should apply to all the Charter. I meant by that, apply to tariffs as well as preferences or quotas, and I said that there were quantitative restrictions, and that if they were to limit a sort of truce or recommendation of truce only to tariffs we may be unbalanced, and may be handicapped by this recommendations. They then referred this suggestion to the main Committee, and yesterday the main Committee approved that I should raise this point here. I think under Art. 21 we could recommend a point similar to that recommended yesterday at the Procedure Committee on tariffs, in relation to quotas. 55. Q-1 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: As I understand the Chilean delelgate's point is that since it is recommended that countries should undertake not to impose new tariffs between now and the completion of the negotiations on tariffs next year and the finalisation of the Charter, it would be appropriate to parallel that recommendation with a recommendation that they impose no new quantitative restrictions during the same period. Iam not quite sure whether it would be appropriate to include such a provision an any of the draft Articles. Speaking off hand at this stage, at would appear to me perhaps better to deal with that, if it is to be dealt with, by a recommendation or resolution rather than by providing for it in the Charter; but that is merely a question of the form of dealing with such proposition. The question before the meetin is whether it is desirable at this stage to put forward such a proposal. Mr HELMORE (UK) Mr Chairman, before you put this question formally for discussion, I wonder if you would repeat the appropriate words in the latest draft of the procedural memorandum. I was not quite sure of their import. THE CHAIRMAN: The part of the report is: "It is important that members do not affect new tariff measures prior to the negotiations so as to prejudice the success of the negotiations in achieving progress towards the objectives set out in Article 18" - Article 18 being the Article which deals with the substantial reduction of tariffs, &c. Mr VIDELA (Chile): Mr Chairman, I may add that at that moment I said: "I entirely agree and back the suggesition of the Australian delegation. that this paragraph should go to the General Committee on the Charter. I do not know whether it should be Committee V, but we shall see later"; and, as the provision was approved yesterday at the particular Procedures Committee, I said that I will leave my reservation subject to this, that if the Quantitative Restrictions Subcommittee is making a similar recommendation on quotas, I will accept this paragraph in that section; otherwise. I will maintain the reservation on the Procedures Committee, but my idea was not to make that recommendation on tariffs and leave that for a general rule applying to the whole of the Charter. 56. Q-2 E/PC/T/C.II/QR/PV/6 Mr HELMORE (UK): Mr Chairman, I feel insome difficulty in dealing with this, since I was not present at the Procedures Commmittee, and therefore have not the benefit of having heard precisely the discussion. If I may venture to critisice the Procedures Committee, since luckily there is no one here from it - Mr VIDELA (Chile): I am from the Procedures Committee, Mr HELMORE (UK): At least, I have the majority of the Committee with me in being somewhat ignorant of their proceedings. This memorandum is a memorandum about giving effect to the principles of the Charter by some negotiations which are due to take place quite soon, There is nothing about that in this report on quantitative restrictions, and I should have thought this is really more a matter for the main Committee II to decide. We are losing some of the effect of this general exhortation to behave well between now and next Summer if we split it up into two. I sea why the Procedures Committee was so dealing with it because they said: We do not. know anything about anything except tariffs. But luckily Committee II to know something about it, and I would be prepared to move to meet this point by insert- ing in that memorandum when we take it in the full Committee to- morrow the words: "or thier" after "tariff measures". Mr VIDELA (Chile): At the Procedures Committee they could not discuss this matter because they thought that it was under the quantitative restrictions Subcommittee here. THE CHAIRMAN: If I may explain what happened: the Chilean delegate raised the matter at the Procedures Committee, which very properly said that since the matter with which the Chilean delegate was concerned was an expansion of this principle of quantitative restrictions, it was not within their scope to deal with it. The Chilean delegate then raised it at the general meeting of Committee II again in terms directed to quantitative restrictions. I suggested to him there that he might raise it were now in order to anable him to state his point to the Subcommittee dealing with the subject matter. Now if it is the view here that the proper thing to do with this is to deal with it not as a thing affecting quantitative restrictions but as a general request to governments to restrain from further restrictive 57. Q-3 E/PC/T/C.II/QR/PV/6 practices likely to prejudice the success of our negotations, then that might be dealt with in full Committee II as applying generally. Mr VIDELA (Chile): I quite agree with that procedure, Mr Chairman. THE CHAIRMAN: Will that be acceptable: we suggest to Mr Videla that he should submit to the general Committee an amendment to the procedural document or a general resolution covering this. Mr VIDELA (Chile): I understand that the main Committee will not refer this to the Quantitative Restrictions Subcommittee again? THE CHAIRMAN: You may rest assured. I am Chairman of both and I will not have it twice. Mr HELMORE (UK) : Will that amendment suit - just insert the words "or other"? Mr VIDELA: I said "new tariff measures and restrictions" or "other res- trictions". I used the word "restrictions". Mr BRONZ (USA) Mr Chairman you suggested in the alternative either an amendment to the Procedures Committee Report or a separate resolu- tion. I think it will be necessary to deal with it in a separate resolution, because the resort of the Procedures Committee refers to truce until the Spring when tariffs will benegotiated; but quanti- tative restrictions will not be dealt with in the Spring, and they will have to remain until the Charter comes into effect. So that you might want a general resolution of a trade ? until the Charter is adopted, which would be broader in scope than an amendmen of the report of the Procedures Subcommittee. THE CHAIRMAN: That is my own feeling. Mr HELMORE: Then I think it is unfair that I should not say at once that to bring in a general resolution for a genuine truce or somethi Thursday, like it on 21st November, when we are going to adjourn until Monday, the 25th November, is not a very practical way of dealing Monday, the 25th November, is not a very practical way of dealing with the point. Mr VIDELA (Chile): Why not take a resolution as to whether we accept the general principle or not, because then I sustain my reservation on the other Subcommittee. THE CHAIRMAN: I think all we can decide here is as to whether we wish to make a recommendation relating to quantitative restrictions Q-4 E/PC/T/C.II/QR/PV/6 in this form; that is all we can do here. Mr LOKANATHAN (India): Mr Chairman, I feel that the subject matter raised by the delegate for Chile is rather more appropriately considered by the Heads of Delegations than by us, because it is really a recomm- endation for each individual country to refrain from doing certain things in the period intervening between new and the time when tariff negotiations are going to take place. So that it would seem that there should be a much more limited reference. THE CHAIRMAN: As Chairman I am reluctant to see the delegate for Chile pushed around any longer, so to sepak. He has now been moved from two Committees to this one, and I think it is time we did make it quite clear to him where he can have his point, which is a very real point, dealt with. That is quite a separate point from the one which Mr Helmore has raised, which is, quite frankly, one which has worried me from the outset when I first heard of this yesterday: that this is a very important prinicple to raies at this stage. However valuable it may be, it does present the delgeations with a very real difficulty. I would suggest for your consideration that you approve my giving Mr Videla an undertaking that we will accept from him in Committee II any proposal which he wishes to put forward on this matter, whether he wishes to limit it to quantitative restrictions, or whether he wishes to make it general, applyign to all forms of restrictive practices other than tariffs, which is already covered. Delegations at that meeting may wish to express the view, that, having regard to the lateness of the time at which this has come forward, they are not in a position to express favour or disfavour of the proposal, and it may have to stand as an individual recommendation by the Chilean delegation. If there are a number of delegations who are prepared to support it, it would appear in the report as a statement of their views, and would therefore receive the consideration of the governments concerned as soon as they are able to give it. Is that acceptable? Mr VIDELA (Chile): I think your decision is very appropriate. I owe an explanation first to the Indian delegate. As I have just said, it was suggested that this matter should be sent to Committee V. I owe 59. Q-5 E/PC/T/C.II/QR/PV/6 another explanation to the United Kingdom delegate. I raised this point because it was only open to us I think yesterday or before yesterday when the memorandum of procedure was available. I think the from the start of the Conference that is one of the most important recommendations - a sort of truce; and the only thing I say is that this truce shuold' cover the whole Charter in every way - not only in regard to preferences or tariffs, but in regard to any sort of individual measures a country may take; because it is a most fair recommendation to state that everybody should stop and not try to take unfair measures in that direction. THE CHAIRMAN: I think that is quite clear: if you feel that the action taken in relation to a general proposition is unsatisfactory, you would obviously wish to reserve your attitude on this particular reference to tariffs. Mr HELMORE (UK): I was not criticising the Chilean delegate. I was criticising another delegate rather nearer to me for raising such a wide issue at this point. THE CHAIRMAN: Now we pass on. M. BARADUC (France) (Interpretation): Mr Chairman, I apologize for raising this particular point. I should like to deal with French translation. At the last meeting I had asked to see the draft French translation both of the Report and the Articles. This has been done, and now I realise very well how difficult was the task of translating those documents; but I thought it would be sufficient merely to review this translation, whereas it is obvious that it has to be done again. We have not the time necessary to make these translations again, and therefore we should ask that the Secretariat be entrusted with the task of correcting the translation of the Report. There are some very serious mistakes, and I think this could be done. As for the Articles, the question is much more serious, and we shaIl ? in the course of this evening or tomorrow to submit to you a proper translation of Articles 19, 20, 21, 22 and 23. THE CHAIRMAN: .Thank you. May I suggest that the general question of the French text not only of this part of the Charter but of the whole Charter is obviously a matter of very great importance, since the 60 Q-6 E/PC./T/C.II/QR/PV/6 two texts are of equal standing, and that we should raise that matter not here but with the Heads of Delegations, so that we can make some satisfactory arrangements for adequate preparation of the texts and for the checking of any translation which may be involved. Will that be agreeable to you? M. BARADUC (France) (Interpretation): Yes. THE CHAIRMAN: I will see it is raised at the meeting of Heads of Delegations. Can we deal now with Article 19. I think the Chinese delegate is not here. I suggest, therefore, that we might leave his point for him to raise in general Committee and make a reservation if he wishes to. Is the delegate for the Netherlands here? Mr VAN KLEFFENS (Netherlands) Yes. THE CHAIRMAN: I suggest we take the point submitted by the Netherlands delegate as noted by the Rapporteur on page 7 of the draft Articles. Mr VAN KLEFFENS (Netherlands): Mr Chairman, the Rapporteur has made a note of the proposal to insert the words "for instance" in Article 19, 2 (e) (ii) after the words "to remove a temporary surplus of the like domestic product", because those temporary surpluses may be in some cases of such an importance that it would not be practicable to deal with them in this way if this should be taken in a limitative sense. So the purpose of this is in English to widen the essential meaning of the clause to deal with temporary surpluses. THE CHAIRMAN: If I can recall the discussion on this question, I think the Subcommittee did give the matter some consideration, and I think the general feeling was that it was desirable that the exception embodied in Article 19 2 (e) (ii) should be limited to clearly defined instances, and that it would be possibly opening the door rather more widely than the Subcommittee thought wise to expresss it in a way which merely recorded the removal of a temporary surplus as an illustration. However, I would like delegates to press their views on this suggestion by the Netherlands, as it will be necessary for that delegation to decide what attitude they are to take on this question if that change is made. 61. Q-7 E/PC/T/C.II/QR/PV/6 Mr HELMORE (UK): Mr Chairman, if we inserted the words "for instance" ? the place suggested, the operative part of this sub-paragraph would permit the use of quantitative restrictions on any agricultural product imported in any form if they were necessary to the enforce- ment of governmental measures which operated to remove a temporary surplus of the like domestic product. The following words would have effect, since they would be purely illustrative, and according to my reading of the Article with the amendment, it would give an undesirable measure of freedom to countries which were unfortunately in the position of having a temporary surplus to limit imports of agriculture products. THE CHAIRMAN: Do any other delegations wish to comment on this proposal M. CALVET (France) (Interpretation): We accept the proposal of our Netherlands colleague. I have no other proposal to make. THE CHAIRMAN: Any other comments? Mr PHILLIPS (Australia): The Australian delegation would agree with the United Kingdom delegation, I think, that this opens the door very widely and we would not favour opening it so far as that. Mr BRONZ (USA): Mr Chairman, the United States delegation would agree with the United Kingdom delegation on this point. It has been the position taken by the United States delegation throughout on this clause, that the purpose of the clause is to require that the impact of surpluses of these products should be equitably shared between domestic production and imports, and I fear that the language suggested by the Netherlands delegation would open the way for devices which would put an undue burden on the imported product as opposed to the domestic quantities of the product. Mr LOKANATHAN (India): Mr Chairman, we should agree with the Netherlands delegation's amendment. THE CHAIRMAN: Any further comment - the Brazilian delegate? Mr KAFKA (Brazil):I have no definite opinion on this. Mr. CALVET (France) (Interpretation) Mr Chairman, I should like to make it clear that we do not ask for this addition, but we have no objection to this addition. 62. Q-8 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: Would the delegate for the Netherlands like to reply to the comments made? Mr. VAN KLEFFENS (Netherlands): Mr Chairman, I would like to make it quite clear that we have no wish to cause any undue opening of do rs; but there are some openings which are due and which are not covered entirely by this limitative clause. So if the point could be met by some other wording, we would be quite open to consider it. Mr HELMORE (UK): Mr Chairman, as I have led the opposition, may I say I cannot think of any words as the moment which would meet the point made by the Netherlands. At the moment with his amendment the clause says that these restrictions would only be conditioned by two things. One is a relativity between the reduction in imports and a reduction in home production, and the freedom given would be to put on imports restrictions necessary to remove a temporary surplus of the like domestic product. I find it difficult to see how this might not be extremely restrictive. THE CHAIRMAN: In the circumstances I think it is somewhat late to seek a resolution of this difficulty by a search for appropriate words. I suggest that we record in our report in relation to this particular section that some delegations considered that other circumstances might justify the action proposed here, and that this point might be met by the insertion of the words "for instance". That would make clear the position of the Netherlands delegate, the Indian delegate, and so on, and would ensure that the thing was further considered late when the precise scope of this change could be examined in detail. Would that meet the delegate's piont; is that agreeable? Mr. VAN KLEFFENS (Netherlands). Yes. THE CHAIRMAN: Thank you. THE REPPORTEUR: May I insert a paragraph of that type in the report? THE CHAIRMAN: Yes, in the report THE RAPPORTEUR: Without coming back here? THE CHAIRMAN: Without coming back here. We will have an opportunity in full Committee just to check the words and see that it accurately represents the view of the meeting. Is that agreeable? Thank you. Is there anything else on paragraph 19? I think we did have Q-9: E/PC/T/C.II/QR/PV/6 something from the Brazilian delegate on this Mr. Kafka, did you want to raise a point on this? Mr KAFKA (Brazil): No, Sir; I think my point is adequately met by the draft. THE CHAIRMAN: Thank you. Mr. VIDELA (Chile): I have found here a reference to my reservation with reward to Article 19 (e) 2, and I would like the Subcommittee to allowme to explain a little more my position. On page 3, paragraph 6, it sayes: "There was wide agreement for the view that a clause on these lines was desirable; but one Delegation proposed that the exception should not be confined to agricultural and fisheries products". I should add there: "in order to give similar protection under- to agricultural or / developed countries". It is only to give an explanation of my resolution. THE CHAIRMAN: I think that is clear. The delegate for Chile, who is responsible for this reservation, suggests that his point of view would be more adequately expressed if the latter part of this read: "but one Delegation proposed that exception should not be confined to agricultural and fisheries products, in order to give similar protection to agricultural or under-developed countries". The Rapporteur will look at that. It seems to me that the delegate making a reservation has the right to have it expressed ? the way in which he wishes it, and I would suggest to the Committee, therefore, that we accept the wording proposed by Mr Videla. 1 E/PC/TC.II/QR/PV/6 he precise wording is that after "products" in line 9 of paragraph 6 insert the words "in order to give similar protection to agricultural or undeveloped count- ries" . MR VIDELA (Chile): Is that clear? THE CHAIRMAN: I think so. Is that agreed? Anything lse on Article 19? Mr LOKANATHAN (India): Mr Chairman, I must first of alll ask your indulgence to raise this point. We were held up at the Joint Committee on the day this meeting was held and it was not possible to give previous intimation to another member of our Delegation to be here otherwise I would have raised it earlier. It is a general reservation which I should like to ?. We have considered the matter of Article 19 in the light of what was decided at the Joint Committee in regard to economic development and we now feel that it may be desirable for us to make a reservation in regard to the question of quantitative restrictions as another exception to be provided for in Article 19. I do not know whether I should make a formal amendment to that, but I would like to say this, that we give notice that we would like to consider that at some stage and on behalf of the Indian Delegation I shoule add like to read this:- "The Indian Delegation reserves their right to add a new Soub-Section 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 restricted in their effects than other forms of protection and provided they are in conformity with the criteria laid down for the purpose by the organisation'." THE CHAIRMAN: May I suggest "propose rather than "add" and "additional" rather than "new" Mr. LOKANATHAN (India): Yes. THE CHAIRMAN: Is there any comment on this?. MR MELMORE (UK): Yes, Mr Chairman. I take it when this appears in the Report it will in accordance with the general rule begin "One Delegation" and not "The Indian Delegation"? THE CHAIRMAN: Yes MR HELMORE:I think as Mr Lokanathan has been kind. enough to give notice of E/PC/T/C.II/QR/PV/6. what he is going to say tomorrow I would like to give notice of what my reply would be. It would be to ask that words should. appear after that to say that another Delegation considered that the point was sufficiently Let in the draft Chapter relating to industrial development, but if the suggested provision were to be included they would wish to reconsider their attitude to that chapter. Mr BRONZ (US): The United States would like to propose an amendment to the UK statement to say "other Delegations". MR LOKANATHAN (India): I have nothing to say about that I am perfectly willing for them to reconsider their relation to those other things, but that is a thing which every delegation can say in respect of anything else. THE CHAIRMAN: Does anybody else want to comment on this? I take it the suggestion is that the Indian Delegate does not wish to move now that this should be incorporated in this record? MR LOKANATHAN (India): No, for various reasons, one of the most important being that we are nearly at the end of our time and I do not want to waste our time here, but our object is to indicate the amount of importance we attach to this question, that is all, and we may have to come back to it at some future time. THE CHAIRMAN: I want to get this clear. We could add this, together with the addition which the United Kingdom Delegate has suggested, to our Report on this question now. That would mean it would come forward to Committee 2 as part of our Report. Alternatively, if we did not do that, it would mean that the Indian Delegation would presumably submit it at Committee 2. On the whole, I think it would be preferable to do it here. That is, if you are going to do it. If there is any doubt as to whether you are going to put it in let us leave it to the next meeting. R LOKANATHAN (India): I am open to any suggestion you make, Mr Chairman. If you want the reasons, why we consider this to be important we can explain them. THE CHAlRMAN : I think it is quite clear why you consider it important. I am looking at it purely formally. We have the Report here in front of us at the present time and it will from us go to full Committee 2. The question is whether it goes including this proposed reservation of yours or whether it does not. If we do not include it here then you have to decide between now and the meeting of Committee 2 whether you are going to put it forward there. E/PC/T/C. II/QVPV/6 and, as. I say, if there is any doubt abut it, if you are uncertain your- solves, I would say let us leave it out now. On the other hand, if you do quite definitely propose to make this reservation then I would suggest we include it here. MR LOKANTHAN (India): I think it is better to include it here and not waste time there. THE CHAIRMAN: I take it since that is to be included the United Kingdom Delegate would want the additional sentence and that the United States Delegate would associate himself with that. MR VIDELA (Chile): I do not think it shalldo any harm. THE CHAIRMAN: If I add by reservation to the preservation of the Indian Delegation in order to make a balance, and say "other -Delegations". MR HELMORE (UK): May we suggest that both go in the plural; that instead of "one delegation" as I suggested, both sentences should begin "some delegations".. THE CHAIRMAN: Just one point. I think looking at this fermally, the addition of your last sentence is a statement of a right which every delegation possesses. Obviously, if a change or an addition is made to a draft which they have generally accepted, they would be free to rcopen the whole question of their previous agreement. Is it necessary to state that? If that were omitted you would be saying in effect "some delegations consider this necessary; other delegations believe that the point is adequately met in, the chapter relating to industrial development". That. is a statement of fact. If we add the statement that some delegations would want to review their attitude towards that chapter if this were inserted, that also may be true, but it is true whether it is stated or not.. The point I am making is, if that is omitted probably we would not have to state the third position. There may be some people who agree with your first sentence who perhaps would not necessarily want to state. categorically that they would want to review their attitude towards the industrial development chapter,. and it might be necessary to add another sentence which would say "other. delegations, while considering that the point was adequately met in the draft chapter relating to industrial development, were not sure whether its inclusion would involve a review". MR HELMORE (UK):. No, Mr Chairman. There is a much easier way of drafting it than that. That is, that my second sentence begins ."other delegations". and the 67. third sentence begins "some of the latter", but I have not heard anybody yet say that he would not want to reconsider his attitude to the industrial development chapter. MR LOKANATHAN (India): You have said a very wise thing, Mr Chairman. It is not for my sake. I want Mr. Helmore to withdraw his last sentence. I think from the point of view of the general success of the objects of this Conference I would say that and not for the sake of the Indian Delegation or any other Debgation the reason being that if there is a sort of -- I do not say you are doing it, but if there is a sort of implied threat that supposing I put this in you would withdraw all you have done with regard to the Committe's work, we on behalf of India are quite willing to take back everything with regard to the Committee's work, so that would not be any help at all. I think we should support the wise words of the Chairman and should not have that implication. THE CHAIRMAN: I think you are putting rather more into the words of the Chairman than he intended. I was, I hope, concerned solely with a mechanical. problem here. Perhaps we should leave a settlement of that until we hear all the views of the Comittee. Does any other Delegation wish to express a view on this? MR DEUTSCH (Canada): I should like to say we would as: ? ourselves with the position taken by the United Kingdom MR PHILLIPS (Australia): I think we would agree rather with the - rd alternative, that we are inclined to think that is covered in the work of the joint body, but if it is not we think it ought to be covered. MR KAFKA (Brazil): I would associate itself with the Declaration of the Australian Delegate. THE CHAIRMAN: I think in the circumstances the correct method of dealing with this is to say "some delegations reserved their right to propose an additional sub-section" etc., "other delegations considered that this point was sufficiently met in the draft Charter relating to industrial development. Some of the latter considered that if the suggested additional exception were to be included in this section they would wish to reconsider their attitude to the Chapter on industrial development". I think that is ? correct statement of the views which have been expressed. 68. E/PC/T/C.II/QR/PV/6 E/PC/T/C.II/QR/PV/6 MR HELMORE (UK): And we have a chance of locking at all these words tomorrow. THE CHAIRMAN: That is right. Is that agreed, that we record the positions in that way? MR LOKANATHAN: Yes. THE CHAIRMAN: Is there anything else on Chapter 19? MR PHILLIPS (Australia): Just one point. We have some dobubt about paragraph 2(a)(ii) and whether the present wording will adequately cover the point in connection with price cntrol. At the same.time we have not bee able to think of adeuqtae words instead. I merley want to say that we make the reservation that are not satisfied that those words are satisfactory and we may wish to come back to this. THE CHAIRMAN: It would be a verbal change? MR PHILLIPS (Australia): Yes It is the words war time price control" "undegoing shogrtages subsequent to the war". I am not quite sure whether those two things do cover the position. It is possible that in conjunction with paragraph (b) of that same section they may, but Iam not quite satisfied about it. I merely want to give notice that we might come back to that point. I do not suggest you record anything. MR VAN KIEFFENS (Netherlands) Mr Chairman, not having assisted at all your deliberations I am affraid I have/temporary surplus of remarks to make. There are a few expressions which are not altogether clear to me. In some csases it is said "the like domestic product", but there ar some classes of goods which are interchangeable. Those you do not produce yourself may be imported and have a very direct bearing on things you do produce and if this expression of "like domestic product" is to be taken quit in its strictest sense then it might cause great diffculties. I would like to draw the attention of the committee to this points. I do not know whether it is necessary to do something about it. There is another point on which I a feeling rather uncertain. That is in paragraph (e) beginning at the words "moreover, any restrictions imposed under (i) of this sub-paragraph". If I read-it correctly countries have to restrict the quantities of like domestic products and there should be relation kept with previous representatives periods and with something of the future, which is impossible. I think that is contradictory. If you have to 69. restrict to keep a certain relation you cannot make the relation to bear on the circumstances which would prevail if there was no restriction; so how you are to put this into practice is not very clear to me. THE CHAIRMAN: I think neither of the points are matters of substance. I think the use of the phrase "like product" has by this time a fairly well established traditional meaning in this sort of context - at least, I have been informed so - and while I think we all recognise the logical difficulties to which the Delegate from the Netherlands has drawn attention, I think we do have to rely upon the practice of the past in the use of a phrase of that sort. In regard to the second point, I think. what was intended was not so much that you should apply two conflicting bases for the assessment of this relationship between imports and home production, but that while you would base your proportion primarily upon what happens in the past, you would be authorised, you would be permitted to vary that proportion if in the past and up to the time e when you proposed the restriction there had been things hapening which were tending to alter that proportion. For instance, if there was in progress technical change which brought about a difference in the relative costs of imports and home production of a kind which tended to increase the proportion of one or the other, you would be permitetd to depart from the average of the pre-restricted years by allowing a greater proportion of home production or imports according to the general trend in that period. I think that is the sort of thing that is intended; that you should not be ? to the purely mechanical application of proportions which existed in the past, but you would be allowed varying proportions, not in the light of things which you thought might happen in the future, but of trends which did in fact exist in the past. Does that meet your point? MR VAN KLEFFENS (Netherlands): Yes, I think that is clear, but the wording is not very clear. MR VIDELA (Chile): As regards this understanding of "like products" I do not know whether it was here or at the procedure committee or the main committee, but someone described "like product" as "identical product". ? would like to have that definition on record. THE CHAIRMAN: We will, clock that. Is there anything else on Article 19? 70. /E/PC/T/C.II//QR/PV6 E/PC/TC.II/QRPV/ 6 Mr BARUDUC (France)( Interpretation): :Mr Chairman I wonder whether we could not meet the opint of the Netherlands representative by deleting all reference to/previous period. . In the 6th line-from the bottom of page 22 I think we should only say "in determining this propertion the member shall pay due reard to any special factor which may exist" and drop all reference to a previous period. THE CHAIRMAN: If I may say so, I think it is somewhat late for us to consider a change of that sort, which is I think a fairly radicalone, and I would suggest to the French Delegate and the Delegate from the Netherlands, that if they felt that that would be an improvement they might record their view so that it could be taken into account at our second session. It does raise a quite important principle, in that the Committee has agreed that some period in the past , unspecified, provides the best working basis, although you do have to take account of other things which are happening. If we have to cut out the reference to the past period I think it would be a very radical change in the views which the Committee had previously expressed. ENS Mr VAN ?/(Netherlands): What was worrying. was not the previous period, but what might reasonably be expected to rule in the absence of restrictions. That is the point because if you have to take into account what happens when you do not apply any restrictions, it is possible to apply restrictions. THE CHAIRMAN: I agree it is difficult, but there are same things that it is possible to know. There is the example I grave of changing costs. If home production costs were falling very rapidly it would be reasonable to argue, that quite apart from the restrctions, that would have the effeect of increasing the proportion of the mark.et taken by the local and on that basis you a could justify to other countries concerned the reservation of/larger pro- portion of the market to the local product, I think it would be unreasonable not to allow a country to take such factors into account. However, I suggest to the French and to the Netherlands Delegate that if they wish to take up this point they should ask for a note to be taken of their views on it so that it can be given further consideration. MR VAN KLEFFENS (Netherlands): I will not press this point, Mr Chairman. 71 E/PC/T/C.II/QR/PV/6 THE CHAIRMAN: Thank you. Anything further on Article 19? can l take it that Article 19 is approved? And the Report thereon? We can then refer the whole of this of this Report, togther with the Draft Articles, to the full Committee 2; and I think, with due modesty, that we are entitled to considerable credit. MR HELMORE (UK): May I say that no shall art of it is due to yourself, Mr Chairman. THE CHAIRMAN: Thank you. The meeting is declared closed. (The Meeting closed at 4.43 p.m..) 72.

GATT Library

mt637rp9673

Verbatim Report of the Sixth Plenary Meeting held at Church House, Westminster, S.W.l, on Tuesday, 26th November, 1946 at 3 p.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/PV/6 and E/PC/T/PV/5-6

https://exhibits.stanford.edu/gatt/catalog/mt637rp9673

mt637rp9673_90210006.xml

GATT_157

E/PC/T/PV/ 6 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARTAORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the SIXTH PLENARY MEETING held at Church House, Westminster, S.W.I, on Tuesday, 26th November, 1946, Chairman: M.M. SUETENS (Belgium). (From the Shorthand Notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westiminster, S.W.I. . THE CHAIRMAN (Interpretation) Gentlemen, the meeting is open. I call upon Mr, Nehru head of the Indian Delegation. MR. R.K. NEHRU (India): Mr Chairman, the results of our work in this Committee have been reviewed by some of my distinguisehed colleagues. You also, Sir; in your capacity as Chairman - and, might I add, a Chairman who has won our very deep respect by his unfailing courtesy and sense of fairness - have made some observations on the subject. We have decided, Sir, to publish the results of our work in the form of a report which will be placed for conideration before our respec- tive governments and peoples. I do not propose in this final meeting to attempt a detailed exposition of the proposals, for we are, most of us, tired men, and there must be some interval for reflection A-2 E/PC/T/PV/6 before we make any such attempt, I would like, however, to say a few words of an explanator character on this subject as a possible aid to the study of the report. If my remarks are not wholly con- fined to points on which complete agreement has been reached, I trust that my motive will not be mi sunderstood. - If I might explain, Sir, some of us who were a bit seeptical as to the outcome of this Conference are now inclined to take a somewhat different view. The first point I would like, to refer to is the scope and character of our discussions in the present session of the Committee, Since most of our meetings have been held In private - although I must say, in fairness to ourselves, that the Indian Delegation has always been in favour of maximum publicity being, given to such dis- cussions - it is possible that some misunderstanding may have been caused, This will be cleared up when the report is published, but- I take this opportunity to repeat that we came here not to enter into any kind of comitment, but merely to exchange views and ideas with our colleagues from other countries. We have not departed from that position and the views expressed by the various delega- tions, including our own, as set out in the report, will be placed, on our return to India; before our Government and people, The entire problem will then be examined in the light of these views and of other expressions of opinion, and also perhaps of new developments in the economic and other fields, in preparation for the leader meet ings, The drafting process is largely mechanical, but in the Spring meeting of this Committe we hope to be able to go a step further in elucidating points of doubt and resolving differences of opinion., The fact that on a number of points divergent views have been expressed is not an unhealthy sign and we, may still be able to con- found the pessimists who are doubtful about the prospects of the Conference. Let them not forget that the task allotted to us by the Economic and Social Council is one of major dimensions, covering the preparation of a draft agenda, including a draft convention, for consideration by an International'Conference, We have been asked by the Council to bear in mind that the purpose of this Conference is to promote the expansion of production, exchange and consumption 2. of goods in all countries and to pay special attention to the needs of countries which are still not fully developed, If we have been able to complete the exploratory stage of this vast labour in the short space of' six weeks, I think, Sir, that this is an achievement of which we have no reason to be ashamed, "Much haste, less speed" is a maxim we would do well to rermember, for we are dealing with an intricate problem and no country - least of all one in the position of India, which has still to develop its. resources to the full - could be expected to enter into long-term commitments affecting the development of the national economy without studying the prospects carefully, I said, Sir, that this report would soon be presented for consid.- eration to our respective Governments and peoples, What their reactions will be it is too early to say, but I would like to assure the Committee the", so far as India is concerned, the views put forwar by every delegation will be examined by us with the utmost care. Our general approach to this problem, has already been indicated in the first plenary session and the latermeetings. We have made itclear that the primary objective to which all our efforts and planning in India are increasingly being directed Is a broad social -objective, namely, the liquidation of Indian poverty and the raising of the standards of living of our vast population, In order to reach this objective, we must increase production and create a better balance between industry and agriculture, which means that we must adopt a policy of rapid Industrialisation and the modernisation of our methods of production. There are other considerations also: first, economic progress must be rapid, for our population is expanding fast and we are constantly threatened by famine and shortage; secondly, the benefits of economIc progress must be passed on rapidly to the people; and, thirdly, our resources which are not unlimited must be used in the best interests of the community as a whole, It is aIso these reasons that ie are trying to build up a type of economy which while giving adequate scope to private enterprise will place the control and direction of the larger aspects of economic activity In the hands of a Government which represents the broad mass of our people. 3 B E/PC/T/PV/6 These facts have been stated before, but I would like to emphasize again that out attitude to the problem of foreign trade is not quite the same as that of certain industrial countries -high are represanted in this meeting. In the past, past have been compelld to aim at an export surplus in order/to meet our varied foreign obligations. The position has no-chaanged and instead of being a debtor we have become an important creditor nation. Although --a still need a very large export trade, our primary interest in the future will be the development of our own vast internal market. Many of our products are in World-wide demand, and the problem of finding a market for then Which faces, or is exported to face, certain exporting interests in the leading industrial countries in respect of other typos of products might -not perhaps affect us seriously for a number of years. Since we also constitute one of the biggest potential markets for a large variety of imported products, it might not perhaps be difficult for us to adopt a trade policy --high is wholly of our own choice, subject of course to our adhering strictly to tho objectives that we have in view.- Nevertheless, sir, it would be a mistake: to suppose tha we have at any time considered the possibility of adopting an autarchic trade policy. We fully approciate the benefits of multilateralism, and since as a creditor nation we are anxious to secure the smooth and speedy liquidation of our claims, We are vitally interested in the expansion of world trade on a non- discriminatory basis. We also recognize that there is a close inter-dependence between our country and other countries in economic and other matters and that the success of our own programme of development .could to some extent depend on the attainment of a high leval of employment and economic activity in the rest of the World. Finally - 'and I would like to emphasize 4. that this is a point to hich we attach the greatest possible importance - we believe firmly in the principle of international co-operation and so long as we are members of the U.N.O., it will -be our constant endeavour to promote the cause for which it stands by participating in any scheme of co-operative relationship which meets the vital requirements of all countries and is based on respect for the principle of equal rights and self-determination of peoples. It is against this background, Sir, that some of the proposals of this Committee will be examined by our Government and people. ie have covered a great deal of ground in the present session and have registered a number of gains. Unquestionably, the most important gain is the opportunity .high these meetings have given us of establishing contacts and making personal friendships and exchanging ideas with our colleagues from other countries. We have learnt a great deal from then and have endcavoured to give them an insight into our own problems and difficulties. We came here to educate ourselves and to prepare the ground for the later Conference, and I think we can reasonably claim that our mission .has not been unsuccessful. The number of points on which agreement has been reached at an expert level is commendably large. We have not committed our Governments in any way, but I do not/hink that much fault will be found with the agreed views put forward in the report on such subjects as employment policy, commodity policy, the character and functions oi the proposed organisation and certain aspects of commercial policy. Even more important from our own point of view is the new draft Chapter which has been propared for consideration and study by member Governments on the subject of economic development, In our comments on the United States proposals for the expansion of world trade and employment, rich were subsequently presented in the shape of a draft charter, we deplored the fact that so 5. E/PC/T/PV/6 little understanding, was shown of the problems and needs of the undeveloped countries, We also gave expression to the view that the entire approach of the proposals was of a negative rather than of a positive character. We recognise, Six, that an attempt has been made to meet this criticism and that there is a welcome charge in the attitude of the more advanced countries. There is now, a clearer recognition of the right and duty of all members to promote that has been described as "the continuing industrial and general economic development of their respective countries." Members have been adviscd to agree to give an undertaking that they will co- operate in such matters as the provision of capital funds, technical assistance and equipment., needed by the less developed economies. Finally, some advance has also been made in other directions, cg. the right of moebor countries to givo special assistance to particular industries in tho shape of protective and other measures has now been fully recognized. we have undoubtedly moved forward, Sir, but the question that is likely to bc asked in India is, have we moved far enough? Certain objectives and principles have been accepted and thc draft chapter on economic development provides some measure of freedom to use tariffs and subsidies for the purpose of protecting industry. But a developing country which is faced with special problems of the type so often discussed in our meetings may not find it possible to give up its right to use more direct methods of trade regulation which may be vitally necessary for the execution of its development plans. The suggestion has been made that if it wishes to use such methods it should ask for release from its obligations from the Trade Organization and an elaborate procedure has been suggested for enquiries into such applications. This is not the time, Sir, to discuss those matters in detail and the proposals .will in any case soon be released for publication. It does seem to me, however, that it is not by imposing such restrictions and 6. L3 B4 E/PC/T/PV/6 laying down a procedure which may lead to delays and prove a source of conflict and irritation that the cause of economic development and industrialisation can be advanced. In India, Sir, we have had some experience of outside interference with our trade and tariff policies and of the hampering offeet of certain Procedures -which have been followed in this connection. We have won our fiscal freedom after a long struggle and are planning to use it for the purpose of developing our national economy in the interests of our people. Certain suggestions that we have put forward for consideration are designed to ensure that these rights are exercised for the purpose of devlop- ment in a rational manner, subject to any international criteria which may be agreed upon and with due regard the the legitimate interests of other countries. I have not the time, Sir, to go further into this matter, but I would like to say, before ending my speech, that having achieved so much in the present session we must make a determined effort to reach some agreement on this point and also on certain other points on which there is still some difference of opinion, so that the great task -high has-been entrusted to us by th, Economic and Social Council may be successfully accomplished. In conclusion, Sir, I would like to associate myself cordially with the tribute of thanks and gratitude which has been publicly paid by some of my colleagues to the many officials of the United Nations, led by our worthy and able Executive Sccretary, and to whose untiring labours we owe much of the success which we have achieved, (Applause) the chairman (Interpretation): I thank Mr. Nehru for his statement. - Gentlemen, -with your permission I shall interrupt for the time being the series of statements given by delegations in order to call upon the representatives of two non-governmental agncies, the International Chamber of Commerce and the world Federation of 7. E/PC/T/PV/6 Trades Unions, who have asked to be allowed to state their opinions at the beginning of the afternoon. I therefore call upon Mr. Phillips, the representative of the International Chamber of Commerce. MR. phillips (I.C.C.): Mr. Chairman and gentleman, as delegate of the International Chamber of Commerce I have followed with absort interest the day to day developments of the work of the several Committees, and speaking as the representative of world business may I be permitted to congratulate the members of this Conference on the successful results achieved, which have only been possible due to the enormous amount of work and time devoted to this meeting by everyone participating. The membership of the International Chamber of Commerce includes 31 countries, each with a National Committee, and, collectively, representatives of these Committees comprise the Council of the Chamber. In each of those groups are the leaders of Trade, Industry and Banking of their respective countries. The Chamber has established a. number of Committees for the purpose of studying and submitting proposals on many phases of International Trade, and, of course, has considcred carefully the original United States proposals which have eventuated in this Conference. In studying the Report Of Committee I,. the International Chamber of Commerce observes that no mention is made of consulta- tion with Non-governmental Organisations, although our Non- governmontal organisation in particular is uniquely equipped to make a substantial contribution on methods best adapted to assist employment. The International Chamber of Commerce Committ on Methods to Maximize Employment numbers amengst its members several -world authorities on this most important subject and much study has been given to it. I am very pleased to note that in the Report of Committee 8. B5 E/PC/T/PV/ 6 V, provision is inclueded covering suitable arrangements for consultation and co-operation with non-governmental organizations. When the International Trade Organization becomes an accomplished entity, it will be the cluty of the members Of the International chamber of Commerce to carry out its decisions, and I can assure the Delegates here present that the Charaber will co-operate to the fullest extent and every effort till be made by the leaders of world trade to onsuro success to this most important Organization. In conclusion, may I express to you, Mr, President, to this heads of the Delegations and to the Delegates, my grateful appreciation and thanks for tho unfailing courtesy and consideration that has been afforded to me by everyone. In addition, I desire to thank Mr. Wyndham-White and his hard worked staff for the assistance they have rendered to my associates and myself. I thank you. (Applause). the chairman (Interpretation): I thank Mr. Phillips, and I call upon Mr. Duret, the delegate of the world Federation of Trade Unions. MR. DURET (....T.U.) (Translation): Mr. Chairman, in vier of tha importance and multiplicity of the tasks facing the Proparatory Conference on Trade and Employment, the world d Federation of Trade Unions desires to state its pogition on the problems which have been under discussion. The unequal development of world economy after two great wars has resulted in a considerable increase in the specific right of the economics of certain countries, Whose national income has become much greater than that of all other States. The distribut- ion of this income, which is also more unequal, constitutes a source of crises of undeconsumption, the onset of which is to bo foreseen and the offects of which will be more dangerous than a crisis in poorer countries .hose national income is more equally distributed, 9. E/PC/T/PV/6 The limitiations of consumption in the former countries also reduce the opportunities for investment in their industries. There the danger of a crisis is all the greater as all controls are progressively abandoned and reserves of purchasing power, accumulated during the war, are reduced by the rise in prices. For this reason, an energetic policy of full employment in those States is necessary to assure the prosperity of world economy. The fundamental defect in the, initial proposals made to this Conference as that they were esseatially negative. In short it was a question of a return to the doctrines of economic automatism, a source of economic wellbeing and stability, a doctrine which as, however, proved to be a failure in the twentieth countury. "If restrictions are abolished, verything will be all right" Such seems to be the leitmotif of Nco-liberalism. However, this formula. in no way solves present-day economic antagonisms, as crises are essentially due to the contradiction between large-scal production and the limitation of the purchasing power of the massei a contradiction which is the dominant feature of our opoch.. Therefore, the world Federation of trade Unions stresses the necessity of establishing an order of pracedence among the various problems discussed at the Conference, founded on their importance and their scope. In its opinion, one problem must enjoy priority over-all others; that of a policy of full employment. We recall briefly the arguments we have already had the opportunity of developing in Committee I. The world Federation of Trade Unions considers that a policy of full employment must be pursued on a world scale and be imposed in all countries whose Trade Union organizations are its members.' However, the policy of full employment can take on diferent aspacts according to the specific conditions in each country. In certain countries it is essentially a question of assuring regular employment for the whole labour fore, or, in the well known formula of attaining a situation in which the demand for labour is slightly higher than the number of workers available. A policy of full employment in those countries has a bearing on the limitation. of working hours and on the remuneration of labour, and is accorapanied by a policy of the redistribution of purchasing power so that the greatest part of production canbc absorbed by the homo market. 10. E/PC/T/PV/6 In other states, economically; backward, the problem presents itself in a different way. Such countries can employ all their labour resources to the full and yet the situation cannot be judged satisfactorily,. In fact, if production methods arc archaic, absence of apparent unemployment can co-cxist with a very low level of national income and wretched living; conditions for the whole population. In those circumstances, the policy of full employment consists of developing national income to the maximum, supplying those nations with modern equipment and, at the same time, ensuring full employment of the labour force on this new basis. Starting from those considerations, the W.F.T.U. considors that, in those countries, special importance should be accorded to the level of wages. It warns against a dangwrous interpretation of the idea that the special economic conditions of these States necessitate the maintenance of wages at a low level. The low level of wages retards the progress of industrialisation by :making less urgent the substitution of the machine for man and in general the adoption of all technical refinemants. Now, it is necessary for those nations to be able progressively to bridge the gap between their own economic development and that of countries economically most advanced. Therefore, it is a question of a veritable reversal of the present- day tendency, as; for twenty years, this gap has constantly tended to increase. Finally, there arc statcs in which the possibilities of economic development far surpass their reserves of labour, and which cannot, therefore, fully omply their production potential except through the importation of foreign labour. In the case of those countries, it cannot be considered that full omployment is achieved when all domestic labour is fully employed. The economic development of those nations is often thwarted, moreover, and especially since the war and enemy occupation, by an insufficiency of industrial plant and raw materials. The policy of full employment must aim at putting at their disposal more abundant labour and more elaborate plant which, by allowing them to develop their reduction possibilities and incrcasc their national income, will greatly serve the cause of international trade But it will only succeed if the two aims defined above are pursued. Certainly, improvement in technique will diminish the needfor labour, but often not so much as to allow those states to dispense with foreign labour. Therefore, in a word, we consider that for them the policy of full employment 11 C2 E/PC/T/PV/6 must not be limited to assuring full employment for domestic labour, but also full employment of thoir production potential and their economic possibilities. The policy of full employment, as we have just defined it, possesses, therefore, a general significance. It implies in countries a policy of increasing national income and redistributing purchasing power in favour of the working classes. It also necessitates a redistribution of purchasing power among the various nations of the world, between the rich nations and the poor nations. A whole -system of international loans should be conterulated. However, these loans, rationally conceived, should not result ultimately in subjecting the economy of countries economically weaker to that of countries possossing groat industrial and financial power. We consider that for countries economically backward or weakened by the war and occupation, it is indispensable, if tho policy of full employment is to be assured, to Sive a very wide application to the transitional period clause and to allow them to use quantitative and discriminatory protective methods (including qualitative discriminations), until they can.compete on an equal footing with their most favoured rivals. In fact, the imposition on their economies of the tempo of industrialisation and reconstruction necessary for this purpose cannot be con- templated without their being allowed to use methods of directed economy and planned organisation. Any method based exclusively on freedom of trade, market operations and monetary demand cannot assure for those countries the priority of social needs. The very recognition of the necessity of a. transitional period proves that the mos convinced supporters of a return to the methods of economic liberalism understand that the complete application of their doctrine would in practicg result in catastrophe. In fact, there are too many countries where a renunciation of the practices of planned economy would quickly lead to an aggravation of the disequilibrium in their balance of payments, to a reduction in effective demand on foreign markets and to the possibility of putting into practice the-policy of full employment. Finally, the planned and co-ordinated development of countries which, through insufficiency of their wealth and the poverty of their economy must, by specific methods, make it possible for themselves to apply a system of large- scale production, will be irreducibly compromised. If the measures proposed to the Conference are not modified, those countries would be no longer able to 12 C3 E/PC/T/PV/6 re-organise rationally their production structure. In short, we believe that a country is in a transitional period as on; as it remains in a position manifestly interior to that enjoyed by its most favoured competitors, as long as there cxists between its econonic technique and potential and these of. the most favoured nations a gap the bridging of which must be the main objective of the economic policy of the state in a transitional period. A state must therefore be in a position to accelerate the rhythm of its economic development by adopting measures of economic control. It is, however, of primnary importance to know whether countries in a transitional period should in fact relinquish a part of their economic sovereignty. It is for this reason that we asked Committee Il to, decide upon a body capable, if need be, of determining whether a country be in a transitional period, to what extens such a country should enjoy waiving rights, and when it should cease to do so. A satisfactory reply has yet to be given to these questioned For our part, we cannot accept a position in which subordinate organs of the, ITO or other similar bodies can settle matters for themselves and decide whether or not the measures taken by states are a necessary part of the full employment policy which those states have decided to adopt. On the basis of these considerations, the WFTU is of the opinion that: (1) the guarantecing of full employment must be the primary consideration. (2) the body set up to carry out this policy should occupy a position of greater importance than that of the specialised monetary and banking agencies, who should adapt their policies to comply with that of the former body. (3) the structure of this body should be such that it could never be accused of sacrificing the interests of countries ecnomically weak to those of the countries economically and financially the most powerful (4) the statutes and Charter to bc adopted by the -ITO must be sufficiently broad and flexible to make then easily acceptable to countries of the most divergent economic structures, thereby avoiding the danger of the formation of mutually antagonistic economic blocs. The relations between member states of the ITO and non-members should be 13 C4 E/PC/T/PV/6 clearly defined, cs should the methods which the ITO intends to use to secure the adherence of countries which have not yet joined the Organisation. If it is hoped to achieve this by means of sanctions and penalties, the way chosen seems to us to be fraught with danger. Such a method, far from making, for normal inter- national economic relations, would in the end result in the creation of two blocs and a state of even greater tension. The solutions advocated by the ITO to achieve full employment must be sufficiently realistic end constructive in character to forestall deflationary crises of under-consumption and not merely to mitigate or localise then. Once a major crisis has developed it is very difficult to localism it and to avoid its spreading across the world. This second task, however much easier than the first it may appear, is in fact one of the hardest to accomplish because of the difficulties inherent in the reversal of commercial trends. Since this question is of the utmost importance, I must repeat once more: A distinction must be drawn 'between a policy of warding off crises by means of a. policy of full employment as we have defined it, and a policy aiming solely at mitigating the effects of crises, which would in our opinion be a far less efficacious policy and, in spite of appearances, one far more difficult to apply. The WFTU believes that the methods at the disposal of the International Monetary Fund to forestall or minimise the effects of depressions and economic disturbances cannot prove sufficiently effective, since'. (1) the prohibition of the export of capital is likely to prove an illusion unless it is accompanied by control of current accounts. (2) devaluation carried out in a period of under-consumption of a reflationary character cannot be considered a sufficiently effective measure. (3) the establishment of restrictions with regard to so-called rare currencies is likely to be the more belated in view of the fact that rarity of the currencies in question can se deterrined only after the actual arrival of the crisis and the spreading in ever-widening: circles of diminishing effective demand. As we have already noted, a sudden riversal of commercial trends encounters very serious dificulties, 14 E/PC/T/PV/6 The world Federation of Trade Unions wishes also to emphasize that all measures will prove dangerously ineffective if the nations whose financial power is greatest and whose influence proponderates in world economy do not carry out a consistent full employment policy based. on a redistribution of purchasing power in favour of the working classes at home and do not practise abroad a broad policy of international lending and at the same time throw open their markets to the products of debtor -nations. The W.F.T.U draws the attention of the Conference to the fact that world peace and prosperity depend primarily or its reaching a solution along really international lines of the problems facing it and in particular of the problem of full employment. As you are aware, we put to the Pre-paratory Committee of the Confernce on Trade and Employment a series of questions to which we have had no reply. We believe that the sessions to be hold in New York and Geneva will provide us with more detailed information on all the points which are our special concern and that the brinin- together of our respective points of view will be rich in results. I was most happy to hear that certain of you have insisted upon the importance of this Report on public opinion in order to bring to a fruitful close and result the work you have been. The W.F.T.U., whose membership includes more than sixty million men and women, have a very strong influence, perhaps a decisive influence, on that public opinion. That is or of the many reasons which make me believe that our Participation in your work has not bean useless. the chairman(interpretation): I thank mr duret for his statement. We shaIl now resume this series of statements of Delegations, and I shall call upon Mr dimechkie, the delegate of lebanon. mr dimechkie(Labanon): Mr Chairman, Fellow Delegates: It was a great honour for us to take part in this Prepartory Comiittee, and we feel sure that our deliberations here will have a very favourable effect on the economic well-being of the nations and will bring about closer understanding and cooperation amongst the peoples of the world. Economic strife has always been at the basis of international misunderstandings, Therefore, if our work here has contributed to the amelioration of trade relations and the 15 D2 E/PC/T/PV/6 climination of economic friction we shall indeed have played an important part in laying one of the main foundations of world peace. I am sure that the purposes that the Organization has set out in the suggested Chartcr are in the hearts of all the people of the world. Our meeting here was held mainly to discuss the best means of attaining these ends - in other words, to discuss what sort of an Oranization we should establish to help us realize our aims. Here we have met delegates from different parts of the world. Some of us come from highly industrialized countrics, others from the war-devastated countries of Europe and asia; others again from countries which are still in the carly stores of economic development. We are all met to achieve a higher and fuller state of productive employment and an increase in the volume aof international trade and a higher standard of living; for all nations. Naturally, our work was not always without difficulties, difficulties arising from the very different problems which our countries face. Most of these difficulties, however, have been sur- mounted, and dispute the -problems that still have to be settled we feel sure that before long we shall have a strong and healthy Organization, fulfilling most effectively the important purposes for which it has been established, but an Organization which the world very badly needs. In conclusion, the Lebanese delegation would like to offer their thanks to you, Mr Chairman, for the wise guidance you have given, to the United States delegation for the Charter, the Charter, to the United Kingdom for their hospitality, and to the Executive Secretary and the Secretariat for their very efficient work. the chairman (interpretation): I thank Mr.Dimechkie for his statement, and I now call upon Mr Speekenbring the chief delegate of the Netherlands. mr speekenbrink(Netherlands): Mr Chairman, on the whole, I think I may say we have reason to be content with the progress made at this Conference. All of us have contributed to the setting up of constructive rules aiming at the expansion of world trade and enjoyment, this being the principal idea underlying; our task. If we have kept to that leading principle, we have at the same: time not lost sight of the responsibilitics of national requirements and, in doing so, we have had to make certain reservations. Those reservations, However, may be said to have been kept within reason- able bounds. As a result of all this we may confidently look forward to the next step on our road, but in the case of the Netherlands there are two important points which I have to mention. The first point concerns the position of Germany and the second refers to the structure of the Kingdom. The very vital importance which the mid-European hinterland has always had for the Netherlands economy is a well known fact. I do not intend to go into details, but I think it necessary to recall here and how that, as matters, stand, our economy is in danger of being made subject to an amputation it could sccreely be expected to survive. Cutting off our close economic relations with Germany, isolationg German economy and basing its financial on currency alien to that country does concern, the Development of trade in Europe and therefore our work. For it is clear that such a policy would greatly harrper our possibilities to take part in international trade to our full capacity. What are the Dutch arts going to do if trade should be diverted from its natural routes? What are/going to do with the export-surpluses of our agricultural production, in which throughout the years that lie behind us enormous amounts of capital have been invested, and in which about 25 per cent. of our population find a living, if traditional consumers of major importance are lost to us? These are just a few examples of the many questions which are being raised now in my country in this respect and arc of grave concern to us. Whilst the Netherlands Delegation have wholechertedly worked together with all other delegates round this table, to arrive at a draft charter aiming at expansion of international trade, at the same time the Netherland.are faced with next-door factors involving a serious contraction of inter- nationl trade, which set special problems to our economy. I shall not dwell further on this at present most unsatisfactory situation which at least has a very direct bearing on the transitional period which the Netherlands have to through. Thus I now ask your attention for the problems my country has to face with regard to anticipated changes in the structure of the Kingdom itself. Here the situation is not yet quite clear, but, on the other hand, I can state that considerable progress appears to 17 E/PC/T/C/PV/6 D4 have been made in a conference at Batavia where an understanding has been reached or a draft agreement which is being submitted to the parties con- cerned and may serve as the basis for developing, under the Crown, the future constitutional and other relations between the component parts of the Kingdom in Europe, in Asia and in the Western Honisphere. In due course we, therefore, will have to consider in which manner the different parts of the Kindom will adhere to the plans which have been worked out at this Conference. Mr Chairman, I brought to the notice of all members of this Conference two points of grcat importance to my country, and, having done this, I think I might be allowed to make, very briefly, a few additional observations with a direct bearing on the result of the Confer-- ence. The first remark is that the draft Charter as it stands contains . number of what are sometimes called "Escape Clauses." These Escape Clauses however, have been drafted by various Committees or Sub-Committees or Rapporteurs with the result that the wording is far from being uniform. No doubt the Drafting Committee will see to it that clauses of this kind, the interpretation of which may some day become very important, are worded in carefully chosen terms that are as closely uniform as will prove to be possible. The second observation is that we have an important chapter dealing with Commodities, but it may be that, owing perhaps to pressure of work, our present draft and the sequence of its clauses are not entirely satisfactory from a point of logic. I would like to suggest that there is a very close relation between commodity policy and commodity arrangement but commodity policy has been dealt with in various clauses of our chapters then the Commodity Agreements. It might prove very useful indeed if the Drafting Committee should look into the possibility of an alternative draft with regard to primary commdities in which matters relatin to commodity policy would constitute one single chapter together with the Commodity Arrangements. In this respect I cannot help thinking of the Washington Conference of the F.A .O. because this suggestion might facili- tate the coordination of I. T. O., F. A O. and possibly other specialized agencies on such very important matters of comodity policy. Likewise there is the question of the intricate system by which, since 1930, we 18 D5 E/PC/T/C/PV/6 have been compelled to conduct out affairs to safeguard vital interests of our agriculture. I submitted particulars of this system to several delegates who played an important part in the drafting of the articles regarding quantitative restrictions, state trading and subsidies. Tioe has been too short to reach dcfinitc conclusions in this rcspoct, but I am confident that further study vrill prove tfLt it is entirely consistent with the purpzoses of the draft t Charter. The v-ork of tha Comnittc on Er- ployrent I think of special importance, so that I iay say ac vord of apDpreciation on it and express the hole that the Resolution ;zo have acred.e upon will soon be forxarded to the Econonic and Social Council, in order to enable this Council to undertake the studios vihich .arc dace.Zd desirable. The Netherlands DelePation also arc in full aî;reconnt vrith the inclusion of a. new chapter on Econornjo Developie-nt, which thcy consider an irortant addition ta the purposes of' the I. T. 0. s a coneludinS ronark, M,,r Chairran, I should also like to dravi your attention to the Joint State.-.cnt -rfhich cux Prench and Belr, an friends acd ourselves have submrittcd TJith regard to the possibility oP apIeal to an Econoie Chcbor oaf the International Court of Justice from decisions of the I. T.0. f7e f'ol that such a sten is indispensable if the proposed Oranization is to be a success. Thank you, ir Chairman. THE CIL`'JMiù: (interpretation): I should liko to thank LIr S-ckonbrink for his remarks. I now call u-pon Mir Johnsen, the chiot dole-atc of Neo Zcaland. MUqR JOHNSEN (New Zealand): Mr Chairman and Gentlemen. On behalf af- the New Zealand Delecation, mey I scy how pleased. wc have bcon to participate in this Conferencc? W0 share v;ith others the vier, that nothing but good can come from a meeting such as this, attecndod byreprosoentatives of so Oany nations having so vide an interest in vrorld trade and attendant problcris. It is only through the exchange of' ideas ,and inforr tion rclardin tha problcns a1fcctin: our -particular countries such as -,- hava hacd at tius Conference thatit is possible to scc haov f'ar it is practicab.le to dcterrmir a 'col-nan set of ruies ïhich miiht fomr the basis on which worl&- trado policy might be conducted. The discussions which vic have had should assuredly ,o far towards reaching that objective. It is ulcar that thore is common recaSni-tion of the necessity for develoient of ccononic resources as a 19, E/PC/T/AV/6 D6 means of providing employment and of raising standards of living , thereby leading to an expansion of international trade. The reports of this Con- ference will provide a useful basis for further study of this very im- portant and interesting, subject, not only by the countries which have been represented at the Conference, but by aIl countries having an interest in world trade. We hope that the good work which we have connenced at this preliminary seeting will be carried further at the next session of the Committee. May I say in conclusion have much -personal pleasure the New Zealand. Delegation have derived in being associated with the representatives of other countries in this task to which our respective countrics have attached. themselves in the interests of the world as a whole? We have been impressed most deeply with the spirit of good will which has existed right throughout the Conference, and we are certain that the friendships made will endure for a long time. We should like to give recognition also to the contribution of all those who have helped to make the Conference a success, to yourself, Sir,. to the Secretariat, to the Chairman of Committees, to the Rapporteurs, and to the staff generally, without whose personal efforts we should not have been able to record so much -progress in-our work in so short a period. Thank you. the chairman (interpretation): I should like to thank Mr Johnsen. Now I call upon Mr Colban, the delegate of Norway. 20. D6 E. fols. E/PC/T/PV/6 E-1 mr erik colban (Norway) I believe - as those who have sopken before me - that we may congratulate ourselves upon the results to which we have provisionally arrived during, our six weeks of stronuous work, The excellent spirit and cordial atmosphere which have existed between the delegations have certainly greatly contributed towards this. We realisethat such results as we have been able to reach are not final and as yet not binding upon our governments. The norwegian delegation has made certain reservations and has expressed doubts as to whether certain texts arereally the proper means of realising our common purpose. But in spit of our reservations and doubt, we consider that what has been achieved here in london constitutes a valuable step forward., The idea which we have come together to try to bring nearer to its realisation has in fact taken more concrete form in cur minds and the texts which we have worked out represent a marked advance on anything we have had up to now, I trust we shall succeed, Because we have the will to succeed, The difficulties still not yet overcome must be studied eurther in the spirit of the most determined desire to solve them through mutual concessions - concessions which should result in bring about a state of affairs such that everyone of us may find that, after all, what now are looked upon as concessions do not really imply a sacr fice but rather a contribution to the vast construction of satisfa-, tory world trade and satisfactory employment conditions. I for one believe In full confidence that we all will be better off after the successful termination of our labours next summer and autumn, I need not emphasise the importance of economic : wellbeing for the political stability and wellbeing of all countries We are all -of us decided to so ahead with determination We are all of us decided to be frank and sincere in the defence of the interests of our own countries. I think we may promise to examine all outstanding problems with the calm and inexcitable mind of wise non We are in for something that is the lmmediate concern not of governments only but of all mankind. We need support of public opinion in all countries. I have had pleasure in noting the keen interest which not only other public international bodies. May also 21. E -2 E/PC/T/PV/6 the International Chamber of Commerce and the World Federation of Trade Unions have shown in out work, It will be a grant help in the furtherance if our task that these and other international organise tions are willin to;willing to assist us through direct contact and also, and mainly, through the influence that they, each in their separate fields, may be able to exercise on public opinion and in the counsels of governments. (Applause.) THE CHAirman (Interprotation) I would like to think the delegate of Norway and I now call upon Mr. van der Post, delegate of the Unicn of South Africa, Mr, A F VAN DER lost (South Africa) : Mr Chairman, on behalf the delegation of the Union of South Africa, I wish to express our pleasure at having been associated with collenagues from seventeen other countries and with the members of the Secretariat in the lnteresting and ver useful discussions of the past six weeks Unfortunately our ship has had to change Captain several times, but as Third Pilot in charge I am pleased that we have bean one of the convoy now approaching port. The convoy has enjoyed sunshine and good weather, but, as is to be exiected by those who brave the sea: it has also had to traverse troubled waters and at times has sailed under cloudy skies. That there should have been collisions and the all of us perhaps have some scars is not surprising; Out, despite all difficulties, we are pleased that the convoy has weathered suc stormy seas as it may have experienced and is now ready to drop anchor at its first port oa call. If we exclude the Economic Conference of 1933, this Conference represents - certainly in this post-war era - the first great atte, on the part of a comparatively large number of countries, represon tive of both hemispheres and all atitudes to meet round a table a. examine the problems of freer trade, Differences of opinion there were bound to be, but the mere fact that, so many persons represent tive of eighteèn nations and, therefore, of widely diffiering, inter. could meet and devote six weeks of close scrutiny andf study to a desirable and common objective is, to say the last, most encourag What is still more encouraging l-s the degree of unanimity that has 22. E/PC/T/PV/ 6 been reached between us as delegates on a number of imports points. We rrealise of course that nothing that we have done here commits our individual governments; but nevertheless, the cordiality and degree of understanding which have characterised our discussions even as discussions of officials and the degree of unanimity reched by Us on points of agreerment as well as of difference augur well for the future. We certainly should not be complacent, but more certainly need not be possimistic or even sceptical about what our association of the past few wes has attained. Our convey is about to disperse, only, however, to converge again within another few Months and steer upon our second port. We wish the smaller convoy which we are dos- patchlng to New York success in lts course and look forward to our converging , at Geneva in April with well-warranted courage to under- take the greater task which will await us there, In conclusion, Mr Chairman, I wish on behalf of our delegation to thanks you and the various Chairman of committees and sub-committees for your and their leadership, and the Secretary and its staff, including the translators, for their very efficient services. Finally, we wish our colleagues of this Conference the complIments of the approaching season and look forward to meeting you, Sir, and them again in the New Year. (Applause,) the chairman I would like to thank Mr. van dar Post and I now call upon mr marquand, chief delegate of the united Kingdom. Mr. H. marquand (UK): We met six weeks ago to tackle a highly technical task. This task the United Kingdom Government b. lieves, is of critical importance not merely for my own country, but for the future of the world. Somehow, we must find the; way of making it clear to the peoples of the world how much it means to them, At the mo :, ri are in the carly stages and while the task is yet incomplete it might be the resolve of u all to secure greater understanding of what we are doing. As I said, we are engaged on a task of great technical diff alty, What was it? we had prepare annotated agenda for a further Conference. That Conference, we hoped, would lay the foundations of an International Trade Organisation. At the same time, it would begin the job - the necessary job - 23. E 4 E/PC/T/PV/6 of removing some of the obstructions to the flow of world trade and plan measures for increasing that flow. Our task .as mplicated, but our objective was modestly and realistically stated. We are not to solve the major or problems. We were to explore them, to examine them, to state them, perhaps to outline the means by which they could bc attacked. But we were to leave the major task to the further conference. Setting out thus modestly, we have exceeded out expectations. we have surprised ourselves. We have found almost complete agreement in stating the problems which must be solved. Perhaps that may seem easy; but we have also be, able to agree in the main on the degree of importance of the various problems an the order in which they should be tackled. More than that, we have found a remarkable meeasure of agreement as to what the ultimate solution of every one of our problems must be and as to the means we can use to ensure these solutions. This we have been able to Go because we have tried to be constructive, to go forward to something nctw, net merely to rectify the mistakes or correct the errors of the past,, :e have agreed not merely that we must free world trade from obstruction, but that we must expand it. We have accepted the objecàtive of a high and stable level of employment: we have set down, in outline at Ieast, means by which we think it can be attained. We have agreed on the methods of international action which can be taken which the supply of primary commodities threatens seriously to exceed demand. There is no difference between us as to the need for an International Trade Organisation and. little difference as to its constitution. There are some differences among us as to the quickest .means of diversifying the economies and increasing the wealth of under-developed regions, but there is no difference as to tho need to do so. There may be some difference of empasis about the restoration of the economic life of Central Europe, but there is no differencef principle. I am particularly glad that it should have been in the oldest capital City of the British Commonwealth that this agreement had been found. You may well think after your experiences here that it could be an advantage if our standard of living could be raised. You may even think that our climate could be improved, But I con see that you have all derived benefit from breathing the air of compromise which prevails in London. May 24. . E 5 E/PC/T/PV/6 I, like others, pay tribute Mr. Chairman to the sagacity -and tact with which you have guided us to these happy conclusions and to the smoothness and efficiency with which the Secrctariat has provided our technical services. when the President of the Board of Trade welcomed this Conference at its first Sossion he said that in discussions such as these every nation must be prepared to give as well as to take. The United Kingdom delegation at this Conference has followed that advice. So, I whole-heartedly recognise, have all other delegations. But when we scparate let us not imagine that the need for agreement and understanding has diminished. The prize that we seek to win is so great that we may all of us justly incur risks in oder to gain it. Our need is urgent and time presses. You will return now. to report to your Governmen. The Government of the United Kingdom hopes that every Government will look with a f avourable eye upon these reports. I hope that those Governments will be able to send their delegates to breathe the air of insipiration in Geneva in the Spring - an and inspiration to resolve every differency to carry through there with speed the bigger task of establishing world trade upon firmer and more lasting foundations than in the past the chairman (Interpretation): I thank you Mr Marquand and I now call upon Mr. Milcox, the Chief of the United States Delegation. 25, E/PC/T/PV/6 mr ilcox (US): Mr. Chairman, today we come to the end, not of or meeting but of six. We have completed a series of conferences on international economic policy., dealing, respectively, with employment, industrial development, commercial relations, restri ive business practices, commodity arrangements, and the ostablis ment Of a now organization for -world trade. We have dealt with subject matter that prosents, in its co-combination Of diversity, complexity, and political sonsitvity, a problem so difficult that it might well have defied the negotiators art. Yet on oveI major issue that has been before us, in every one of these conferences, we have come, all or almost all of us, to an identi of views. We have worked steadily and quickly, in an atmospher of cordial co-operation, ---here each has sought to find his own interest in a purpose that is common to us all. And we have completed our task within the time that we allotted to it when.- met. have- -arrived at wide agreement, speaking as exports without committing our governments, onnine-tonths or more of the text of a charter for world trade, employment, and economic development. I am happy that the preparatory work that was done within my own government has contributed to this result. But am equally happy that the draft that is no taking form has a better balance, a greater realism, and a finer precision than th one with which we began. The document that is omerging will give expression, not to the lowest common denominator, but to the highest common denominator of our views, The principles on which we have built are sound. Our work has been well done. We have gone farther and faster, I am sure, that any one of us had dared to hope was possible six rocks ago. We have made a good boginning, but it is only a beginning. The instrument that we have forged in London must be polished this winter in New York, hardened with the alloy of trade 26. a ions n s in in G .a,s ed in the conference or many nations that will follow, acceptodby world opinion, andput into operation by governments . The way ahead of us is long and may be difficult. But we are facing: in the.right direction and we have taken the first sure stops toward our common goal. And in this there is great Promise for a worried and a weary world. As we have structed nere with the technicalities of unconditional most-favoured-nation treatment, discquilibrium in the balance of payments, non-discrimination in the administrat- ion of quantitative restrictions, and procedures to be followed in multilateral selective negotiations on tariffs and preferences, we have not lost sight, I trust, of the deeper problems that underlic these mysteries.. For the questions that we have really been discussing are whether there is to be economic peace or economic war, whether nations are to be drawn together or torn apart, --hether mon are to have work or be idle, whether their families are to cat or go hungry, -hether their children are to face the. future with confidence or with fear. Our answer to all of those questions is written in the Charter for th, world to read. In conclusion, Mr. Chairman, I should like to express, for my. deelegation, our gratitude for the many courtesies that have been shown us during these meetings, our admiration for the men with whom we have worked both day and night over the past six weeks, our affection for those .whom we have case to know as personal friends, our deep appreciation of the spirit of good- will that has animated all of-the deligerations of this committee, from the beginning to the end. We are pleased and we are proud to have been associated ith such a group in such an enterprise. (,Applause) the chairman (Interpretation): I would like to thank Mr. wilcox for his stattment. 27- Gen ha.c lis,..ed th the .,eatest of attention to the speeches made by the various delegations, and I am vary pleased to remark that the impression that each one of them has drawn front the task of this Conference is the same as my own impression, high I allowed myself to express this morning in my speech. I think are in the right ray and that we need only go ahead. Before separating I would like to say to you, first of all, how much I was moved by the gracious .:ords --hich most of you have expressed concerning myself . 'e have -,orkod in an atmosphere of thought, in en atmosphere which sometimes was even rather dynamic but above all we have worked in a good humour. We have sometime oven had the courage to make fun of ourselves, se -e have had soi sense of humour. We will laugh for many years yet about the famous Ruritanian amendment .'-.s1tch ras ciroulariscd a.Mongst all the delegations, and also the apocryphal report of the Procedure Committee. If we had this courage it .-as because .:7 sav., -:hat rocks we wished to avoid, and thus. we found quickly and very easily the right path. I would now like to speak to the representatives of the Government of the United Kingdom, in order to express to them, ir my own name and on behalf of all of you, our thanks and gratitu, for the hospitality -hich re have enjoyed in London during' this last fre weeks. It does not seem to me an exaggeration to say that thé cordiality with which we were greeted there, the atmosphe of seriousness, of work and organization with -which old England is so full today, have helped in the excellent results which we have reached. I would like to thank the Directors of Church House, this fine building of which we now know all the many passages' To the managers I would like- to say her much I have appreciated their effective and discreet organization. Gentlemen, hero in Church House you have found excellent co-operation and such goodwill in 28. your -work that you -were able to f inish your task in a relatively short while. It is none the loss sure that this result is to a great extent due to the valuable work of the Chairman of the different Committees, and now I would like to pause in order to greet them all: Mr. unsz King, the representative of China. Mr. Coombs .who has such a heavy taks and to whom we all owe so much Mr. Helmore, .-hose Committee. worked so valiantly that it was all the more worthy of our was all the more worthy of our homage today we are sorry out to have amongst us today Mr. Edminster, Mr. Malik and Mr.. Dieterlin, but let their absence not make us forget all that we owe to them. Every one '.as -orthy of his task and I associate you all together in my thoughts. All delegations worked d effectively. I cannot name them all, nor all their qualities, but I do not --ish by this silence to seem to forget the excellent work done by myfriend Mr. Speekenbrink and the Procedures Committee. I --oul also like to turn towards the Interpreters and toll them how much I admire their work and how they have accomplished their difficult task, often in very difficult circumstances. Finally, I would like to give a very special place in this tribute to the Executive Socreitariat of this Conference, thanks to which we have been able to accomplish oui task. Mr. ".yndham- white, Mr. Lacarte and their brilliant group of co-workers have been model agents and - we must admt it - the real workers of this Conference. I cannot do better than to thank them in your name and in my orn name. Now, gentleman, I must say. farewell to you and-wish you a speedy return to your homes, a Happy Christmas, and lot us meet again in the future, (Applause). Gentlemen, I feel it is my duty nem to say a fe- r 2erds in English to my English-speaking friends who form the majority of this Conferonce. Most of the time what I have had to say has had 29. / / / 6 to be conveyed to you through Interpreters. I should like to thank then for exprcssing my thoughts so admirably, and without their help my task could have been most difficult. However, on this occasion I feel that I must speak to you directly and :-give you a few words of farewell in your own language. I wish first of all to speak to our host, the British Government , who have helped us so generously and whom I thank most sincercly for their very cordial hospitality. Long will be remember the Church of England, 'hose promises have formed the setting for our meetings. Long will be rememberedthe Hoare Memorial Hall, the consultation room frorn high we were regular driven by the noise of the work! And the corridors where severa. delegates regularly lost their way My five weeks in London have been both very hard and very pleasant; very hard. because we have all had to tackle a lot of -.ork,-but also very pleasant because of the execellent relations established between us and the feeling of mutual good-ill and the desireto collaborate in the common task. I should like to add a word of thanks to the members of its Secretariat whose zeal, efficiency and kindness have been more then useful to me and to us all. I shall always retain grateful memories of my stay hero, and: I sincc-rely hopc c shall all moct again next Spring at Geneva. (Applause) I no call on Mr. Speckbrink. mr enbrink: gentleman, I have been allowed the privilege of saying a last word to you, and I do that with the more placasure owing to the close relationship between out two countries and also between us as collcagues, and when we got a wide Customs Union, ell we may be trains: Mr. Chairman, I am not a man of many words, 60 I rill only say to you this, that it is my privilege to express: to you the appreciation of the .wholceConference for the impartiall and wisce 30. guidance which you have offered to us .We have indeed been fortunate to have you as our Chairman - a an who combines such high qualities of tact, experience and personality. Thank you. (Applause) . the chairman (Interpretation): I thank Mr. speekenbrink - my friend speekenbrink - with all my heart for his kindess and his very good words.. Gentlemen, I believe that we have come to the end of our work we had hoped to finish this evening, but we have had the pleasant surprise of finishing at tea-time Therefore, I declare the meeting closed. 31 .

GATT Library

tz288rg6566

Verbatim Report of the Tenth Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Tuesday, 19 November 1946 at 2. 30 p.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.II/PV/10 and E/PC/T/C.II/PV/10-11(A)

https://exhibits.stanford.edu/gatt/catalog/tz288rg6566

tz288rg6566_90220013.xml

GATT_157

A1 E/PC/T/C. II/.PV/10 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPATORY COMMlTTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the TENTH MEETING of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S.W.1 on Tuesday, 19th November,1946 at 2. 30 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. A2 E/PC/T/C. II/PV/10 THE CHAIRMAN: Gentlemen, we have received from the Technical Sub- Committee of Committee II a draft Report for the consideration of this full Committee. I will ask Mr Videla, the Chairman of the Technical Sub-Committee, to introduce the Report. MR VIDELA (Chile): Thank you, Mr Chairman. As the Chairman of the Technical Sub-Committee, I should like to say a few words before I ask our Rapportour, Mr Roux, to present the Report. We were at least two weeks on the provisions and the previous procedure, and on the 1st November, for instance, we adopted on show of hands the deletion of the word "person" in Article 10, but on the same day the Heads of Delegations adopted a new procedure which was explained to our Sub- Committee, and on the 1stNovember it was adopted. Since the 1st November wre have proceeded under pressure of work and under the arrangements made by the Heads of Delegations Committee in order to finish our work before or on the 12th November. This is the reason why, accepting and accomplishing our task with new procedure, we are able, I think, to be the first Sub-Committee to present to our full Commit- tee a Report. I must say that the technicalities and other technical matters involved would have taken at least two or three months if we had adopted the procedure we first started with during the first two weeks. There was general agreement amongst the members of the Sub- Committe first not to divide the Sub-Committee into small Drafting Committees as regards the difference of wording between the French language and the English language, and also the technical questions involved made it very difficult to divide the work of this Sub- Committee, and every Delegation wanted to present and discuss fully the meaning of each word. That is the reason why this Committee, which is not a Drafting Committee but a Committee on technical matters, could not find a way to present a draft first, because we could not subdivide our staff into small Drafting Committees; and secondly because we had no time. The Secretariat asked us to finish our work before or by the 12th November. After what I have said, I would like only to thank my friends, my fellow Delegates, for their splendid work and for their 2. A.3 E/PC/T/C. II/PV/10 great help to the Chairman, and particularly I want to thank the Secretariat and all my friends here, because we have accomplished in a very nice and friendly atmosphere one of the most difficult tasks. Thank you, Mr Chairman. I am now going to ask Mr Roux, who has just arrived, to present the Report of the Technical Sub-Committee to you. THE CHAIRMAN Thank you. I now call upon theRapporteur. THE RAPPORTEUR (Mr Roux) (Intrepretation): Mr Chairman, I do not think there is any need for me to go into details of the work done by the Technical Sub-Committee. I shall merely say a few words on the subjects dealt with and try to bring out, as objectively as possible, the general trend of our discussions. In the case of the problem raised in Article 9, it is not enough to guarantee the different nations equality of treatment, that is, most favoured nation treatment; they must be granted equal treatment with the importing country itself, in other words, national treatment. One question raised hero is the levying of internal taxes or duties other than customs duties, which necessarily affect imported products as they do domestic products: the other question is that of the industrial and commercial regulations applicable to such products once they are out of bond. The principle set forth in the Charter is unchallenged, but difficulties arise in its application either by reason of the apparent discriminatory nature of the various measures called for by particular situations, or as a result of the difficulties which certain countries - I particularly refer to States of a federal structure - experience in securing the applica- tion of these regulations by their local authorities. Article 10 ,following the 1921 Barcelona Convention, on which it could with advantage be more closely modelled, asserts the principle of freedom of transit. The authors of the Charter have found it necessary, at this junteure, to raise the delicate question - which arises also in connection with Article 8 - of the tariff rate to be applied to products imported through the territory of a third country. On account of the widely differing regulations existing and the insufficiency of our information on this point, 3. A.4 E/PC/T/C.Il/PV/10 we were unable for the time being, to do more than retain the practices in force in various countries. Article 11, dealing with measures designed to counter dumping and subsidies, shows the tendency of the United States, author of the suggested Charter, to modify its own legislation in accordance with its proposals. The text appears for the most part satisfactory and precise. It might, however, be improved by safeguarding States against the ill- considered application of these measures which, if they were applied without due deliberation, might well harm international goodwill. In Article 12, which deals with tariff valuation, similar tenden- cies on the part of the USA can be observed. But in so controversial a matter it was not possible for the moment to formulate such detailed regulations, and the Committee is inclined to think that it would be better to omit from this Article anything other than general principles. Article 13 deals with the simplification of customs formalities and condemns indirect protection. The final drafting of this text will be helped by the work of the League of Nations on which we might well base our work to a larger extent. On the other hand, Article 14, dealing with marks of origin which, in certain countries, must be fixed to imported goods, raises a series of problems which had not before been very fully considered. Here also, as in the tariff valuations dealt with in Article 12, the wisest course appeared to be to keep to general principle. It was in connection with this Article that we had to face the important and delicate question of the protection required by several countries for the time-honoured trade marks of a geographical type covering certain goods of worldwide repute. As in both cases, the question at issue is, in short, to ensure fair trading practices and to safeguard the buyer, it was felt, for the very reasons underlying Article 14, that it might be wise to reund off the Charter - this point by an explicit mention of the problem. Article 15, on the publication of customs regulations, is, like Article 13, related to problems already considered at Geneva. General agreement was secured, but it seemed advisable to deal cautiously with 4. E/PC/T/C.II/PV/10 matters of internal fiscal dispute and inadvisable moreover to regulate too closely the temporary measures to be applied in favour of consign- ments already on route when tariffs are increased or fresh restrictions imposed. A similar measure of agreement was reached regarding the statistical information called for in Article 16, provided always that we are con- tent to make progress by degrees and to take into account the material difficulties experienced by some countries. Article 17, dealing with the renunciation of boycotts that are likely to endanger economic peace, has less technical implications. We attempted to define the idea as fully as possible. The Committee's last task was the examination of Article 32, in which are listed the general exceptions to Chapter IV of the Charter. We reviewed the list in the light of the principles put forward by Article 13, and a. t that it was necessary to make it clear that the provisions of Article 32 should not becaused as a cover for unjustifiable discriminatory practices or practices designed to secure indirect protection. I must add that in connection with many of the Articles I have just mentioned, reservations have been expressed so wide in scope that they might be applied to the Charter as a whole: the necessity to make progress by degrees and to allow time for the putting into force of the obligations undertaken by States: the special position of federal States, of countries not yet highly industrialised and of countries in the process of re-establishing their financial or political position; the possibility of invoking the Organizantion before a particular measure is decided upon or afterwards. at the request of a Member State which considers that it has suffered prejudice. To spare the time of the Committee, I shall bring this analysis to an end. This Report is a piece of work done in good faith, laid before you in all humility by men of good will, accustomed to dealing with realities, desiring rather to put forward plans capable of practical application in the existing conditions, than to state abstract principles or propose ambitious new departures. 5. E/PC/T/C. II/PV/10 The Rapperterus ask for your confidence, and beg that you will net reopen the technical discussions which have already been given opportunity for debate in the special Sub-Committee. It beheves me here to note the liberalism, the courtesy, the goodwill and the breadth of vision with which the Chilean Delegate, M. Videla, has directed our work. It is thanks to his personal initiative that the most controversial questions have been threshed out, with the utmost cordiality, by delegates coming from widely separated countries, holding different viewpoints, yet constituting, in the course of their work as a Sub-Committee, a homogeneous group of exports anicably exchanging their views and suggestions, and animated by the same desire to create a lasting organization that would prove satisfactory to all. And our efforts will have been fully rewarded, Mr Chairman, if you will be pleased to associate yourself with the tribute we all pay to M. Videla. In conclusion, I should like also to draw attention to the efficiency, the indefatigability and the perseverance of my American colleague, Mr Johnson, whose influence is still felt in our midst even after his return to the United States. It was with him that I began the examination of the Charter, and now, at the moment when, thanks to the labours of my folIow Rapporteurs from Belgium, Canada, the Netherlands and the United Kingdom, this task has been brought to its conclusion, it gives me great pleasure to associate Mr Johnson in the success of the work in which he played so notable a part from the very beginning. 6. E/PC/T/C. II/PV/10 THE CHAIRMAN: Thank you. The Report of the Technical sub-Committee is now before the Committee for consideration. Before we pass to a detailed consideration of the Report, I suggest we turn our attention to the point to which the Chairman of the Technical Sub-Committee has drawn our attention, and that is that as a result of a desire to adhere closely to the instructions issued to the various sub-committees and because of the intense difficulty and the technical character of the subject, they have reported substantially along the lines that wherever differences of opinion were apparent those differences were recorded accurately and precisely, but little attempt was made, in detailed analyses and dis- cussion, to seek alternative drafts which perhaps might have reconciled those positions. It is quite clear that the Technical sub-Committee in this way acted in accordance with the general direction which had been issued; but I do wish to obtain the views of delegations on the question of whether, in view of the fact that the duration of the Conference has been somewhat extended, it would be possible to take this question any further, or whether we should acccept the Report finally in its present form. Quite clearly, it is appropriate, I think, subjct to any particular views the Committee may wish to put forward, to adopt it so far as it has gone in its present form; but that does raise a question of whether it might be possible, in the few days left to us, perhaps to take the matter a step or two- further, so that the task of the Drafting Committee in January and consequently the Second Session of the Preparatory Committee in April will perhaps be somewhat easier. I would therefore ask whether Delegates have any views on this general question, whether we should adopt the Report finally in its present form, or whether perhaps, after adopting it provisionally in its present form, we should attempt to seek a further reconciliation of views upon those matters where a substantial body of agreement appears to exist, even though some reservations may be necessary from the draft report of the Technical Sub-Committee itself. I shall be glad to have the views of delegations on this question. 7. A2 E/PC/T/C. II/PV/10 MR MORTON (Australia): Mr Chairman, I should like heartily to endorse your approval of the work of the Rapporteurs in reporting as they have done strictly in accordance with their instructions. They have produced an excellent piece of work, which clearly sets out the points of view on which there was found to be universal agreement, and in such cases amendments to the draft were made and they clearly noted the points of disagreement amongst the various countries. Nevertheless, the document as it new appears before you has indicated so few points of general disagreement and, in consequence, so few amendments to the Charter, that I think you should regard it for the moment from the angle of its assistance to the January Drafting Committee. From that point of view, Gentlemen, it is not in my opinion entirely satisfec- tory. We do not know what manner of form the January Drafting Committee will take or who will constitute its personnel, but I feel certain that the various countries will not be able to send solely for the purpose of drafting the Articles relating to general commercial policy the same customs talent that they sent to this present Committee, and to that extent I think more use may be made of our presence here and the extent of our discussions here than has been done with this document considered solely from the angle of its assistance to the drafters. With that object in view, I have a suggestion to make and it is this: That where an amondment to the original text has been actively advocated by a reasonable number of countries, either by way of a suggested alteration to the existing wording or by the addition of a further sentence or paragraph, and where such amendment was not actively opposed by any considerable number, say, four or more countries, then the sub-Committee should make a recommendation to the Drafting Committee for the adoption or the inclusion of the amendments in the proposed draft. If you agree with that suggestion - and I think you owe at least that co-operation to the January Drafting Committee - it would open the way for each delegate now to propound such of his reservations and/or amendments as he attaches particular imprortance to, without, of course, delaying the Committee by reopening the A3 E/PC/T/C. lI/PV/10 arguments for or against it, the idea being sclely to ascertain whether thereis or is not a reasonable amount of acceptance of that particular viewpoint which is expressed throughout the Rapporteurs' Report. If a reasonable amount of agreement is found to exist on any of the points there raised, then the Committee should recommend that that amendment or alteration be incorporated in the January draft. Failing such reasonably general agreement, the draft and the report may stay as it is at present. If that programme appears to you to entail quito an amount of work, still I would suggest that it would be worth it. Thank you. THE CHAIRMAN: Does any other Delegate wish to express an opinion on this question? . fols. 9. B. 1. E/PC/T/C. II/PV/10 MR. HAWKINS (U.S...): I would like to say first that I agree with the views of other delegates that the Committee, has produced an excellent report. It has analysed the subject fully and has brought out what we all need to know in a meeting of this kind - on the difficulties all the various countries are in in respect of a given subject. However, it is evident from a hasty reading of the report, which is all that I have been able so far to give it, that there is wide difference of view on many of the provisions. Now the problem is how and when to reconcile them. I would agree with the delegate of Australia that it would be highly desirable to spend more time on this with a view to getting nearer agreement at least on important provisions at this meeting. My difficulty on that is simply one of time. These are very difficult questions, as the Committee has found in its discussions. I do not believe that hard-worked delegates in the closing days of this meeting, as now scheduled, will be able to find the time to give this the thorough study which it needs. If that is so, there are two alternatives, the first of which I am sure will not be particularly popular. That would be to contemplate remaining in session some days longer. If we could clear away the other things and free ourselves so that we could concentrate on this, I am perfectly sure that in 3 or 4 days of concentrated work - and I do not believe it could be done in less - we could obtain a substan- tial meausre of tentative agreement on this, as all our agree- ments are subject to approval at home. As far as the American delegation is concerned, we are perfectly willing to spend as much time as is necessary to do that. I know, however, that this would be difficult for many delegates, if not impossible. If that is so, the only other alternative is to turn the whole report over to the Drafting Committee which will meet after this Conference adjourns. If that were done - and I am not - 10 - .2. E/PC/T/C.II/PV/10 necessarily advocating it, - it raises a question of the form of this Committee' s report. I would suggest this as a possibility: that the Articles covered by the Sub-Committee be included in the next draft completely in brackets; that the technical sub-committee's report be adopted as a working document sent to the drafting committee but not made public. Now my reason for not wanting to make it public is that I am sure it would give an impression of a much wider area of disagreement than will be found ulti- mately to exist, which most of us would like to avoid. As faras I am concerned, either of those alternatives would be acceptable. MR. KUNOSI (Czechoslovakai): I am advised by the members of my dele- gation who have been taking part in the work of this sub- committee, that it would be much more practicable, and probably the only practical way to get some desirable re- sult, to accept the second alternative put forward by the American delegate, and to consider the report of the technical sub-committee as unfinished, perhaps sending a special instruction to the Drafting Committee in New York, at the same time drawing the a teration of the different delegetions to the fact that in this field it will be necessary for then to get further instructions from home in order to reconcile the differences now existing. I think it is possible to indicate quite clearly to the Drafting Committee that this is a task of the Drafting Committee in New York in the field of conciliatory work. I myself do not believe that, at this stage of our Con- ference, and after very long sessions, we could achieve anything more than has been achieved in the report presTnted to us. MR. FRESQUET (Cuba): I want to express Cuba's support of the second - 11 - B. 3. E/PC/T/C. II/PV/10 alternative presented by the U.S.... delegate. Mr. V.M KLEFFEMS (Netherlands): I think we are all greatly indebted to the Sub-committee for its very clear work. It has been suggested that we should try to let the Drafting Committee make an alternative proposal, dealing not only with diffi- culties which are of a more formal nature but matters of substance. There are a lot of alterations, additions and amendments on which it ought to be possible, without very great difficulty, to come to an understanding, and in other respects there are very severe problems on which there is a certain amount of disagreement. I think the Drafting Com- mittee would not be fully qualified to deal with matters of substance, if they are very important ones, and I would suggest that we should at least attempt here to try to condense the existing difficulties and to reach some understanding. Mr. McKINNON (Canada): I do not for a moment wish to detract from the tributes paid to the Technical Sub-Committee, still less to detract from those which have been paid to the Rapporteurs. Although not a member of that particular Committee, I dropped in often enough to witness the highly technical discussions that were going on, and to sense the difficulty which the members of the Technical Committee - and necessarily, there- fore, the members of the Drafting Committee - were facing in coming to any sort of conclusion on some of these, Articles which had been referred to them. At the same time, I cannot overlook the fact that the delegate of the United States referred to it as an excellent report. Quite frankly, I do not know if it is or not. I have not had a chance to go through it. It consists of some 40 pages of closely typed matter, packed with technical detail. I would think it is excellent if, by excellent, we mean exhibiting very large and substantial areas of disagreement; In that respect it is perhaps outstanding! And I say that, I repeat, without - 12 - B.4. E/PC/T/C. II/PV/10 casting the slightest reflection upon the Committee. I think that is inevitable when you get a Committee made up largely of technical personnel, administrative officials, who look at these Articles just as the camel would look at the eye of the needle if he were attempting to go through it: I should feel that I was not discharging my respon- sibility to my Government if I attempted here today, to- morrow or next week, to say that this is an excellent document or not. I might find that it was highly unaccep- table. At the same time, I realise that if, as the main committee, we attempt to go through this line by line - because that is what is necessary - we would be here not only four or five days but, I am quite certain, on a few points of substance alone, we might be here four or five weeks. One Article leads to another. administrative practice in one country is so different from the adminis trative practice in another. The valuation system in one area differs so much from that in another. Nomenclature enters so much into the consideration of the whole thing, that we would find that technical considerations such as we, not tutored in that respect, could not give,. would lead us into ramifications of policy. Much as I hate to see this particular report stand off in square brackets (to adopt the U.K. delegate's suggestion), I doubt whether we can do anything else with it. If it goes to the Drafting Committee, we must keep in mind the rule that has been accepted in the meeting of the heads of delegations, that the Drafting Committee which will meet in New York is not a policy committee; it is not a committeee that is supposed to express opinions. If we keep that in mind also allow that it is bound to make an honest effort to reconcile opinions where there appears to be a reasonabl area of agreement and if, in addition to that, we postulate now that the Drafting Committee which we have settled is to - 13 - B. 5. E/PC/T/C. II/PV/10 consist of not more than two or three at most from each member-country, should be: assisted by a highly competent body of technical advisers, then I think something might come out of the drafting sub-committee that could be con- sidered at the next session of the Preparatory Committee. In view of the pressure under which we are working, (the fact that we have a date fixed for the termination of these proceedings) I do not see how we can possibly go into this report, Article by Article, and adopt it or disapprove of it. Therefore I would somewhat reluctantly endorse the suggestion of the delegate of the United States, that the report in toto, without comment, go in square brackets to the Drafting Committee. MR. HAWKINS (U.S.A.): I did not make myself entirely clear, I am afraid. The second alternative was that you would put in brackets the Articles in draft, the ones that are under consideration, to show that they are not accepted, and that the report of the Technical Committee be adopted as a working paper for the Drafting Committee, but a working paper only, not to be made public. MR. McKINNON (Canada): I am very glad the U.S. delegate has given that explanation. I think that makes his suggestion still more acceptable. MR. CHERRY (South Africa): The proposal of the delegate for Australia is presumably, and in fact it is, to assist the Drafting Committee. If this is a matter of prime importance, the South African delegation will endeavour to do its best and pull its weight to proceed further with this matter. On the other hand, there is the possibility - in fact I think it is a probability - that the delegates will shortly return to their countries, report to their governments on the points raised, and there, is always the possiblity that they will be able to return to the next meeting in a position to withdraw certain reservations or not to oppose certain reservations raised by - 14 - B. 6. E/PC/T/C.II/PV/10 other countries. I think most delegates have experienced the particular position of hearing reservations made on points which have not crossed their horizons up to the present, and which they consider their governments need further to review. We must face up to the possibility that if this procedure is adopted, the Drafting Committee may find whomselves forced simply to put forward the report of the Sub-Committee as their report, without doing very much work on it. If, however, the matter is made easier, as I have suggested, by delegates being in a position to withdraw reservations or to agree with proposals made by other delegates, perhaps this will not matter so much. Whichever scheme is adoped, South Aricca will be content to do its best to fit in with it. MR. JOHNSEN (New Zealand): I think we are all agreed that it would have been highly desirable to be able to send to the Drafting Committee a document on which it could work, and from that point of view we must support the suggestion made by the delegated of Australia. The only difficulty I see in connection with the matter is the time factor. I was wonder- ing whether it might not be possible, even in the space of a couple of days, for the Rapportours or the Committee which went through all this material and are familiar with the views put forward, to have a look at it again with a view to setting out clearly those points on which\there was agree- ment, as suggested by the Australian delegate. Personally I visualise great difficulty, if a document like this is to be sent to the Drafting Committee in the United States, particu- larly since it is suggested by the Canadian delegate that it is not a policy-making body. That being the case, I can see great difficulty in various member-countries having the experts available to go into this matter further at the time when the Drafting Committee is doing its work on other sections -15 - B. 7. E/PC/T/C. II/PV/10 of the Charter. It seems to me that it would be more appropriate if those technical sections which could not be brought to a more conclusive stage here, might be held over until the early stages of the meeting in the spring when the various countries will have the personnel avail- able to do the job more completely. In the meantime, each of the countries concerned will have had an opportunity to consider the various views that have been put forward and, as has been suggested, should then be in a position perhaps to co-ordinate their ideas and get some clcer understandly fairly readily. So I would suggest that, if there is a possibility of any further examination being made of this document at this stage, we should endeavour to arranged it. M. LE BON (Belgium-Luxembourg) (Interpretation): In re-examining the Charter in the way proposed by the Asutralian delegate, I think we should begin a new serious of discussions which would promise to be difficult ones. If we touch this report, it may very well disintegrate. we should then have to begin all our work anew, perhaps without achieving better results than we have achieved. In view of this, I think we might follow the proposal of the United States delegate. B.A. follows - 16 - B.A 8 E/PC/T/C .II/PV/10. MR SHACKLE (United Kingdom): I should say, to begin with, that, owing to the pressure of work in the last few days and weeks, there has not been time for me to obtain a firm view from the United Kingdom delegation and, therefore, what I am about to say must be regarded, to some extent, as my personal impression. It seems to me that, in looking at this chapter, the first thing we have to consider is how far the provisions of this chapter form an indispensible basis for our further immediate work, and how far they do not, on the other hand, constitute a necessary part and basis for our immediate work and, therefore, could be remitted for more leisurely consideration later on. It seems to me that among the first class of those things which are essential as a basis for our further work, there fall such matters as tariff valuations, tariff classifications, anti-dumping and national treatment in matters of internal taxation and internal regulations. I think that, as regards those particular questions, we have to consider what is the sort of necessary minimum to lay down in order to provide a firm basis for the further work which awaits us in the in the immediate future. Now, applying that principle to the various particular questions in the chapter, it seems to me that in the matter of tariff valuations, the question of arriving at some standardised uniform basis of valuation which would sorve internationally as a long-term matter which we cannot hope to settle now, what is important for immediate purposes is that we should decide that tariff valuations and also tariff classification systems should not be so altered or capable of alteration that the results of the tariff negotiations which we are about to embark upon could be invalidated. It must be certain that, when we have negotiated tariff schedules, the methods of customs valuation and the systems of classification should not be altered in such a way that the rates of duty which we have negotiated can be altered. We must have firm ground under our feet for that purpose. - 17 - B.B 9 E/PC/T/C .II/PV/10. It seems to me, therefore, that, as regards tariff valua- tions and also classification, there should be a general provision which says that changes should not be made which would result in increases or negotiated and consolidated rates of duty. That is the first principle which I would like to suggest. When we go beyond that, it seems to me that the study of a standardised international system of valuations is a master which the Internations Trade Organisation might very well consider when it has got into the saddle. It requires time and careful thought which only a body in the position of the International Trade Organisation can give it. We certainly cannot give it such consideration at the present time. The same sort of considerations apply to the questions of national treatment in the matter of internal taxation and regula- tions. We need to make sure that internal taxation cannot be so manipulated as to evade the intentions and bindings of convention- alisations of tariff rates. We need also to make sure that internal regulation cannot be so manipulated as to circumvent the intentions of the provisions which we are about to suggest in the matter of quotas and quantitative regulation. I think also that, as regards anti-dumping, we need to have a certain understanding that the existing systems shall not be so modified as to invalidate the results of the tariff negotiations which we are about to under- take. It may be that, from that point of view, the best thing is to agree to something on the broad lines of what stands in the draft charter. At the same time, we must recognise that there are a great many difficult, very complicated questions involved in this matter of anti-dumping, which again it is proper that a body which has time to give consideration to the matter should take up. I think that is a matter which should be referred to the ITO, but we should be sure that meantime the situation is not, so to speak, made worse so that the effect of the tariff conventionalisations should be invalidated and undermined. As regards the matter of internal regulation, there is just - 18 - B.C 10 E/PC/T.C.II/PV/10. one exception which I think it is necessary to make as regards the exhibition of films. That is an extremely difficult and complica- ted matter. It goes beyond the field of purely economic considera- tions. It raises cultural questions and so on. I think one must take it as more or loss axiomatic that as matters stand at present countries will insist on being able to reserve to themselves a certain proportion of their own domestic market for films. There- fore, I feel that this is a matter in which, even though we may recognise that with a theoretical principle national treatment may be the right thing in the long-run, that is not attainable at the present time. At the present time, insofar as the action of individual Governments may need to be, as it were, moderated by international agreement, I feel that these agreements should be of a bilateral character, and that we cannot hope, as matters stand at the moment, to see a general recognition of the principle of national treatment in the matter of the exhibition of cine- matograph films. I think there I have said the main thing that I have to say. There is only one other thing I want to say, and that is that, in some of these fields such as freedom of transit and customs formalities, a great deal of work has been done by the League of Nations. I feel that it would be a pity if that work were to go unregarded, and that we should look at the results which the League of Nations produced, see what there is of value in them and see whether we may not, to some extent, at any rate, be able to incorporate the League of Nations agreement in our corpus of agreements which will form, part of the body of agreements under the auspices of the International Trade Organisation. To sum up, I would say that the dividing line should be what is necessary for the purposes of our immediate work and what is not necessary for the purposes of our immediate work. We should concentrate, in the first place, to settle such matters as are indispensible in order that there may be a solid basis for the work on tariffs, quantitative restrictions, and so on, which - 19 - B.D 11 E/PC/T/C . II/PV/10. we are about to undertake. Everything that goes beyond that should, I think, be remitted not perhaps to the Drafting Committee which, if it lives up to its title, will be concerned purely with drafting, not with questions of substance, but should rather be remitted to the International Trade Organisation, which might study these matters at leisure. MR. LOKANTHAN (India): I do not propose to follow the delegate of the United Kingdom in the detailed observations he made on some of the articles which are the subject of the report. I do not believe that at this meeting we can settle anything at all, and therefore the question as to whether any smaller portions of the various Articles, which are the subject of investigation here, could be accepted now, does not arise. Confining myself purely to the procedural matter, on behalf of the Indian delegation I support the suggestion made by the U.S. delegate - that is, his second alternative that the whole thing, should go to the Drafting Committee and that the Drafting Commttee should bring it to the next meeting of the Preparatory Committee. The difficulty, however, is this: that since the area of agreement in this is not as wide as in other cases, the Drafting Committee, not being a policy-making committee but only a drafting committee, cannot do anything very much itself. If it attempts to go further, and tries to draft on the basis of trying to reconcile, it cannot do so, obviously, without getting assistance on a technical level from various member-countries. As we know, the meeting in New York is not expected to be a forum, for that kind of work. Hence, all that the Drafting Committee can do is to take note of these things and send them along, with other drafts, and there will be a real difference between the Drafting Committee's work in respect of this Committee's report, and the rest of the things. C follows . - 20 - E./PC/T/ C. II/PV/10 I think it is necessary that we would send it only on the assumption that when it comes back it is allowed to be completely reconsidered in the light of the various suggestions that have been made by various Delegations. MR KING (Brazil): Mr Chairman, I should like to associtate myself with the suggestion made by the Delegate of the United States. The only thing I should like to suggested in addition is this. We have already, by instructing the Drafting: Sub-Committee to attempt to reconcil, differences of opinion, changed the character of the Drafting Sub-Committee. Would it be possiblle to go a step further and instruct that Drafting Sub-Committee, at least on this very important Chapter here to deal straight away with matters of substance? That is all I wanted to say. MR. KUNOSI (Czechoslovakia): Mr Chairman, it is entirely superfluous, now, after what the Delegate of Brazil has said, for me to take up the time of this meeting again, but I merely wanted to ask you quite definitely if you would be kind enough to read out the resolution accepted by the Heads of Delegations Meeting concerning the functions of ther Drafting Committee in New York, because I believe that some Delegations have an idea as to what the Drafting Committee should do, but I am afraid they have not yet taken any notice of the decision taken at yesterday's meeting of the Heads of Delegations, and if you could now gratify my desire that you should read out the resolution concerning the functions of the Drafting Committee in New York, then you would see that an important suggestion concerning the reconciliation of the different points of view as set forth by the Drafting Committee is possible and indeal very probable, and perhaps the Drafting Committee will try to do that. On the other hand, I sympathise very much with the views of the Canadian Delegate, who set forth a point of view with which nodbody, I think, will disagree, but I am wondering if some if differences of views and some reservations in this Report have not arisen for the simple reason that some questions came up just because the Technical Sub-Committee was composed of such brilliant but very definitely technical experts that perhaps just for the Drafting Sub-Committee members it will not be necessary for them to be technical 21. C. 2 E/PC/ T/C. II,/PV/10 exports on very specialised questions, but they will, on the other hand, have the considered opinion of the different Governments and in that way it might be just the body that will be able without very great difficulty, to come to some kind of agreement. MR SHACKLE (UK): Mr Chairman, might I ask a question at this stage? I am afraid it is a disgraceful admission, but I do not knew exactly what was the decision reached by the Heads of Delegations regarding the functions of the Drafting Committee. I feel it is very important for this task that we should know exactly what that was. THE CHAIRMAN: I am trying now to find a copy of the record of the deci- sion of yesterday, but speaking from memory the decision of the Heads of Delegations Committee was to the effect that the Drafting Committee would not be authorised to concern itself with reconciling differences of opinion; it was to concern itself solely with the tidying up of the drafts coming forward from this Committee, with the proviso that it/would be open to the Drafting Sub-Commtitee to forward to the second meeting of the Proparatory Committee to be held in April next their explanatery notes and comments on the various drafts which it had submitted to it or which it had prepared itself. Now, that addition giving the Drafting Committee the right to make explanatary notes and comments would enable the Drafting Committee, if it felt as a result of its examination what appear on the face of it here to be conflicting views, in fact to reconcile then without a change in drafting, merely adding a note of an explanatory character to its Report, in which it would draw attention to the fact that it believed that the difference in substance was mere apparent than real, and to suggest for the consideration of the Committee an alternative draft. But its fundemental principle, as far as I recall it, on which the Heads of Delegations decided was that the work of the Drafting Committee was to be concerned with the preparation of neater, tidier, more accurate and more self -consistent drafts of the articles generally agreed upon by this Committee; so that, I believe, is a point which would not necessarily have to borne in mind in the consideration of what it is proposed to do with this Report. 22. B/PC/ T/ C. II/PV/10 MR SHACKING; (UK) Thank you, Mr Chairman. I should like to say one thing. It does seem to me that that reinforces the suggestion that I have just made, namely, that the immediate task that we should set ourselves is to consider how far matters which fall within this chapter are such as we must settle in order to provide a solid basis for the immediate work that lies before us. MR HARKINS (USA): Mr Chairman, I must say I have been rather impressed with what Mr Shackle has said. We have for next Spring a difficult negotiating meeting to deal with tariffs, and it should get under way immediately without having to formulate provisions which area pre- requisite to getting on with those negotiations. Now I wonder - and this will again, I am afraid, raise a question of the functions of the Drafting Committee - would it, do you think, be within the proper functions of the Drafting; Committee, if we were to ask the Drafting Committee to formulate provisions dealing with the subjects Mr Shackle mentioned and any other which it finds to be, on full examination, indis- pensable to the getting on with the work of negotiating tariff schedules next Spring? THE CHAlRMAN I now have the resolution as agreed upon at the Heads of Delegations Meeting, and I will read it: "It is resolved that it will not be a 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 the different views expressed at the First Session, together with such explanatory notes and commentaries as the Drafting Committee should consider desirable and useful". It was, as I said earlier, brought out in the discussion that it would be comptent for the Drafting Committee in its explanatory notes and commentaries, if it thought that a difference in a point of view was apparent rather than real, to draw attention to this opinion on this matter and perhaps to suggest by way of commentary a draf t of words which would reconcile the points of view which, while they appeared to be different, were not in effect in conflict. The 23. E/PC/T/C. II/PV/10 Committee has before it several fairly concrete proposals. First there is the suggestion that this Committee II might work. rapidly through the Report of the Technical Sub-Committee and seek to obtain from Delegations a more precise short statement of their fundamental views on the issues covered in this Report, so that it could perhaps be decided here without great arguement that on the majority of questions there was a majority of Delegates in agreement. It would then perhaps be possible to include that draft as an agreed draft, with certain countries reserving their positions. It has been pointed out, however, that there would be difficulty in reopening; this question in any way at this stage, particularly in full Committee. Alternatively it has been suggested that we might proceed on the understanding that this work would take us rather longer than we anticipated, and stay on beyond the projected date of our conclusion until we were in a position to report a greater measure of agreement on these draft articles. Thirdly, it has been suggested that we might approve the Report of the Technical Sub-Committee as a working document, that the relevant draft clauses of the Charter might be included in the published docurment in square brackets, indicating that they had not been agreed, and that the Report of the Technical Sub-Committee as an approved working document should go to the Drafting Committee Meeting in January, and that the Drafting Committee should be entrusted with the task of seeking out of the material contained in the Report a set of draft Articles which could perhaps form the basis of a closer examination in April. Finally it was suggested that before we seek to take this matter any further we should perhaps attempt to divide the subject matter covered in this Report into two parts, the first part dealing only with those provisions which it is felt essential we should reach agreement upon before we are in a position to embark upon our detailed examination particularly of tariff. questions in April of next year, and that that attempt might be made presumably here, to reach some greater degree of unanimity upon this question, and that the balance might be referred for the ITO itself to deal with when it is finally constituted. I must say, as Chairman, that there seem to be considerable difficulties about any one of these proposals, but as 24. E/PC/T2/C.II/PV/10 attention has been drawn to the very definite limitations of the powers of the Drafting Committee which have been a read upon by the heads of Delegations, I feel myself that the suggestion that we should entrust the Drafting Committee with the task of reconciling the clearly con- flicting views embodied in this Report would both involve the Drafting Committee in the type of work which the Heads of Delegations Committee clearly did not envisage it should embark upon, and secondly it would make it necessary for them to be able to draw upon the services of technical exports. perhaps from a number of countries, if their delibera- tions were to proceed in a way likely to produce results. I wonder whether it is possible to adopt a compromise solution of this question. I think there is a great deal in Mr Shackle' s point that there are certain of these issues upon which it would be highly desirable to say the least, to have some resolution on the issues. Those may not be very numerous -I am not in a position to say without studying the Report in more detail - but if a resolution is to be sought before the April Conference it seems to no that it must be attempted here; but, on the other hand, it would be clearly unwise to held up our whole proceedings pending a re-examination of those issues. For the consideration of the Committee I put forward those suggestions: first, that we adopt the Report of the Technical Sub- Committee as it stands, in the way proposed by the United States Delegate, as a working document, which would be forwarded in the first instance for the Drafting Sub-Committee to do what it could within the limitations imposed upon it, and that would mean that the work that has been done so far would at least obtain the stamp of approval of the Committee as a whole, and we would lose nothing. Secondly, that we seek by the appointment imme- diately of a very small Drafting Sub-Committee to work over again the material contents in this Report by doing two things: first of all, to select those items which conform with Mr Shackle's is standard which would appear to be essential to each finality on as soon as possible, and in the light of this Report and the record of the discussions to bring forward alternative drafts for the consideration of the Committee, upon which a 25. E/PC/T/C. II/PV/10 greater measure of agreement might possibly be obtained, and on the remainder of the contents of the Report we would not seek any further reconciliation, but it would come to the Drafting Committee, and if the Drafting Committee within its limitations and powers did not feel capable of taking the matter any further by the preparation of alternative drafts, it would go to the April Confernce, which could decide whether it wished to discuss the matter further itself there or whether the matters were such as could be left for the ITO itself to examine later. If we appoint such a small Drafting Sub-Committee to re-examine only the essential issues, I believe it is possible that they may be able to bring back to the Committee before the end of the week drafts upon which we may get a majority of agreement with reservations of a minor or funda- mental character perhaps being necessary on some of the issues by some Delegations; but that, I believe, would be a considerable advance. If I can sum up the suggestions which I have put before you, the first is that we approve the Report of the Technical Sub-Committee as it stands as a working document to be forwarded to the Drafting Sub-Committee to be dealt with within their terms of reference; secondly, that we appoint now a small Drafting Sub-Committee, which I suggest might include the two Rapporteurs together perhaps with a representative of some other Delegations; I think the two Rapporteurs were appointed by the Delegations of the United States and France; and we might add to them, and I suggest it for your consideration, someone from the Delegations of the United Kingdom and of Australia (Delegates may have views on the composition of such a Drafting Sub-Committee), but I suggest we attempt to keep it very small. That Sub-Committee would first of all attempt to separate from the Report issues upon which early decision appeared vital, and secondly should prepare for the consideration of the Committee alterna- tive drafts which in the light of the previous discussions appear to them to offer the prospect of a majority approval. With those revised drafts returned to the Committee, we would, seek approval if possible and, if not complete approval, then approval with reservations by particular countries. The balance of the Report, as a said earlier, would go 26. 6 C.7 E/PC/T/C. II/PV/10 to the Drafting Committee, and subsequently, with any alternative drafts they might prepare, to the April Conference. As for as the publication of the Articles is concerned, that might make it possible for us to publish certain Articles without square brackets, although it may be necessary in this case to record reservations for others where it was not considered essential to reach finality or where it had not proved possible to reach finality, and we could adopt the suggestion put forward by the United States Delegate, to print the articles in square brackets clearly indicating that they had not been agreed. 27. D.1 E/PC/T/C.II/PV/10 MR SHACKLE (United Kingdom): I agree with everything you have said. There is just one corollary I would like to add, and it is this, that this Drafting Committee should not only be instructed to consider what are the minirmum provisions, the minimum area of the subject-matter which it is necessary to cover for the purposes of our immediate work, but also the minimum provisions within the divisions of the subject-matter. For example, under tariff valuation, what is the minimum provision which is necessary in order to provide a solid basis for tariff negotiations? As regards quotas, what is the minimum provision in regard to internal negotiation? The task of this Drafting Committee should be to consider necessary minima both as regards the particular types of subject matter and the provisions within those subject-matters. MR LOKANATHAN (India): I should like to know: when, after the Sub-Committee reports, and certain process or discussion is agreed on, does that mean a binding agreement, or just an agreement in exactly the same form in which we agreed to everything else? Mr Shackle has raised a more fundamental point. If at this Meeting countries approve of certain drafts on those minimum topics, does it mean that the agreement has a binding effect in any sense of the term? It is a very important question because if there is an attempt to bind any country to the agreement which we may generally reach here, it is going beyond the purpose of our discussion. THE CHAIRMAN : So far as the suggestions I put forward are concerned (and this would probably apply to the United Kingdom suggestion also), it was precisely the same as we said it was, that it would be tentative agreement for the purposes of this first meeting. MR McKINNON (Canada) You are by nature so constructive, Mr Chairman, that I hate to indicate any measure of disagreement with you, and Mr Shackle is so persuasive that it is very difficult also to take any other line. However, Mr Shackle s suggestion boils down to this, in a very few, words, that the small Committee now appointed select a minimum number of vital and essential articles as being those on which there must be some measure of agreement reached before the spring; and, secondly, draft what, to them, appears to be a satisfactory solution. I didnot follow him closely enough to notice whether he mentioned 28. D.2. E/PC/T ./C .II/PV/10. four or five subjects, I was not making notes at the time, but from memory I think he did mention valuation, dumping, national treatment and classification, and one other. That is five. My recollection is that there were only ten articles referred to the Committee and they have been working on them for weeks. The vital one, on which it is desirable to reach a decision, is No. 5, which is 50 per cent of the field, and I would venture to say that in substance those five probably encompass 90 per cent of the field, and on some other sections, such as customs forms, there might be no discussion whatever. I just cannot follow it Shackle when he suggests a dividing line. I do not believe that there is one. I do not believe that we can find it unless we stay here another week or two weeks, in which time we might reach a reasonable area of agreement on four or five of the most substantial portions of this section of the Charter. Otherwise, I think the only thing to do is to adopt the suggestion of the United States Delegate and send it, for better or for worse, to the Drafting Committee, with the Charter in square brackets, for then to do with it what they can, and to the extent that they cannot create something, that will indicate fairly general agreement, it will have to come back at the spring Session. I think we are throwing away the substance and grasping at the shadow, if we think that in a few days a new sub-committee can reach a substantial area of agreement in five or six important subjects in this section. THE CHAIRMAN: First of all, the proposition I put forward did not involve accepting Mr Shackle's classification of what it was necessary to reach agreement on. I think that is quite clear, and it may prove that the area upon which agreemenat is desirable is rather narrower than Mr Shackle hads suggested. If that is so, it would make the task easier. If it is not so, it may still be that the task is impossible in the time available. There is one comment I would like to make on the remarks of the Delegate from Canada, which is that, if we adopt the suggestion I have put forward, we can in no sense be worse off than we are now, because at the end of the time which Delegates are prepared to give to this task, .we can be no further back than we are now, because we have approved the suggestion put forward by the United States Delegate that we adopt this report as a working document to go forward to the Drafting Committee. 29. D.3. E/PC/T/C.II/PV/10. If it proves possible, in the few days remaining to us, for a small number of the drafters to work out from this something which might receive general acceptance, not necessarily complete acceptance, we mould at least have made that much progress. If the time comes and it is found that the Drafting Committee has not been able to reconcile the views on anything, we are just where we would have been if we adopt the United States suggestion. If they manage to reconcile the views on one point, there will have been that much progress. MR CFTEDAL (Norway): The Norwegian Delegation doubts whether we could accomplish very much if we started discussing; this any further at this moment. We would be more likely to agree to have this report sent over to the Drafting Committee as a working document and let them look at it. If we appoint at this moment a small drafting committee to go through it, we doubt very much whether such a committee could reach agreement on more articles than, for example, the Drafting Committee in New York would be able to do. I might mention that I have taken part in the Technical Sub-Committee which has discussed these matters which are now before us; and although I am not one of those brilliant technicians who have been mentioned here, I am one of the ordinary service officers, I would say that when we, in Norway, went through the American draft Charter, we did not find many things to which we were very much in opposition. It also seems to me that many of those objections which have been raised during the discussions of the Technical Sub-Committee are matters of technical substance which the different Delegates, going back to their different governments after this meeting, might be able to bring up with the appropriate government authorities. I presume that most of the countries represented here will take part in the work of the Drafting Committee in New York, and they may be able to inform their representatives there of possible withdrawals of the objections, in order to reach agreement on the different articles. Therefore, I think the best thing might be for this report to be sent to the Drafting Committee as something of a working document, in the hope that they will possibly be able to reach agreement in a much larger degree than we would be able to do at this moment. 30. D.4. E/PC/T/C.II/PV/10. MR VIDELA (Chile): It this stage, I would like to call the attention of the Committee to the last part of the report, under the heading "Concluding Remarks". It was agreed at the meeting to report to this Committee II these concluding remarks. The point which arises on several articles in this section is the definition of certain terms used therein, such as "like products", "similar products, "country of origin", and so on. The Drafting Committee might consider the desirability of including in this section of the Charter an article containing definitions of these terms and other terms which present any ambiguity or obscurity. I must call the attention of this to the Committee, because this was one of the great difficulties in proceeding with our task, and I think this difficulty will arise also in any Drafting Committee. MR SHACKLE (United Kingdom): There are just one or two remarks I would like to add, with more particular reference to the observations of the Norwegian Delegate. It does seem to me that, in deciding what questions we will or will not refer to the Drafting Committee, we have to have regard to the character and composition of the Drafting Committee. If we are going to remit to the Drafting Committee any questions which involve substance, that involves a different type of Drafting Committee. That involves a Committee on which there are experts in the particular subject-matters to be discussed. That will mean a very much larger Drafting Committee, in fact a different type of Committee altogether. It will not then, properly considered, be a Drafting Committee at all. It will be a Committee on question of substance, and therefore a very much larger and more representative type of Committee. It seems to me that if we ask the Drafting Committee to settle any questions of real substance, we shall be laying down for it a mandate larger than that which the Heads of Delegations have already contemplated for it. I would therefore say that my suggestion is not that the Drafting Committee set up at this meeting should attempt to settle the function of any of these particular articles. What, in my suggestion, it should attempt to settle is, firstly, the particular types of questions on 31. D.5. E/PC/T/C.II/PV/10. which it is necessary to reach some measure of agreement, to provide a basis for our immediate future work. Secondly, I suggest that, as regards those particular types of question, all that our small Drafting Committee should attempt to do is to settle the minimum provision which it is necessary to make in order to lay the foundation for our future immediate work. It should confine itself strictly and solely to that. I would add this: I entirely agree with you that by setting up a small Drafting Committee of that type we shall have done no harm and probably will have done a great deal of good. Therefore, there can be no possible objection to setting up a small Drafting Committee. It my settle what we need to settle; it will not leave a large number of unresolved. questions of substance to be settled by a Drafting Committee which, by its nature, is inappropriate to consider them. THE CHAIRMAN: I am sorry that it is necessary for me to go to another appointment for half an hour or so, and with your permission I would like to ask another member of the Committee to take the Chair for half an hour. As the Vice-Chairman, Mr Speekenbrink is absent today, may I suggest that Mr McKinnon of Canada takes the Chair? Would that be acceptable to the Delegates? ("Hear, hear".) (At this point the Chair was taken by Mr McKinnon, the Delegate of Canada). THE ACTING CHAIRMAN: This is my first experiencee of being in the Chair at an international meeting, so that I hope, for the sake of getting on with it, you will temper the wind for the shorn lamb. MR KAFKA (Brazil): It would be much more satisfactory if I could associate myself with the optimism of the previous Chairman, but I am afraid that the pessimism of the present Chairman, as to the possibilities of this little Drafting Committee which it is suggested should be set up, are much more realistic. In view of the declaration made by the Norwegian Delegate, I think we might expect much better results if we acted in that way. I believe that possibly no harm could be done by setting up this small Drafting Committee, but I think that it is almost certain that no good will be achieved, because it is quite clear that, whatever the composition of this Committee, unless it contains all the Delegations, its recommendations will not be of such fitting excellence, and when they come before the Committee there may be hosts of reservations. Therefore, I do not think very 32. D.6. E/PC/T/C .II/PV/10. much would be gained by setting up this small Committee. Then I think that Mr Shackle is right when he says that if we are to refer this matter to the Drafting Committee to function in New York, then the character of this Drafting Committee will have to be changed. I think there is nothing to rouse opposition about this, even though we have a determination by the Heads of Delegations that the Drafting Committee should be strictly a Drafting Committee. That determination was made prior to this difficulty cropping up, and I wonder if the Heads of Delegations could not reconsider that decision. MR LE BON (Belgium) (interpretation): It is quite certain that, in order to do a certain measure of work, the Committee would have to attack the most sensitive points; so that we must expect discussions as long as the one we have finished. Therefore I would like to support the last proposal; I mean yours, Mr Chairman. MR NATHAN (France) (interpretation): Mr Chairman, the Delegates of Belgium and Brazil have said more or less what I wanted to say. I would only add that the remarks of the United Kingdom Delegate have been most persuasive and full of interest; they have shown more clearly that it is impossible to make a distinction in a problem of this kind between procedure and substance. As the Canadian Delegate has said recently,. there is a possibility that the work will go backwards if all these problems are raised again. Therefore, I believe, with my Belgian and Brazilian colleagues, that the best thing we can do is to adopt this report as a working document and send it to the Drafting Committee. E.fs. 33. E. 1. E/PC/T/C.II/PV/10 MR. VAN KLEFFANS (Netherlands): We can be optimistic and we can be possimistic about the work of this small drafting committee which has been suggested, but we would welcome anything which might reduce the number of items in dispute. So I repeat that two are in favour of an attempt being made. In the second place, if we are going to adopt the report before us. as a working document for any drafting committee, there is a point which interests us, and which is not included, so I would ask if I may mention it in order that it may be dealt with? ACTING THE/CHAIRMAN: I would suggest that you indicate the point so that the Committee know whether or not it appears to be one of substance and relative to this particulrar section of the Charter. MR. VAN KLEFFENS (Netherlannds): It refers to Article 11 and is a matter of dumping and countervailing. In the course of the recent discussions a number of subsidies have been made permissible under the Charter, and we feel that there ought to be a provision which makes it impossible for any important country to impose countervailing or anti-dumping measures on the ground of subsidies which are permissible under the terms of the Charter. MR. SHACKLE (U.K.): I feel it is rather a council of despair to suggest that all the different types of subject matter comprehended in this chapter have to be settled before we can go ahead. I think that if we take that view, it will postpone the attacking of our real task almost indefinitely. There are a number of complicated questions such as marks of origin, anti-dumping, and so on, but I think the essential thing is to decide what are the particular matters which we have to legislae for in order to proceed with the most important items of our work, the questions of tariff reduction and consultation, questions of quantitative restric- tions, and so on. That is the point where the line should be 34. E.2. E/PC/T/C.II/PV/10 drawn - the things which it is indispensable to legislate for in order to provide a basis for our immediate work. I suggest that it is both possible and necessary to draw that line, and that this small drafting committee should be set up with the express purpose of drawing this line. MR. JOHNSEN (New Zealand): With regard to the point raised by the Notherlan's delegate, Dr. Coombs said that one alternative was to adopt the report as it stands as a working document. In that case there should surely be opportunity for dele- gates to correct any misstatements or omissions from the document? Apart from that general statement, there is one particular point. At one meeting the general opinion expressed on paragraph 3 of Article 13 - with only the U.S.... dissenting - was that the second sentence on page 22 of the report should be deleted - "Moreover, members shall remit any penalty ....." THE/CHAIRMAN: In reply to New Zealand, I should say that if I were a member of a delegation from a country which felt that the report as it stands did not attiribute to me properly the attitude I took, I would by all means insist that it should be altered, either through the secretariat or through the vopporteurs who prepared the report. The second point indicates the very considerable difficulty the Committee might have in arriving at the topics suggested by Mr.Shackle as being more or less vital to further consideration of the Charter. The suggestion has been made that since, there are now three proposals, quite distinct and different, before the Committee, and since there has been manifested a very considerable difference of opinion around the table, we might adjourn for 15 minutes and have tea and, in the 15 minutes, possibly compose our minds a bit and come back prepared to discuss the matter further. I would suggest, if possible, then that we might vote on one of these as a means of 35. E. 3. E/PC/T/C.II/IV/10 reducing the alternatives. I believe the delegate of Czechoslovakia wished to speak? MR. KUNOSI (Czecheslovakia): I want to draw your attention, Mr. Chairman, to the fact that the Czechoslovakian delegation submitted to the Secretariat comments and corrections con- cerning this draft reoprt, and I assume that even if there is no discussion on these points, my delegation will have an opportunity to ask the Committee to take notice of, and perhaps accept the corrections my delegation will have an on this report? I relate my remarks to the intervention of the New Zealand delegate. My second point is that our position remains unchanged, and we believe that nothing can be gained by creating a small drafting committee on which perhaps the United Kingdom, the United States and France would serve. If one looked at it optinistically, there might be some chance of climinating differences between those particular countries, but what about the innumerable observations and comments and reservations that have been made by other delegates? I see in this proposition, if acceped, a dangerous precedent, and therefore I object to it. THE ACTING CHAIRMAN: In reply to the first point made by the delegate of Czechoslovakia, I am informed that the comments forwarded on behalf of his delegation have been received by the Secretariat, have been handed to the Kapporteurs, are now being transcribed, and will be added to this report. MR. VIDELA (Chile): I have several criticisms to make on the proposals before us - THE ACTING CHAIRMAN: Before we add to the criticisms, I had made a suggestion that we might adjourn for 15 minutes. I am not a tea drinker myself, but I am in the hands of the Committee, and if 15 minutes adjournment may be advantageous, I would suggest we have it between now and 5 .o'clock. However, if the desire of the Committee is to go ahead without interruption, 36. E.4. E/PC/T/C. ll/PV/10 I shall be very pleased to do so. What is your wish, gentlemen? Adjourn? The Committee adjourned at 4.45 p.m. for 15 minutes. F follows. 37. G.1. E/PC/T/C.II/PV/10. After a short interval: THE ACTING CHAIRMAN: When we broke up, the Committee had before it three different proposals. As I sense the feeling of the Committee, two of those proposals had a substantial measure of approval or backing. One of them appeared to have very little support. I would suggest that, as a means of getting down to something concrete and practical, we should dispose of the one that has very little support. Unless any Member has any objection, I propose to put that proposal which had very little support to the vote and dispose of it, so that we can narrow the field down. The proposal I have in mind is the one which the Chairman left in front of me, namely, that we attempt in this Committee No. II to reach a greater area of agreement by extending the time of our stay in London, How many are in favour of that proposal? I declare it lost. We therefore now have the other two proposals. The first one is that we forward the document as a working document to the Drafting Committee in New York; the other one is that we appoint a small interim sub-committee to do a little drafting and see if something can be achieved, possibly by tomorrow night; his idea being that, if nothing important is achieved, at least no harm will have teen done and no time will have been lost; that was the proposition put forward by the Delegate of the United Kingdom. I feel that, now that we have narrowed it down to two proposals, I should he ask, if anyone wishes to speak further in connection with either of them/should do so as promptly and concisely as possible and that we then vote on the two proposals. I believer, Mr Shackle, that you thought that possibly the Chair had misunderstood to some extent the true intention of your proposal, and it is not improbable that I have. MR SHACKLE (United Kingdom): May I just repeat it as concisely as I can. The job I would sugest for this small Drafting Committee is to decide which questions, among this mixed bag which are in this chapter, are the essential and necessary questions to consider and arrive at some conclusion on, in order to be able to get on. The second point is that, as regards the particular 38. G. 2. E/PC/T/C.II/PV/10 questions they select as the essential ones, they should try to determine what the essential minimum to decide about each question. I do not want at all to stake out a claim for the United Kingdom to be on this small Drafting Committee, should it be set up. I think that for this purpose there is a virtue in odd numbers. I would suggest that there should be five members on that small committee, and the particular composition I would like to suggest is: The United States, Australia, Canada, France and Czechoslovakia. The United Kingdom does not wish to press its claim. That is purely a tentative suggestion for consideration. THE ACTING CHAIRMAN: Is the Committee ready for the question? MR VIDELA (Chile): I would like to remind the Committee that when we started our work on the Technical Sub-Committee the Secretariat made a concrete proposal, and that proposal was unanimously turned down by the Delegates. The proposal was to appoint a Drafting Committee, to divide the matters and to make a few drafting committees inside. It was turned down for this reason, that it was considered that all Delegates should be there to discuss, word by word, the various matters, because the French language was different in meaning from the English language, and it should be compared word by word in English and French. In those circumstances, I do not see how a drafting committee of 4 or 6, composed of members outside the technical Sub-Committee, could again revise the work of the Committee, and, when they have done some particular drafting, how that drafting will be approved by the seventeen Delegations who are not on the drafting committee. That is one point. My second point is this: When we change a procedure, it is not because we want to change a procedure. It is because we are pressed by the Heads of Delegations in their Resolution taken on the 1st November, in order to achieve our task before the 12th November, and finish the whole work of the Conference before the 20th November. I will refer to a particular case: whether we delete the word "persons" in Article 10. We have spent practically one hour in the discussion on that deletion. That question was decided by a show of hands, the result being nine against three. Now, how can a sub-committee of 4 or six members, who are outside our discussions, supersede what we have already approved or turned down. For instance, in Article 15, when we were discussing the words "en route", there were 11 against. That is a disagreement. How, for 39. instance, before our six are going to approve the words "enroute", can you reconcile something, which is already resolved in that sub-committee with a team of four or six, which were not in our Sub-Committee? THE ACTING CHAIRMAN: Is not that exactly the point that the Committee is about to decide when we come to a vote? I now want to hand the rather turbulent baby back to the Chairman, I can tell the Chairman that all we have been able to do is to get rid of one of the three proposals, namely that we extend the target date. That leaves us with two proposals, made by the United States and the United Kingdom, and I had just suggested that any Delegates who wished to say anything further iq that should do so conoisoly and quickly and then we can go to the vote. (Dr. Coombs returned to the Chair.) THE CHAIRMAN: I call on the Delegate of Chile. MR VIDELA (Chile): When I raised that point about the deletion of one or two words in our Sub-Committee, I had in mind the important point just raised by the Indian Delegate a moment ago. If we are going to draft certain articles here, are they binding us? If a drafting committee of four is going to bind all our countries, this is a very important point.; this point was raised by Mr Nehru, the Head of the Indian Delegation, the other day in our Sub-Committee; and we reached the conclusion that, even after we had taken a show of hands (nine against three) that resolution was not to bind the other countries; because this is a Proparatory Committee. I would like to ask Mr Nehru to give us an explanation and I would like to ask him why he came to our Sub-Committee and pressed us to change our procedure, because if we had not changedd the procedure, we should not now be having this discussion and trying to remake the work of 17 members by 4 members who are outside our sub-committee. I had to raise this point on behalf of the Sub-Committee. If we are going to make any redraft, I think it should be again sent back to the Sub-Committee, and the Rapporteur could makea special request from this Committee. MR SHACKLE (United Kingdom): I venture to think that the Delegate of Chile has misunderstood my proposition. My proposition is not at all that we should set up 40, E/PC/T/C.II/PV/1O. G.3. G.4. E/PC/T/C.II/PV/10. questions a small Junta which should attempt to decide/which have been found impossible of decision in the Technical Sub-Committee. What I suggest is that there should be a small Committee which should attempt to decide which are the questions which, for our immediate purposes, need to be in some manner regulated. Then, to decide what is the minimun provision that needs to be made about those particular questions in order to emble us to get ahead. The small committee I suggest is not one of four or six, but of five people; I think there is virtue in an odd number. Whatever it may recommend will come back to this Committee; therefore, nobody will be deprived of their opportunity of criticism. As between propositions 2 and 3 which we are being asked to vote on, No. 2 being that we forward the Report of the Technical Sub-Committee to the Interim Drafting Committee and No. 3 being that we set up a small ad hoc Drafting Committee, I propose to vote for both. MR KAFKA (Brazil): I am sorry if I appear to repeat myself, but I think we area in an escapable dileman. Unless you set up a small Committee to deal with these questions, this Committee will not do any work quickly. If you set up a small Committee, then when the thing comes before the whole Committee there will be interminable discussions. I do not think anything will be gained by setting up this small committee. MR KUNOSI (Czechoslovakia): I want to thank the Delegate of the United Kingdom for having thought of Czechoslovakia to be a member of this small committee. But I do not think that, if such a small committee is set up, Czechoslovakia should be on this committee, for the simple reason that the Czechoslovak Delegation has no, or very small observations to make, and what we have made has been more or less accepted. If any Drafting Committee should be setup, I am quite sure that the United Kingdom Delegate should be on it, and not the Czechoslovak Delegate. That is really wanted to say, and I do not think there is really any need to repeat that I myself agree with the views of the BraziIian Delegate. MR NATHAN (France) (interpretation): MR Chairman, one of our colleagues was saying earlier in the discussion that one could be either an optimist or a pessimist. I would like to say that the difference between an optimist and a pessimist is not very great. If one takes a glass from which one has already 41. G.5. E/PC/T/C .II/PV/10. taken a drink, the pessimist says "It is half empty", and the optimist says "It is half full". We all agree, and all agreed to believe that, thanks to the work of the Sub-Committee, the glass which the Technical Sub-Committee brought us is at least half full. Now our task is to see that it will not be emptied. I think that, if we send the work back to this Drafting Committee or Sub-Drafting Committee, or the Interin Drafting Committee which our British colleague is suggesting, our glass will be found empty; and finally we will see that there is many a slip 'twixt cup and lip. I insist, therefore; that we should vote on the proposal to accept the Report as it is as a working document, and send it as it is to the Drafting Commiittee. MR NEHRU (India): Mr Chairman, I was not present at the earlier discussion, so I do not wish to speak at any great length, but since my name has been mentioned by Mr Vidella I feel that I should say something. I hope the suggestion is not that I am in any way connected with this very turbulent baby. If I have understood the point correctly, it is that, since on a number of matters the area of disagreement is very wide, an attempt should be made to explore the possibility of narrowing the area of disagreement, and if this can be done by tomorrow afternoon, the attempt may be worth while. So far as we are concerned, we have made our position absolutely clear, that we are not here to do any drafting, and that we are not going to commit ourselves finally to any proposition until we have examined the implications of the proposition carefully on our return to India. If it is considered worth while to make an attempt to explore the possibility of narrowing the area of disagreement by appointing a sub-committee which will have to complete its work by tomorrow and put forward fresh proposals, I can see no serious ham in the setting up of it. From my point of view, the position will remain absolutely unchanged. MR MORTON (Australia): Mr Chairman, I regret that I have missed so much of what has been an interesting discussion. I have returned in time to find Mr Vidella making a point that I intended to bring up myself later; that is to say, in an attempt to narrow down the divergence of opinions and views, the only type of sub-committee that you can have is a sub-committee consisting of one representative from each country; and that a sub-commiittee of four or five 42. G. 6. will only give you the views of four or five people and will get very little further forward than the original Rapporteur's Report. MR VIDELLA (Chile) Hear, hear. THE CHAIRMAN: Is there any further comment on these suggestions? There are several proposals before you. They are not necessarily inconsistent, in that it is possible to approve of several of them at the same time. The first one is that, after having examined the Report as it is put forward, and having made any alterations which it is decided upon in Committee to make, that the Report should be approved, or, presumably, if you wish, rejected; but, on the assumption that it is approved, it would be treated as a working document and forwarded to the Drafting Committee to be dealt with within the terms of their reference. Now we could set that up. The second alternative is that, whether we do that or not, we might attempt to reach before tomorrow night some closer reconciliation of some of the views that have been expressed than has been possible up to date. Now, as a means of doing that, there have been two suggestions, as I understand it, put forward: one is that, as a first step, we night appoint four or five members, presumably from the Technical Sub-Committee, to examine the material to see whether they could arrive at certain possible reconciliations. It seems to me that if that suggestion is accepted, it would clearly be necessary, for the point that the Chilean Delegate and the Australian Delegate have made, to send those suggested reconciliations back to the Technical Sub-Committee tomorrow night for examination, approval or rejection. The third alternative is that we might omit the appointment of a preliminary Drafting Committee of four and refer the matter directly back to the Technical Sub-Committee for an attempt, in the short time available, to reconcile some of the issues which it may seem possible to reconcile. 43. H.fs. E/PC/T/C.II/PV/10. H.1 E/PC/T/C.II/PV/10 I suggest that in reaching, a decision on this we take the first question separately, because as I have understood the discussion it seems that all Delegates are, generally speaking, agreed about what should be done with this report; that except in so far as some reconciliation is possible the draft, if it is approved in the present form, or something substantially like the present form, should be approved as a working document. Now can we take that question, which is essentially one of whether we approve this report in the same way as we will, presumably, approve this report as a tentative agreement as to the way in which matters shall be dealt with, which would involve the publication of those reports; or, do we approve it as a working document not for publication but for transfer to the Drafting Committee and subsequently to the Second Session of this Committee? Having disposed of that question we can then pass to the question whether we seek to reconcile any further differences of opinion which are embodied in this report. In asking you to record your vote on this may I point out that the point on which you are voting, at this stage is whether you approve of this document solely as a working, document and therefore not for publication in the way in which other reports will be approved; that when we examine this document we should approve it as a working document rather than for publication. Will all those who agree to that approach please raise their hands? MR. KUNOSI (Czechoslovakia): I have a point of order. In the event of our approving of this proposition would there be many mention in the printed report of the action we have taken? Would you say in the printed report that there was a Technical Sub-Committee which had been working on that, that their report is unfinished, that it was transferred, and so on? THE CHAIRMAN: I should think that would be lone. MR. KUNOSI (Czechoslovakia): Do I understand that I am right in my assumption? THE CHAIRMAN: Yes. MR.NEHRU (India): What exactly is impliod by the suggestion that the report will be used merely as a working document and will not be published? Is it suggested. that the report on Articles 9 to 15 will not be published at all? 44 1.2 E/PC/T/C. II/PV/10 THE CHAIRMAN: The reason why it could not be published in its present form - at least without editing - is that it does attribute specific views to specific countries, and it has been agreed that that should not be done. So far as the publication of the relevant Articles are concerned, it seems to me that is not really a question for this Committee. There was some discussion at the Heads of Delegations meetings as to how Articles which did not receive a substantial body of agreement, and on which consideration was deferred, should be dealt with. I am not quite clear from memory what that decision was, whether it was decided to publish the original draft Articles in square brackets as an indication that they had not been adopted and were still under discussion, or whether it was decided to leave the space blank, so to speak. Do you recall, M. Lacarte? MR. LAGARTE (Assistant Exceutive Secretary): I am afraid the Hedas of Delega- tions have not taken any decision on that question. If I were very hotly pressed to mkae a statement I would give it as my own opinion that the consensus of opinion is that the Article would not be published, but there might be some referenece made to the fact that no agreement was reached on such-and-such an Article of the Charter. As I have already said, three has been no agreement on that point among the Heads of Delegations. THE CHAIRMAN I think it would be unwise for us to try to seek a decision on that amtter here, since it affects not only these Articles but other Aricles in the draft Charter - for instance, one in particular relating to state trading I can recall, upon which it was decided that no discussion or decision should be made here. I suggest we leave that question for considera- tion by the Heads of Delegations. The question before the meeting is whether matter examination we approve this report, that we approve it as a working document only for reference to the Drafting Committee, and subsequently to the Second Session of our Conference. Will those who are in favour raise their right hands? Those against? -- I declare the motion carried. I suggest we take the second part of our discussion in two stages. First, would you indicate whether you favour an attempt to seek a reconciliation of some of the issues outstanding in the next two days? If the Committee is in favour of that we will proceed to the question of how that reconciliation 45. H.3 E/PC/T/C. II/PV/10 should be attempted. If, on the other hand, it is rejected we need not worry about the structure of the machinery to do it. Would you indicate whether you are in favour of an attempt before tomorrow night, to reconcile some of the outstanding differences, particular on matters where it would be a disadvantage to the Second Session of this Committee to be left without a clear decision? MR. SHACKLE (United Kingdom): Light I say one thing before the question is put to the vote? My suggestion is not that we attempt reconciliation where reconciliation has not so far been found possible, but rather what we might call a filtering; that you try to sort out from this bunch of questions those particular ones upon which it is important to come to some decision as a condition of procecding with our work. When you have filtered out the questions which are important in that way you should then attempt, or the sub-committee should attempt to decide what is the minimium provision that needs to be made. You have two filtering processes: (1) which questions are essential? and (2) what mininum provision is essential under each of those particular questions? That is what I suggest. THE CHAIRMAN: Could I read what appears to me a resolution which expresses the idea? "It is resolved that an attempt should be made within the next two days to reach agreement on minimum provisions on matters6 dealt with by the Technical Sub-Committe which it is important to have agreed before the Second Session of the Committee." MR. NEHRU (India): I have a point of order. I think we have already decided that no agreement and decision will be reached at the present Session of the Committee. We can actually only make proposals for the consideration of our Governments. When the suggestion is made that within the next two days we should attempt to reach a decision or agreement it seems to me that we are going against a decision which has been taken in the heads of Delegations meetings. THE CHAIRMAN: I think the point now taken is a very good one, and it is a valid criticism of the words suggested. What I had in mind was, not any different type of agreement from that which has been reached in other parts of the report. 46. H. 4 E/PC/T/C.II/PV/10 I think perhaps it could be expressed by saying" to reach tentative agreement on proposals to be submitted to our Governments on minimum provisions." MR. NEHRU (India): It is recally a reconciliation of conflicting views. Mr. Shackle objected to that, and that is the reason I raised this point. THE CHAIRMAN: " .. tentative reconciliation of views on proposals"? MR SHACKLE (United Kingdom): I must still object to the word "reconciliation." It sems to me that any recommendation which may be made in this matter is in exactly the same order as all other recommondations of this Committee on any matter whatsoever. They are all for the consideration of Governments and without prejudice to consideration by Governments. What I do suggest is that we should try to arrive at some recommendation for consideration by Governments before the Geneva meeting as to which particular questions in this mixed bag of questions are essential for the immediate progress of our work, and as regards those particular questions what are the minimum indispensable provisions that need to be made. THE CHAIRMAN: I do not seem to be very successful as a draftsman. Perhaps you will bear with me a little longer. I think the form, which our proposals would take if we were able to reach this agreement, or reconciliation, or what have you, would be draft Articles which, presurmably, would be tentatively agreed. Could we avoid this problem by saying: "An attempt should be made within the next two days to reach tentatively agreed draft Articles on minimun provisions relating to matters covered by the report of the Technical Sub-Committee which it is important to deal with before the Second Session of the Committee." MR. SHACKLE (United Kingdom): I would suggest only one microscopic gloss in that. We need not necessarily say "agreed Articles" but "agreed bases for Articles." THE CHAIRMAN: I think that is so microscopic that we can leave it. MR. SIM (Canada): I would like to say a word in explanation of the vote I would be prepared to cast upon the question you have indicated. I would like to preface my remarks, though, by saying a word or two about the report which is before the Committee. One would infer from some of the discussion that has taken place here this afternoon that it was not much of a report. I rather suspect that some who have participated in the debate have not given the 47. H.5 E/PC/T/C.II/PV/10 report the consideration which it warrants: As a matter of fact, it does represent some weeks of serious effort on the part of a committee ably presided over by the Delegate of Chile. There were not to Rapporterus but five Rapporteurs, four of whom were exceedingly well qualified for the job: they represented the United Kingdom, United States, France, Belgium, Netherlands and Luxembourg, and Canada. During those weeks efforts were made to grapple with the work which had been referred to the Committee, and what you have before you this afternoon is the result of that work. I would be very doubtful that in 24 hours or 48 hours any other group, however competent, could effect any substantial improvement upon the work which has been done. 48. E/PC/T/C.II/PV/10 I do not deny that if there had been more time the same group could perhaps have continued to work on this report and improved it, because we rapidly found, in the course of our discussions as Rapporteurs, that fresh points kept arising. However, it is very difficult, in a subject of this kind, to say what articles are important and what are not. They are all important, Mr Chairman, in one respect of another; and I am really of the view that I must vote against this proposal, because would think it very unrealistic to hope that within twenty-four hours or forty-eight hours we could really do a worth while job with this. THE CHAIRMAN: Any further comments? If not, would delegates please record their vote in favour of or against the following resolution: "That an attempt be made within the next two days to reach x tentatively agreed draft articles relating to the matters covered by the Report of the Technical sub-Committee, which it is important to deal with before the Second Session of the Committee. Will those in favour please maise their hands? Those against? (There was a show of hands). The motion is is defeated. The basis for our future work, therefore, is that we now have to examine the draft report of Technical sub-Committee for the purpose of deciding whether in its present form we will forward it to the Drafting sub-Committee to meet on January, to be dealt with in accordance with their terms of reference. Is it your wish that we take this report paragraph by paragraph or Article by article, or is the Committee prepared to vote upon it as a whole) MR VAN KLEFFENS (Netherlands) Mr Chairman, during the course of your absence I have mentioned a particular point which has not been dealt with in the report as it stands, but which we think is very important, and with that proviso. I am in favour of adopting the whole report. THE CHAIRMAN: I think that at would probably prevent any possibility of mistake if we took the reports quickly article by article and that will give anybody an opportunity to faise points relating to particular articles which they wish to deal with, and if delegates will refrain I.1 E/PC/T/C.II/PV/10 from commenting on the on the report and the articles with which they are satisfied, I am sure we can deal with them expeditiously. MR KUNOSI (Czcchoslovakia): On a point of order, Mr Chairman, I wanted to remind you that so far as I am informed the Secretary had already asked all delegations to bring forward by twelve o'clock today written observations and comments on this document, and the Czechoslovak delegation has done so, andI believe other delegations have done so, so that I propose, with the proviso that the Rapporteurs take note of and incorporate the omments and the corrections, we should vote on the whole document at once. THE CHAIRMAN: The Czechoslovak delegate states that delegations were in- vited to submit written comments on the draft report of the Technical Sub-Committee, and that a number of delegations have done so. Are those comments availalble? (After a pause) They are not yet available for circulation; they are in process of preparation. MR MORTON (Australia): Mr Chairman, might I ask if it is still open for the Rapportours to receive more written reports on this subject? We were anticipating having a meeting on this yesterday afternoon, and in the view of the meeting and in the short time we had to study the document - we only received it about ton in the morning - it was not possible to make an written coments before noon; but I think it would be helpful if any delegation which still wished to - make any written comments on the Report were in a position to do so within the next 24 hours. THE CHAIRMAN: I think it must be quite clear that delegations have the right to submit views on these matters in writing at any time. If they arrive after the Committee has dealt with them, then presumably they would be incorporated in the records of the Conferenec and would go on with the other working documents. If, however, delegations are not able to do that, then they would clearly have an opportunity to state their views as we work, through the report. I think that in view of the fact that there are some delegations who have submitted comments ,it is essential that we work through the document article by article, and that it would be desirable that a copy of those comments should be 50. 13 E/PC/T/C. II/PV/10 available to all delegations before we complete our discussions. That will probably prevent us from going very far with the actual articles. Perhaps we could approve the general narrative statement of the TechnicaI Sub-Committee. Is there any comment on the first part of the report, the general narrative statement? MR KUNOSI (Czechoslovakia): Mr Chairman, would that take care of my proposal? I proposed quite clearly that the report should be taken as a whole in view of the fact that corrections and comments have been put forward and accepted. There are some very minor corrections and comments so far as I am informed, so that I do not see any reason why we should go in a detailed way through this document. THE CHAIRMAN: Of course, it does seen to me that every delegation must have an opportunity to comment adequaterly on this report if it desires to do so. How long it takes is clearly in delegates' hands. I would suggest to the Czechoslovak delegate that if he is anxious that we finish quickly he should deal only with those particular on which he has comments to make; I feel it is important that we should do that; otherwise we may deprive individual delegates of the opportunity to state their views. MR LE BON (Belgium) (Interpretaction): Mr Chairman, I would like to make a proposal of reconciliation. we night perhaps not examine each article but ask each member if he has any remarks to make on one or other or several articles, and we might gain much time in that way. MR VIDELA (Chile): In my view, this procedure is very important, because we shall be creating a precedent for the other reports we are going to receive. Without prejudice to the next report we are to receive, I quite agree with and accept the suggestion made by the Belgian delegate, but I would like to reserve my right on each article of the draft report. Thank you, Mr Chairman. THE CHAIRMAN: I think if I take this document article by article and ask whether any delegation wishes to comment on those articles, and if no delegate indicates that he wishes to comment, we will take that article as approved and pass on to the next one. Is there any delegate who wishes 51. I.4 E/PC/T/C. II/PV/10 to comment on the general introductory statements? I take it that is agreed? Does anybody wish to comment upon the Technical sub-Committee's report to the drafting Committee? I take it that is approved. Article 9. Does any delegate wish to comment upon that part of the report dealing with Article 9? MR MORTON (Australia): Mr Chairman, I do not know to what extent one is permitted to comment upon this and whether it might not be better to make one's comments in writing if they are to be at all full or use- ful. In pagraph 2 (b), for example, Australia, Belgium-Luxembourg, Czechoslovakia, Netherlands, New Zealand and South Africa reserve their position as to discriminatory restrictions on mixing, exhibition or other use, and so on. It is my suggestion that we add at the end of paragraph 2 a sentence reading: "unless it is demonstrable that such requirements are less restrictive or less onerous in operation than other allowable practices, of which matters the Organization shall be the judge. " I think that is a sentence that could easily receive full support from the United States and from all other countries. Had we managed to get that added to paragraph 2 then there would be no reser- vation from any of the countries whom I have listed who have reserved their position on the matter. Is it proposed that we continue with comments of that nature or do you think it better if such matters are just referred to in writing? THE CHAIRMAM It seems to me in view of the nature of the previous decision, that we should not seek to reach tentatively agreed draft articles, that that should apply generally and we should not attempt to do so even in relation to all the articles, and I would suggest to the Australian delegate, therefore, that his comments on this be incorporated in writing and thus be available to the Drafting Committee when them come to work upon it. MR LE BON (Belgium) (Interpretation): Mr Chairman, in any case such as that just mentioned by the Australian delegate, which is one of the countries which have expressed etheir reservations, I think those countries will agree that we maintain the paragraph as it stands, adding 52. I.5 E/PC/T/C. II/PV/10 the sentence suggested by the Australian delegate, and in that way we would save time, because then we would not need to consult anyone. We would leave the paragraph as it stands and we would add the last sentence that has just been read out by the Australian delegate. MR CHERRY (South Africa): Mr Chairman, referring to the same paragraph 2 (b) that the Australian delegate discussed a moment ago, the reservations about the discriminatory restrictions on mixing, exhibition or other use, it does not specify the particular sub-divisions that were under discussion. South Africa reserves its position in respect of the mix- ing of South African motor spirit; New Zealand, interr alia, mentioned the matter of the assembly of motor-cars. This matter has been discussed in our delegation since the receipt of this report. We had not originally intended raising the matter of the assembly of motor-cars, as we did not consider that we were contravening, the spirit of this par- ticular article, but in view of the New Zealand delegation' s having raised the matter, it may be contended that the difference between their requirements and ours are only a matter of degree; and therefore, in the detailed records of the discussions on this Technical Sub- Committee, we would like to line ourselves up with New Zealand in this reservation in addition to the moter-spirit point. Than you, Mr Chairman. THE CHAIRMAN: would the Secretariat take note of that point and see that that is incorporated in the records. Is there anything; further on Article 9? DE TUNG (China): Mr Chairman, Article 9, paragraph 5, the last part, the sentence reads: "supplies for govermental use aid not for resale." I just want to have a clear understanding of what we mean by "governmental use." Does that mean only administrative use or also supplies for public works? I notice that this phrase has been charged from "public use" into "governmental use" as decided in the Procedures sub-Comnittee, and I do not understand the new wording. THE CHAIRMAN: Can the Repporteurs of the Committee enlighten the Chinese delegate as to whether that phrase does include public works in the intention of the Commiittee, or whether that is a matter which may be in dispute? I.6 E/PC/T/C. II/PV/10 MR MORTON (Australia): Was it not the intention that the reference to purchases by governmental agents be struck out of this and left to I.T.O? It wras one of a lot of comments that apparently had not been noted by the Rapporteurs, that the excision had been made. THE CHAIRMAN: That Was an actual excision, was it? MR MORTON (Australia): I understood that that was the casce It was dealt with in the Procedures sub-Cormittee, not by us at all, and their decision was that it should be struck out from the Charter and left that the I. T. O. when established should draw up the necessary machinery. THE CHAIRMAN: I believe that is correct. In the sub-Committee of Committee II dealing with Tariffs and Procedures it was decided that this question of governmental use should be deleted frorn the Articles concerned and referred to the I. T. O. for future examination; so that the quretion asked by the Chinese delegate is one which cannot be answered definitely at this stage, but is left open for further examination. I think we should ask that the report be ended in relation to this paragraphgprcrra, theto make records awiccord th the decision oarf the Tiffs and Pro- cdurce Seb- Committee m,ofee Comttc eI. MMRINN (Canada):oouldld wo that drp o,ut nlgttoechgr mro thm records of tehTechnical sub-Cmomittee? As I understood in the other Comimtmet ew deleted one reference in article 8 and a somewhat similar refeernce, namely,this one, in rtiAcle 9 - completely deleted them from the Charter; and itaaws then discussed wethher that entitled a complete and final deletionfr om the Charter or if theyw ould be dealt with in another substantive article. Hero I think oen part of it is eadtl with, amenly, only suppiel spurchased forg voermenntl a use. MR SHAKLlE (UK) y undMerstanding of thism atert may be incorrect, but it was this. It was agreed in the Procedures sub-Comitmeet that there should be taken out of the scope both of Articles 8 and 9 this matter of the procurement by governmental agencies of supplies for goevrnenmalt State use nad not for ersale It was also decided, on the question of/trading, to make the corresponding amenmedntwh ich ocnsists of a new paragaprh in Article 26 which says that the provisions of rticleA 26 do not relate I.7 E /PC/T/C. II/PV/l0 to the procurement by governmental agencies of supplies for govermental use and not for resale, but that what is comprehended within the scope of Article 26 is procurement by governmental agencies of supplies which are for resale. I thought that the matter had been agreed in that shape both in the matter of Articles 8 and 9 and in the matter of the State- trading Articles. I do not recollect that there was left over that matter for further decision by the I. T. O. THE CHAIRMAN: If I may say so, Gentlemen, it does not seem to me very profitable for us to discuss here a question which clearly depends upon a matter of fact - that is, the nature of the decision made by the Procedures and Tariffs Sub-Committee; and, consequently, that whole part of this needs to be altered. Can we take that the Secretariat is requested to consult with the Procedures and Tariffs sub-Commmittee of Committee II to see whether the present record now before us is correct in the light of their decision and, if not, to report back to this Committee? Is that agreed? MR TUNG (China): Mr Chairman, the Chinese delegation wants to reserve its right to interpret that phrase as including supplies for public works. THE CHAIRMAN: The Chinese reservation is noted. Do I take it then, subject to the provison just made, that the report of the Technical sub-Committee on Article 9 is adopted? it will be necessary for the meeting to adjourn now. When can we arrange for its continuation? Would 3 p.m. tomorrow suit the Committee for its next meetings? (Agreed) Then we will adjourn to three o'clock tomorrow afternoon in this Hall. (The Meeting rose at 6.15 p.m.) (Adjourned to tomorrow afternoon, 3 o'clock) 55.

GATT Library

yc667wn1683

Verbatim Report of the Tenth Meeting of Committee V : Held in Convocation Hall Church House, Westminster on Friday, 8 November 1946 at 10.30 a.m

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/C.V/PV/10 and E/PC/T/C.V/PV/9-12

https://exhibits.stanford.edu/gatt/catalog/yc667wn1683

yc667wn1683_90230016.xml

GATT_157

E/PC/T/C. V/PV/10. UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the TENTH MEETING of COMITTEE V held in Convocation Hall Church House, Westminster on Friday, 8th November, 1946 at 10. 30 a.m. Chairman: Mr. Lynn R. EDMINSTER (USA) (From the shorthand notes of W. B. GUREY, SONS '& FUNNELL, 58, Victoria Street, Westminster, S. W. 1. 1. E/PC/T/C.V/PV/10 THE CHAIRMAN: The first item on the agenda this morning is a report of the sub-committee on Amondments and withdrawal. The Chairman of that sub-committee is M. Palthey of France. In that connection, may I say that a mistake has been made in the spelling of his nane in the English version of the document which has been distributed; the "x" should be a "y". I call upon M. Palthey. Mr PALTHEY (France) (Interpretation): Mr Chairman, the sub-committee which was set up with a view to studying the possible new drafting for Article 75 and Article 79 ,et as instructed. Itsweek resulted in a new draft of Atrticle 75 and a new draft for Article 79 on Withdrawal and Termination. As regards Article 75 the sub-committee examined three different questions. The first was the quostion of whether the Charter must precisely define the conditions according to which the new Amendments to the Charter will be presented to the Conference. There we thought it preferable to leave it to the Conference to fix, according to its rules of prcedure, these ccnditions for the introduction of the nowr amendment. The second qustion was the question of what majority would be required for the adoption of any Amendment. Here the Committee decided to keep the United States proposal and it was decided that the majority would be a two-thirds majority. The third question - which was perhaps the main one - was to what extent the new Amendments could apply to the minority which did not accept them. The Committee throught it would be preferable to admit the general basic principle that the Amendment must be binding for all, even for the minority. Yet there are some cases in which the Amendment introduces new obligations upon the members, and in those cases members must choose whether they are going to accept or not those new obligations. In those particular cases the Conference can make these Amendments binding for all, and then the minority can withdraw if it wishes to do so. We have therefore now come to a final agreement regarding Article 75, which reads as follows: "(1) Amendments to this Charter shall 2. B.1 E/PC/T/C.V/PV/10. become effective upon receiving, the approval of the Conference by a vote of two-thirds of its members. 2. Notwithstanding the provisions of paragraph 1 of this Article those amendments which involve new obliga- tions 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. In the absence of a determination that a memberr shall be obliged to withdraw, a member shall, nevertheless, have the right to withdraw, on due notice, as provided in paragraph 2 of Article 79. 3. The Conference shall, by a vote of two-thirds of the members, adopt rules of procedure for carying out the provisions of this Article.". The discussion on Article 79, "Withdrawal and Termination,'' bore only on the period during which the members must remain in the Organization. The United Kingdom Delegate said that the period which was envisaged in the U.S.A. draft was five years, but that that could lead to some difficulties because according to U.S. law the customs agreement which will accompany the signing of the Charter can be valied for a period of three years only. Therefore, the United Kingdom Delegate proposed to reduce the five years period to a three years period. Eventually the United States Delegation was so kind as to agree to that proposal. Now Article 79, as it stands, reproduces the original U.S. wording with .q . ,-.nd theexception that the perioda is three years nd not a five years period, e 'noice, stob bee gviven ia tote en ix months -indvance and *' yea. ,The txt ead as' f:Lollos , B.2 . "Withdrawal and Termination. 1. In addition to the provisions of paragraph 2 of Article 75, any member of the Organization may give notice of withdrawal from the Organization at any time after the expiration of three years from the date of the entry into force of this Charter under the provisions of Article 78 by written notification addressed to the Secretary-General of the United Nations, whlo will immidiately inform all other members of the Organization. 2. The withdrawal shall take effect six months from the date of the receipt of notification by the Secretary- 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." Such is thie text which I have the honour to present to the full committee. THE CHAIRMAN: You have heard the report of the sub-committee. Is there any discussion? MR. LAÙRENCE (New Zealand): There are one or tvwo points arising out of the suggestions of the sub-committe on which I could like clarification. with regard to the second sentence of paragraph 2 of Article 75, I take it it is intended that the determination of the Conference regarding imposing the obligation on a member to withdraw is to be taken by a simple majority, in accordance with Article 53. I raise that point because it seems to the New Zealand Delegation that it is a very important decision to take, to ask a member to withdraw; and it is just a question whether that decision is not as important as some others upon which a two-thirds majority is called for. There are other points which arise under pararaph 2 of Article 75. With regard to the final sentence, I was wondering whether that provides for anything which is not already in Article 79. It would seem to me that if an obligation is imposed on a member which that member is not 4. ~ ~~~~~. B.3. E/PC/T/C . V/PV/10 prepared to accept the right to give notice to withdraw is available at any time and does not need to be conferred specifically, as is done in this sentence. That leads on to another point, in paragraph 1 of Article 79, whrerein notice of withdrawal cannot be given until after the expiration of three years. Now, it would seem that there is no such time limit imposed on the right to amend the Charter under Article 75, so it would appear that a conflict would arise if an amendment to the Charter were made within the three year period which a member was not prepared to accept. MR. PALTHEY (France) (interprention): I wish to answer the New Zealand Delegate in my capacity of Rapporteur. On the first question, of the majority, it is obvious that the decision to make an amendment binding for all must be carried out by a two-thirds majority. In the mind of the sub-committee the reference which makes the obligation binding is part and parcel of the amendment; therefore, it was envisaged that the amendment would be adopted by a two-thirds majority, and then the question whether it was to be binding for all would be decided by a simple majority. On the question of the freedom to withdraw, the freedom to withdraw, even before two years, is not in conflict with the provisions of Article 79. Indeed, Article 79 is to be regarded as an Article of general scope. It is a generally accepted legal principle that general provisions can be applied only in so far as they are not contradicted or otherwise modified by further particular provisions. Thus Article 79 bears on the question of withdrawal without reason, when the case is not envisaged in, for instance, Article 75.. I can say we thought that the freedom to withdraw if the, amendment was not binding must obtain. If the Charter which was accepted by a member is amended, and if thc' new amendment is not accepted by a member, that member cannot be obliged. to remain a member, even i f the new amendmnt does not entail new .- t -; - 4., x 0 , ' - - : o Eions or, h .Thmef, te isnoconflict, because - ' '' ;-t5 ' B.4 E/PC/T/C.V/PV/10 Article 79 is an Article of general scope, and has no baring on the obligation to remain three years. However, there is an escape clause, and thw member can withdraw if the new amendment leads him to think that the new situation does not correspond or does not agree with the terms of the original Charter which he signed. MR. ALAMILLA (Cuba): I agree entirely with the very clear explanation which the Delegate for France has given, which in may opinion shows exactly what the idea of the sub-committer was. I wish to add only one thing. In the present drafting of Article 79 we have also added, to make more clear the point raised by the New Zealand Delogate, certain words. Article 79 says: "In addition to the provisions of paragraph 2 of Article 75"- and then we go on with the right to give the withdrawal after three years, which means we are contemplating that this six months retirement of the member can come inside the three years, and that the second paragraph of Article 79 only applies to such cases where the withdrawal is made after the three years in accordance with the general terms of Article 79. Of course, cur idea is very clear. If it is not translated into the actual words of the Article no doubt the masters of the English and French languages can make it clear enough, because we have it very clear in our minds. 6. C. 1 E/PC/T/C. V/PV/1 0 THR CHAIRMAN: Before I call on the Delegate of India, the legal adviser from the Secretariat has some suggestions to make with regard to a slight alteration of the wording of the provisions which we have been discussing, and I think they would be helpful. MR. TURNER (Secretary): I thought that the point raised by the Delegate o Newr Zealand might easily be resolved by a slight drafting amendment in last sentence of paragraph 2 of Article 75. If we delete the word "neverthelesss" and replace it by the phrase "notwithstanding the provisions of paragraph 2 of Article 75" I think that would clear up th matter. MR. LAURENCE (New Zealand); A verey good suggestion. THE CHAIRMAN: The Delegate of India has asked to speak. MR. H. S MALIK (India): It is no longer necessary for me to speak, thank you Mr. Chairman. MR. LAURENCE (New. Zealand): I can clear up very quickly now the points whi. I raised. On the first question I have got the anser that it is clear in the minds of the Sub-Committee that they have considered the point about obliging Members to withdraw on a single majority. The words suggested by the legal officer, "notwithstanding the provisions of paragraph 1 of Articlae79" instead of "nevertheless", meet my point an I accept them. THE CHAIRMAN: What are the views of the Delegate of France in regard to this suggestion? MR. PALTHEY (France) (Interpretation): I am quite in agreement with the suggeston. - - -r.ad A 1C Aub: Ca).) w. have Zoulnew d 'thn oft~he apaaph readrgr~kh a C. 2 E/PC/T/C.V/PV/10 THE CHAIRMAN: I wiIl ask the legal officer to read the last sentence of paragraph 2 as revised, and. the first sentence of the first paragraph of Article 79. MR. TURNER (Secretary): The last sentence of paragraph 2 of Article 75 will road: "In the absence of a determination that a member shall be obliged to withdraw, a member shall, notwithstanding the provisions of paragraph 1 of Article 79, have the right to withdraw, on due notice as provided in paragraph 2 of Article 79." Then in the first paragraph of Article 79 we delete the words "In addition to the provisions of paragraph 2 of Article 75" which are right at the start of paragraph 1 of Article 79. THE CHAIRMAN: I take it that the change in the wording is agreed to? Agreed. THE CHAIRMAN: Any further comments on the report of the Sub-Committee? MR. DAO (China): New that the first phrase of paragraph 1 of Article 79 whether is to be deleted, I wonder/the terms of Article 30 will not be in conflict with the new terms of Article 79? MR. KELLOGG (United States): For what it is werth, in drawing up this Charter we felt that the provisions of Article 30 could take place at any time, even during the preliminary period, because it involves action on the part of the organisation as a whole, and if the Organisation, knowing what it is doing, takes steps, which would warrant a member' s withdrawal, it seems to me that the matter has had sufficient considera- tion and that the member should be permitted to withdraw - even during the first period. If the Committee does not think that is clear, we could put in a clause in Article 79 referring back to it, and making it abundantly clear. MR. DAO (China): In the light of the explanatin given by the Delegate of - 8 - C.3 E/PC/T/C. V/PV/10 the United States, I wonder whether - I am not a legal export - it would be appropriate to add one phrase at the begrining of paragraph I of Article 79 to the effect "Except as otherwise provided for in the Charter -b . n. R. ALeJLLAuweba): I believe that, in crderto be consistent, in vie of what e have done in parargren2 o: krtcl6 75we should also add rarggraph~~~. 2;'rtc'7 something in Article 30 to make it expliit that this witldra.il in 6C days is permissible ntwithstanding -he provisions of paragraDI of Article 79 - f that is the intention. 1. KEILGG (United States): I would suggest that this is the kind of qumestion which could be taken care -Ly the Intert Drfting Com-,ite which has been envisaged. There will probably be many other questions of the same nature which will come up, a. 7think the remarks made by members of this Cemittee sh-ld be Dasod to the interi Drafting Comittee for their consideration. THE CHADLNA:s cehairman I desire to add tc tt that it would secrm t me that if theere were only one other place in the Charter whre an exception apmpeared ther might be something to be said for Lking a more explicit coverage of the matter in that provision, but if there are several plahcnes in the Charter where this would arise, I tik the suggestion of oneree ;mreember that we should just say, "Except aslswhe provided" would be a wiser solution. However, I agree with the Dele- gate of the United States that it is a drafting matter, and the Interim Drafting Con~tee could -nte the record and try to find a solution. MlAlAILeA. 'ua: I am perfectly willing to leavc it t the Drafting Committee. Sply-rthe ecg, .I wicd,lik o say that the general ; -~flr -tbeen lac'iwn Artictlcove 7- tould no rer those ' 0a~one of thempmee a ii- it wrhat tey- are not ?^s -pml e-1l-E2 abjqc s/T. 1~ion - -hAAn ,yurth fuiherm ormen~ t eonuiCommittee'sntho Sibst?: -.0 > ^>9_;, C. 4 : :>0 V V1 .~~~C /V I 1. VUNTYLLe (Netherlaneds)e: 7-iot ivistig oproposo anothr amcnd:mont, I would like. tCo ask th Delcate of France if the Sub-Ooittee have' considered the possibility of bringing t new obligations into force not uoc acceptaemnce oen-t,hcpart ec tw;othirds of the mc-rs, c. but naefter certain ooride after aocetnicc wo-thirds cf th memiber That period cld coincide, in my opinions with the period which the confereonce ;ll determineo according tcthe second line c paragraph 2. h it stawnds it w;ll mear hat the ne-.bligations w-.l have to be apmied by certainrncrswile they are not being applied by other mmbers, Also eI think thamt,m the insction of sorperiod w-ihin which mthe new bligations -st be brought into force has the advantage of giving tie to mo.-s to take legal or administrative measures which mye bee necess=7 bor thy can give effecet to those nowu bigations. Aes it reads nw, the new obligations will have to take effect on the of dc/ or the aday afteer, iceptanco la(.AT2;eX `Fco (Intrpnetation)mu: I rF.st sthat the Commnittee id not think of this ipartcular point. Speaking from the general point oew, f v in the coase f amendments which would entaiwl ne obligations and which might causmee so member states to take new internal legislative or administratmive easuwres ith a vioewmp t ilementinoge ths obliganew - tions, the eCeonfrmunce st sawy ho those obligations must be implemented and dolay wn a reasonable period during which it can be done. In the Charmer, when we speak of pthe ossible impact cof any new decision and its possible consequences on internal legislation, we envisaged a transi- tliona period, so I think the Confeerenc could do the same, rreashe the Point is a similar one. MAR. UYLLVN T (Netherlands): IIf understand the Delegate of France aright we lcoul leave this question to be settled by tohe Cenfernce in itse Ruls oof .edure for rrcingayf.uatthe prioevions of those articles, as is said in paragraph 3 of Article 75I. s that his opinion? - 10 - C.5 E/PC/T/C. V/PV/10 MR. PALTHEX (France) (Interpretation): No, I think it is difficult, because we cannot envisage in advance how the anendment will be implomented. Paragraph2 of Article 75 speaks of the acceptance of amendments, but the implementation of each amendment will depend on that amendment and may be different from that of others, depending on its nature. So it is difficult to envisage, in the Rules of Procedure, any precise period which would apply to all cases. We can envisage in the Rules of Procedur naturally, that an amendment which must be implemented after a certain delay to be fixed by the Conference will in fact be implemented after that delay, but we cannot be any more precise than that. MR. VAN TUYLL (Netherlands): So that means that this transitional period would be part of the amendment, to be decided on by the Conference? If that is so, I am satisfied. - 11 - D1 E/PC//T/C.V/PV/10 MR PALTHEY (France) (Interpretation): That is exactly what I thought. THE CHAIRMAN: Are there any further comments on the report of the Sub- Committee? If not, the report is agreed to, subject to the revisions which were agreed to in the discussion by the fill Committee this morning. The Committee will recall that at our meeting the other day, at which we discucsed the question of voting in the Conference, the delegates from Belgium and Netherlands withheld their position and asked for an opportunity to report their views at a later meeting. I understand that they are now prepared to take a report, and I suggest that it night be timely to hear from them. I wish to add I do not want to provoke a sustained discussion of that subject this morning. I merely want to get these views into the record. If anyone has anything else that he wishes to bring up on that subject that would merely be additionally informative for the purposes of later consideration, possibly, by a Sub-Committee working on this subject, I would also be glad to get that into the record, but I do not wish at our meeting this morning to provoke further discussion or debate, on the subject of voting ln the Conference. BARO VAN TUYLL (Netherlands): Mr Chairman, this question has been, discussed in the Netherlands delegation and in the Belgian delegation, and we intend to make a joint written declaration on this question, so,if you do not mind, we would like to have discussion of the matter held over until our note has been handed in to the secretariat and handed round to the delegates. I hope that will be done tomorrow. THECHAIRMAN: The Chair had the impresion, from a discussion of this matter prior to this meeting, that the delegates from the Netherlands and Belgium were in a position to report on the matter this morning. Apparently that is an incorrect impression, and the proposal made by the Chair has proved to be what we sometimes call a "dud". However, it is, of course, quite agreeable that we should postpone consideration of that matter until the gentlemen in question are ready to report. MR HOUTMAN (Belgium) (Interpretation): Mr Chairman, I wish to apologise for our delay. It has been accounted for already, and I support the Netherlands proposal to give you a clear, written statement of our attitude. This D2 E/PC/T/C. V/PV/10 question is a very important one; and as you know, it led yesterday to considerable discussion of a contradictory nature; and, if I may say so, the discussions were at tines highly dynamic. I consider that it is important for the success of I.T.O. that we come to a full agreement on the question of voting in the Conference. It is in that spirit that the Balgian delegation made contact with the Netherlands delegation, and we may be in a position to propose a compromise. That is the reason why we are treading very cautiously on thorny ground for the time being. THE CHAIRMAN: Very well. I shall assume that in due course (and I hope to be very clearly advised on the matter ) the delegates from Belgium and the Netherlands will be ready to report their views on this matter. I am sorry I have taken up the time of the Committee this morning in bringing up the matter when there was nothing to report. The next item on the agenda is a discussion of Articlee 76, "Inter- pretation and Settlement of Legal Questions". In that connection I believe that the Cuban delegation have submitted two amendments, to paragraph 1 and to paragraph 3, and I assume that the delegate from Cuba will wish to speak on that. MR ALAMILLA (Cuba): I would like to deal first with paragraph 1 and our amendment there, and then deal with our other amendment when we come to paragraph 3. This is what we are proposing, briefly. As the delegate of Norway said at a previous meeting, the success of I T.O. largely depends on having in that Organisation all the members of the United Nations. If that highly desirable objective is achieved, we shall then be in this position: that there will be 51 members of the I.T.O., of which no less than l7 have Spanish as their official language. That will mean that 17 governments, comprising one-third of the members of the Organisation, will, as the Article stands at present, have to deal with the Charter and try to understand it as well as they can. I do not think there is any other language of which that can be said, certainly not to that exent. Now, -,< -.- -S - - - p isskiegm-deeh~e kzat ~.sh.~ ae atworn lne f thes ' g'- T¢' ' -/ : , a2!'ec@ ka wha:-elt conable problems -la;±*or2L wourkiz.g :ngcumg when it6e to 5w ,>- :21;J , D3 .E/PC/T/C.V/PV/10 having authoritative texts, we feel that it is necessary that there should be an authoritative text in Spanish as well as in English and French. We therefore ask that the first paragraph of Article 76 be re-drafted accordingly. THE CHAIRMAN: I think it night be helpful at this point,' if we were to.L.. have comments upon this suggested amendment from the Legal Officer of the Secretariat. MR RENOUF: Mr Chairnan, I merely wish to point out that this paragraph of Article 76 is bound up really with the question of what will be the official languages of ths International Trade Organisation. A similar paragraph in the Charter of the United Nations, in Article 1II, was taken as an indication that the official languages of the United Nations should be Chinese, French, Russian, English and Spanish. Therefore I merely wish to brine that to your attention. Personally, I would consider that the delegate of Cuba's request was justified, and I might go so far as to say I would expect a similar request from the Chinese representative. If those two requests are met, we will have a basis of four official languages. That would leave out Russian, and unfortunately there are reasons at the present time why we should omit Russian. 14 Mr. KELLOG (USA): Mr Chairman, I would sirmpy like to say here that the reason the first U. S. draft confined the languages of the Official version of the Charter to English and French was an effort to make for simplicity sc far as possible, but I would be glad to support the proposal of the Cuban delegate and the Legal Officer. THE CHAIRMAN: Four delegates have asked for the floor, and I believe the order in which their hands appeared was first China, and then India, Chile and Canada. Mr DAC (China): I want to say that I am glad to hear that our views have been put forward by the Leal Officer and the delegate for the U.S.A. I think we may do well to follow the example set up in the Charter of the United Nations, that five languages will be used. Mr MALELK (India): Mr Chairman, the words have been taken cut of my mcuth by my Chinese friend. We would like to support very strongly the proposal put up by the delegate of Cuba. It is a very reasonable one. Mr MERING (Chile) (Interpretation): Mr Chairmian, I wish to say that I gladly support the Cuban proposal, as so far as I am concerned it is hard for me to follow the work of this Conference, because I do not speak English and even in French it is hard for me to express rmy thoughts. I therefore wish that we could have Spanish adopted as an official language. Mr COUILLARD (Canada) (Interpretaticn): Mr Chairman, I shall be glad to support the proposal with the view to have the Chinese and Spanish languages as official languages. Nevurthelces, I support this proposal in the French language. THE CHAIRMAN: There seems to be no legal cbstacle to doing what seems to me to be obviously desirable, and therefore I assume that the two additional languages which have been suggested will be added to this Article. I take it that when the delegate for China suggested that we followed the United Nations text, he was not suggesting that for the moment we add the fifth language which has been referred to ? Mr DAO (China) As our draft text will be discussed again at the next - m tng,lwand lso attt e h onference, there will be plenty of opportunity of ny aaddition. 1.5 E2 -~' ' cle T6? We shouldHE CMIaIHO:or'.any Vfuhr, i .rt.o'7 corin6cu adagiaphscussiWeon, I suppose, first to p:,r. 2 c ve covered pearagraph 1, and Ie should have askd whether there wre any co;iolcnragraph 2. .iteh egrard to pragraph 3, tho Lcal Oficr omf thce Secretariatm has soe obsrvations to ake. i iiS'ioIi&a: If we are gCing todiscuss paragraph 3 now, I just want Tv CA L N: x7sume thate we arc aolmost' t it I as just waiting to see if wque eare it sure there aremm no coents on paragraph 2. IKZ&1I (a): Theoerf isoe; samlldrafting pPoint. I want toc know whether there is anyp articular object in retaining this second sentence fo this praagraph: "TehE excutiveB oardm ay require a preliminary report fomr ayn of the Commissoins in such cases as it deems appropriate". Surely the serviceso f the Cmmoissionw ill always be at teh disposal of -v* ExecwutiveB oard ?I was justwonde ring wehther there was any particular objecti n puttingtti ins pecifically in this wa.y r KELLOGG2(USA): In r-ply t.-the suggestion of the delegate of India, I thoroughly agree that the matter is covred by paragraph 4 of Article 60. However, we felt that in drafting this matter that the Commissions would play an extremely important pat in getting to the Executive Board well considered opinions of experts in cases of dispute. We felt that it would be desirable to stress by reiterating the idea in Article 76 the necessity of having before the Executive Board such opinions in any serious case cf dispute. It is quite true that it does repeat the same idea. Mr MALIK (India): Mr Chairman, I shall leave that question to the Interim Drafting Committee. THE CHAIRMAN: Are there any further comments on paragraph 2 ? Mr HOUTMAN (Belgium) (Interpretation).: I wish to make two remarks, the first of which is on a pure question of drafting. The French text speaks of 11 . iec tx pas "ccntestatiozjukesticiable7,vrihof course is a .misa-he tranxslaion. Ito should be "judiciaire". Tph;secCd point I wish to make is a ;int 16. E3 E/PC/T/C. V/PV/10. Of substance. I wish to ask the United States delegate a question, because I do not understand why we speak of any issue rising out of a ruling of the Conference in respect of paragraphs (c), (d), (e) or (k) of Article 32. I should like to know why sub-paragraphs (a) and (b) of Article 32 should not be submitted when their interpretation is at issue, to the International Court of Justice. Indeed, it is envisagcd under sub-parraphs (c) and (b) that the present Charter will not appreciate the adoption of measures with a view to protecting public merals, and also the question of hygiene and the defence of the lives of animaIs and plants, and so on. ..We have arranged that such Articles could be invoked with a view to escaping the Customs obligations which have been undertakenn by different nations. I therfore wendered whether some serious dispute arising from such points could not be covered and could not be brought before the International Court of Justice, and whether an Amendment should not be adopted here. THE CHAIRMAN: We have rather confused the situation hero. The delegate from Cuba had previously asked for the floor and a question has been asked by the delegate of Belgium of the delegate of the United States. The delegate from the United Kingdom wishes the floor, and I believe that the Legal Officer of the Secretariat has some remarks to make on the next paragraph. Mr ALAMILLA (Cuba): I only wish to speak on paragraph 3. THE CHAIRMAN: That is right. I am still getting ahead of mayself. I will call upon the delegate of the United States. F fcls. 17.. - ; -1. . \ . * $ . IALLLOGG(United States): In reply to theeeg qeuestion of the DcIc t weof Bel-w a to svd-l sgiagled out aub,paarphs (c), -(d) e) and (k) of .tagicle 32 anAd par-aph 2 of -ticle 49 for special' treatmaynt,e I wish to sothireason isa that thesle parrraphs deaL with matters of national security, and it ways felt that ever nation joinwiunothe I.T.O. 'lad elwant tghe untrzm:ed riht to get such tters of security before the International Court aned would not bo xllin- o permit the Conference tao cught of f thctri lby.adecision t o the contrary. .th re-rd to the rest of the parag:rphg, the thou h behind the drafft was as ollows. The 1.T.O. should, as far as possible, settle all aqsiongs -riin nder its operation in its owvn hop, and that the Irerna.ionnl Court shoulbd not - called upon toe sottlJmatters unless they ewely rme raliportant and hgad to o to the Court. Seconhedly,o t Curt shoulde not b callned upo to setatleree mts which the Conference did not wthink er e gof aleeal typ suitable for a ddecibsion n a cofolaw/urt f as It w.aor th. reason tehdrat wo go fted thisgrap parah in suwch ahat aaly matterst l /to the Confeerenc; then, if the Conference decides that a matter )is (a vmpery iortant, (b)and of a nature which a couraat oflw can and should decide, the Conferwence opuld ass the matter on toI the nternationual Cort. You notice evethate pn th whart wy ichins its dispute in the Conference is boungd to oo up t the court on the appeal ofo the pposing party. That was the reason for which we drafted this paragraph in this manner. Does that answer the question of the Belgian Delegate? OL;En1HOn Uritd nKihmgdn): I wish to ask for englihtenment. Im an araid Io d not myself know whetheAr rticle 32, to which we have been referring, has yet been passed by thep apropriate mmitcotee of this Preparatory Committee. If it has not yet been accepted, or if substantiaaml dmentens have been made, our laubors at this moment may be in vain. 18. E/PC/T/C.V/PV/10. THE CHAIRMAN: The Chair feels that there is nothing in the suggestion of the United Kingdom Delegate that would prevent us from making a provisional examination of paragraph 2 at this time. It would, of course, be understood that if there are substantial changes in the other parts of the report which would affect this paragraph we will have to go back to it and make the changes that are consequent upon these other changes. Returng to the question raised by the Belgian Delegate and commented upon by the United States Delgate, is the Belgian Delegate satisfied with the explanation which has been given? ( interpretation) MR. :W-C. sN (Belgium): I understood the reason which led the United States authorities to have such a draft, as explained to me just now. However, as has been said already, everything depends on the precision and clarity which will be given to Article 52 later. As it stands now, under (a) and (b) I am very much afraid we can see escape clauses that can be construed rather loosely, which would enable some members to escape from the obligations undertaken. I understand we would be able to come back with a text once Article 32 has been amended by the committee which is now considering it . Naturally it is not within our purview to examine it. THE CHAIRMAN: Are there any further comments on paragraph 2'R MR. VAN TUYLL (Netherlands): I would like to make two remarks. The first is that according to the proposed order of business which we received at the begining of the work of this committee Article 76 was one of the last Articles which we were going to discuss. I think; the reason was that that Article is of very great importance for the work of Committees Il, III and IV. Therefore, I would like to stress that we my have to come back to this Article again as soon as we know what has been decided ~~~~~~~~~~~t 1 ~~-= . .: ,..- .n~ ' , 'he e nwhch.nselrith itn Ttuzt ise settlemehnto -u u--: t xm ine t:hat Ia nct ite h y -aout the worsi the * t. z .,' se*e ce :.. ~ .. . **.*e I would like 6he s rice whc we wir gongt cti sc . I -t-da "n resn F.3. E/PC/T/C .V/PV/10. an explanation from the Unites States Delegate why those words were introduced in this paragraph. THE CHAIRMAN: The Chair would like to comment on the first point raise by the Netherlands Delegate, and then will call upon the Delegate of thle United States to comment upon the second. The first point was with reference to the discussion of this Article at this time. I believe that the point made ± was that it is premature to take up this Article , that it was set originally at a later point in our order of discussion and it might be better to discuss it furthler at a later point. With reference to that, I shouId like to point out that the same observation applies with reference to practically evrything that remains for this committee to do. ie have promised in the Heads of Delegations meetings to endeavour to conclude our deliberations in Committee V by the end of next week. Of course, it would be understood that there will be perhaps a few points to be cleaned up after that which are obviously contingent upon the discussions in other committees, particularly Committee II which seems to have made less progress because its task is inherently difficult than those of the other committees. It musti be clear that if we are to conclude our work by the end of next week we simply cannot afford to suspond further discussions of this committee until towards the end of next week. We must go ahead. It is always understood that we are free to come back - indeed, we will have to come back - and take care of changes in these Articles which are it contingent upon the work of the other committees, I think that/has already become fairly clear from the record of this committee's work that it has been constrictive k and worth whil e for us to go right ahead and discuss these various paragraphs and Articles, even when we know that we cannot make definitive and final decisions about them. Therefore, I suggest we go right ahead with Article 76 and the remaining Articles and do the best we can. Does the Delegate of the Netherlands wish to comment on this particular point? 20. G. I E/PC/T/C. V/PV/10 MR. VAN TUYLL (Netherlands): When I made my remarks I did not wish at all to criticise the decision of the Chair to discuss this Article this morning; I hope you did not misunderstand me, Mr. Chairman, when I made that remark. THE CHAIRMAN: The Chairman just simply remarked that he was seizing this occasion to say something that he wanted to say anyhow. MR.KELLOGG (United States): In reply to the second question by the Delegate of the Netherlands as to the words "If the Conference consents", the theory upon which we procceded in this pragraph was that the Conference must make two decisions on any disputes which came before it. Firstly, it must make a decision as to whether or not a dispute was of a justiciable nature suitable fr detarmination by the world Court, and secondly a decision as to wvhether or not a dispute was of such importance that the possibly crowded docket of the World Court could be further pressed. Those decisions of course would be made in addition to decisions on the substance of the question. We put in the phrase "If the Conference consents" so a to give to the Confernce the right to say, "We have considered the dispute, we have hoard all the parties, and we have decided in a certain manner, and we moreover feel that this dispute is not sufficiently imopartant to be put on the docket of the World Court." I may add that this idea was suggested originally by our legal experts who foresaw that oven though the Court may not now be very busy it probably will in the future be extremely busy, and some protection must be given to it in the constitution of the various specialised agencies. MR. VAN TUYLL (Netherlands): I think the prestige of the Conference would have to be extremely high of none of its rulings were to go to the International Court of justice, but if the Conference is wise and takes wise decisions, it will not very frequently happen that they do. On the - 21 - .. . , , - .2 -~~~~~~~~~~~~~~~~ . ~ A i G. 2 E/PC/T/C.V/PV/10 other hand wee i- not foomrgoet that pretheI onfornce is caisodorfro - sentatives ef G.=rnrnts, and, with duo rspect to the decisions, o', thesGoee reepresentamtives of their vrnmnts, I a afraid that perhaps. some political Dcisions ia be tatken. Therefore I. hink. will be a": dangerous thing to prevent, in certainom cases, member countries fr aIweng to tho Iternational Courerrt of Just,ice. The othdr ection.: that mthe Internonal. Curt nnit be so busy that it could not do all th w-r':kith -;hh it was as'edto cope, could be covered by asking Cothe Iterrata-o 1 u ither vcliuntrily or by chanting its Statue, t aarraxe for -Lmpecifoal cha.Ir Cbcommercial matters, anod if the Cput amberiod stha at .:mmk3-icll or:iai eperts, the ordinary chambers of th Our w;nCod ..ogetm so nuc woork tc d. That -wold be ruile a edenifpfrt oart ef th CourIt. woluld ikeknow wto hat tehe Dlegate c thniee UJi States thinks of that.. HOUTMANI.B B(eumlgiIntq pr( r-tati:on). I -gree withe thnfears expressed b ethaDelegatoe t the Netherlands.I 1think that I.T.O. cannot but befenit by smittubing as many cases as possible to the Iernntationl urt_^f Juasiie, espec~clly, f thlelatter sets up a special chamber for commercial matters which would judge the cases which in normal circumstances would fallwithin the scope of I. T.O. MR. A (Cuba): We also feel the same as the Delegate of the Netherlands in this matter. We cannot here try to modify the International Court of Justice;that, Ithin,k wruad b. something they would have to do them- selves whre the case arises when they cannto cope with the work they have tc od. But in roder to try to solve this difficulty, so that very i=portant questipos may be placed before the International Court, I would suggest striking pot the words "If the Conference consents" and adding, inth elin ebfemer hwere there i sa reference to "any justiciable. issue," arerfeonce t o" a,m i.mortant issue" or something to that effect. In htat iwaO an mattre which any member considered important owuld be sub- Zmitt dto the CoOurt That is only a suggestion. - 22 - G.3 E/PC/T/C. V/PV/10.. MR.KELLOGG (United States): As to the first issue raised by the Delegate of the Netherlands concerning possible political factors entering into decisions by the Conference, we thought that just for that reason it became particularly important that the Commission should in fact be the court of first instance in any such dispute. Thc Delegate of India raised that point earlier and referred to the second sentence in the paragraph. As the Committee will recall, in the U.S. scheme of things the Commissions would be international experts with inter- national responsibility, and when the Commission passes judgment on a question as a court of first instance, we hope that its decision will be entirely based upon non-political considdrations. However, I do see a great deal of value in what the Delegate of thd Netherlands has suggstd, and. would be very glad indeed to have the comments of' other Delegates. As to the second issue raised by The Delegate of the Netherlands, it would seem to the United States that the ITO should as far as possible, attempt to deal within its own house with issues of a commercial nature. We hope ITO will have colossal prostage, and we would like to have it contain within itself the means for dealing with commercial disputes. We would feel that the ITO might, to some extent, lose in prestige if it were required to share responsibility with other bodies. - 23 - ~~~~sX-. '- M !LI (India): One has a very nympaa.turNM sP7irma., wiA,h an itht -he principle underlying the suggestion made by the delegatefor the dNethemrlans, naely, that an aggrieved party should not be barred from havin recourse to a thirwd party T isen it -s dissatisfied with a decision of the Ceonferenc, and that it should simply have to obtain the consent of ethe Confrence before going to the Innalternatil Court. I think that is a verpriy splound nciee. On th other hand, there is a real difficulty, and that is this, that we do wish toavoid the submission of these sorts of attcse to ethab onatcr.tcnlConudrt, *alt mthe se-aetimc think we ust realise that the Conferencge igs -in-to be a very influentidyual bo and I thinkm one ight nreasoablye leav it eto th Conference. I do not thin there is any rdeale cngo in the Confeerenccitsofelf cany one party cig treeatcdon the basis of injustice. amI T-ust wonderginS hether it wouldo nt be aws ell to leave the authority with theon Cfrence itself but also to put in sghlihtly different words: instead of saying "if the Conference consents"e w might say "with the consent of eth Confeecrne, hich shall not ebcunreasonably w-thheld". If you qualify it in that way that might possibly be a solution of this difficulty - because the ifficulty is there. MR BURY (Australia): Mr Chairman, this is not quite the place to re-open an to record old discussion, but I would like/, in view of what the United States delegate has just said, that we should regard any tendency to treat these Commissions as a court of first instance, performing judicial functions, as a very dubious proposition. Apart from that, Mr Chairman, it does seem to us that it is rather putting too much to the Conference to give it what is implied here, that is, a power to withhold certain kinds of disputes going to the International Court of Justice.' It is quite clear it may well be a court of first instance, but the line of appeal should Perhaps be made clear. I was going to suggest that night hear the views of the Legal Officer on this point, if he could add anything to what has been said. THE CHAIRMAN: I call upon the Legal Officer of the Secretariat. MR RENOUF: There is not much of a legal character that I can add to this 24 E/PC/T/C.V/PV/1 0 discussion. There are really no legal considerations involved in this particular question.. On reading that clause at first sight I thought it was father unduly restrictive of the right of a state to submit a dispute to the International Court of Justice. On the other hand, after hearing Mr Kellogg's explemation, I appreciated his argument that it was framed that way to increase the prestige of the Organisation. Just the same, it seems rather peculiar to me to invest the Organisation with a jurisdiction which is strictly judicial when it comes to judging these complaints and seeing whether they shall be passed on to the International Court. However, it is actually up to the members of this Committee to take a decision whether they wish to restrict that right, and there is nothing, illegal if they do take that decision. There is one other point. Some members have mentioned the fact of the Court forming chambers to consider these commercial cames. That power, of course, does exist under the statute, under Article 26. It says, "The Court may form one or more chambers from time to time to consider particular cases", and it specifies there labour cases and cases relating to transit communications - merely as examples, of course. MR PARANAGUA (Brazil): Mr Chairman, after hearing such valuable opinions I would ask permission to add something to this discussion. If any decision of the I.T.O. could be submitted to the Court; that would mean that the I.T.O. would be, in effect, like a Lower House having to refer everything to an Upper House, the International Court. This Organisation is the one to decide on certain matters, and it seems to me that any member could try to evade the decision of this Organisation merely by submitting it to the otherCourt. I think it would be better to have a certain definite field in which the decision of the I. T. O. is final. When a question of interpretation or some obscurity of the Charter, or some legal question, arose, it would be better, I think, to refer it to the Court. But I think commrcial questions or decisions as to disputes alleging any kind of unfair practice -that is, bad behaviour on the part of a country - should not be submitted to the Court; they should be kept for the sole decision of the Organisation. The decision in such cases should be immediate, and final, and not suspended until consideration, had been given to it by the Court. I think the decisions of the Organisation on the matters within its jurisdiction should be final, and that we should leave to the Court what belongs to the Court. Here in this Organisation we all have the some representation and, consequently, the same obligations, and for that reason there should be no question of appealing from decisions taken by the Organisation. 26 I.1 E/PC/T/C. V/PV/10. THE CHAIRMAN: Gentlemen, I had very much hoped that we would be able to conclude the discussion of pararaph 2 this morning, but two more delegates have asked for the floor to continue this discussion. It is now a quarter to one, and it appears that if we permit the discussion to continue it might run on toc late into the morning. In as much as we shall have to return to Article 76 in any case, to deal with paragraphs 3 and 4 - and I am sure there will be some discusion on paragraph 3 - I think it may be wise to break off our discussion at this point. If I were sure that the discussion on paragraph 2 would conclude in a matter of two or three minutes, I would continue, but I am afraid that is rather a dangerous assumption. There remains some routine business to transact. The main question is when we are to meet again. Certain delegates have expressed their desire that we should not meet next Monday. I understand that in addition to that the Secretariat is pretty well cver-loaded and probably would welcome a slight respite to catch up. On the other hand, if we were not to meet until Tuesday some matters which I think ought to be carried forward in discussion would be neglected, and there are some other items of business that the Chair is anxious to transact. I would like to suggest that in return for a holiday on Monday we settle for a meeting tomorrow morning, which perhaps might not be a very long meeting. We might hope that we could meet - if 10.30 is too early - at 11 o'clock and go on until 12.30 or 1 c'clock or something like that, and conclude the discussion on Article 76. I should like also at that time to make certain proposals with regard to the setting up of some sub-committees, and I should also like at that time to arrange for the appointment of a Rapporteur or Rapporteurs for this Committee. If there were time beyond that, there are still some other Articles that I would be able to suggest to keep the Committee entertained. What are the views of the Committee in regard to a meeting tomorrow morning ? Do they agree, and if so what time would you like to meet ? Mr COUELARD (Canada): 10.30 tomorrow morning is satisfactory. I would 27. like to ask if you are in a position to toll us what other Articles you would like us to discuss besides Article 764 THE CHAIRMAN: I thought we might - if we get to them - take up Article 78, paragraph 3 and 4, and Articles 1 and 50. I hear no objection to our meeting at 10. 30 with a view to adjourning at 12.30 instead of perhaps 1 o'clock. It is agreed and the Committee is new udjourned. (The meeting rose at 12.50 p.m.) 28.

GATT Library

vj418cg0471

Verbatim Report of the Third Meeting Committee III : Held in The Hoare Memorial Hall, Church House, Westminster, on Thursday, 24 October 1946 at 10.30 a.m

United Nations Economic and Social Council, October 24, 1946

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

24/10/1946

official documents

E/PC/T/C.III/PV/3 and E/PC/T/C.III/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/vj418cg0471

vj418cg0471_90220058.xml

GATT_157

E/PC/T/C. III/PV/3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the THIRD MEETING COMMlTTEE III held in The Hoare Memorial Hall, Church House, Westminster, on Thursday, 24th October 1946 at 10.30 a.m. Chairman: M. PIERRE DIETERLIN (France) (From the Shorthand Notes of W. B. GURNEY, SONS & FUNNELL 58 Victoria Street, Westminster, S.W.1) A1 E/PC/T/C . III/PV/3 THE CHAIRMAN (Interpretation): Gentlemen, we are able to meet this morning in the Hoare Memorial Hall, and this will, of course, greatly facilitate our proceedings, as we have the use of the system of simultaneous interpreta- tion. It had been thought that, in view of the meeting of the heads of delegations and the Presidents of Committees which had been foreseen for this morning at 11 o'clock, we would have to suspend our meeting at 11.30. Mr Wyndham-White has been kind enough to agree that Mr. Gonzalez may attend that meeting both as head of the Chilean, Delegation and as Vice-President of our Committee, so that it will not be necessary for me to attend that meeting in person. In these circumstances, it will be possible for us to continue our discussions this morning until 12.30, if, gentlemen, you are agreeable. We would then, of cours, resume our discussions this afternoon at 3 o'clock. Has any delegate any statement to make on the point of our continuing our discussions until 12.30? . . .As no one seems to have any statement to make, I suppose that you are all in agreement that we should continue our meeting until that hour. May remind you that in order to facilitate the clear ard correct interpretation of your remarks it will be necessary for you to speak somewhat slowly, in order to enable the interpreters to follow your statements word by I think that most of the delegates who are present today will be making statements the text of which has been prepared beforehand. In order to facilitate the interpreta- tion of these statements I would ask delegates to be kind enough to hand copies of these statements to the Secretariat, and then they will be handed on to the interpreters, and that will greatly facilitate the translation. A2 A3 E/PC/T/C. III/PV/3 Has anyone any questions to ask concerning these procedural matters? . . . As nobody seems to wish to make any statement, we will return to the subject matter of our meeting, and I call upon Mr. Gonzalez, delegate of Chile. MR GONZALEZ (Chile): Mr Chairman, Article 34 of the Charter prohibits the formation of cartels but permits inter-governmental agreements, as stipulated in chapter 6, for certain commodities, with the participation of member countries both producing and consuming. Chile, in pre-war years, took part in international cartels in special cases when world production of a certain commodity was in excess of consumption and resulted in surpluses which constitute a danger to the stability of world economy. These cartels worked satisfactorily, stabilizing markets at lower prices than those prevailing before. The Chilean delegation fears that inter-governmental arrangements which provide for the participation of consuming countries would only be successful after a long period of over-production when such services had become too burdensome. The situation might therefore arise that before these new agreements could become effective the commodities concerned would suffer a crisis of over-production with all the attendant difficulties for the Internal economy of the country and for its foreign trade. 3. E/PC/T/C . III/PV/3 with regard to Article No. 40, on. "Exceptions to Provisions of Chacter V", the Chilean Delegation suggests that Item No.1 (c) should read as follows:- ".....agreements or understandings concerning railway transportation, aviation, shipping and telecommunications services, and other services, always providing that such agreements are approved and applied under the control of the International Trade and Employment Organization;" with the object of harmonising the various provisions of the Charter with the observations already made, the Chilean Delegation proposes that Chapter VI should include not only intergovernmental commodity arrangements, but also arrangements in respect of transport and other services, as we believe that such agreements might be necessary and useful in certain circumstances, both for commodities and for services. In connection with these problems I would like to inform this Committee that the Chilean Delegation has submitted to Committee IV the following proposal: Article 46, No. 3 - It is here proposed that in the resolutions concerning price regulation, trade, stocks, production and other matters of importance, the producing countries and those which depend to a large extent on their imports, should have equal authority. The Chilean Delegation thinks that it would be advisable to add a paragraph reading :- but such consuming or importing countries should not oppose the adoption of measures necessary to bring about a reasonable price increase in the commodities concerned, when it is evident that such prices have suffred an appreciable reduction compared with prices ruling during a certain former period, or then they do not cover the cost of production and provide a reasonable profit, and so substantially affect the economy of one or more of the member countries, which are responsible for a considerable percentage of the total production of these economics." I thank you. 4. E/PC/T/ C.III/PV/3 THE CHAIRMAN (Intepretation): I thank Mr. Gonzalez for his staemennt. I think, however, that I should call his attention to the fact - and I make this remark also for other delegates ho have not yet spoken, in oder to facilitate and clarify the discussion - that the suggest- ions contained in the second part of hs statement concern- ing amendments refer to the second part of our task, rather than the order of the day which we have provisionally accepted. I think that for the moment we should limit ourselves to the general aspect of the question; that is to say, the practical application, such as that which Mr. Gonzalez has touched upon, should be reserved for the second part of our task. I now call upon the delegate of China. MR . DAO (China): Mr. Chairmn,. China, with her industry still in its earlys Stage of develoment, is fully aware of the injurious effects of cartel arragements affecting a number of commodiities which she has to import, but she has no experience of her own in this field. we endorse the purposes set out in the American suggested Charter regarding restrictive business practices, as these purposes conform to one of the basic economic principles laid down by the founder of the Republic. In the general interests of free flow of internatoinal trade and for the protection of consumers of any product which may be subjected to such restrictive practices, we would like to see that an agreement could be reached whereby the undesirabe effects of restricting- competition and of fostering monopolistic control in foreign trade my be mitigated and abuses suppressed. It should be pointed out that as these restrictive business practices are generally conduced from countries E/PC/T/C . III/PV/ 3 which enjoy a higher stage of industrial development, the responsibility for any remedial measures either by govern- ment control or international agreement will principally lie with those countries. In the process of industrial- ization in China the necessity may arise, for the govern- ment to take a direct interest in the marketing of certain products, in the form of agencies or otherwise, for the purpose of regulating the export of certain commodities in the general interest of their economic development. Notwithstanding inter-government commodity arrangements, they may find it necessary to adopt measures to ensure stability in the important segments of national economy. As we understand it, such measures are not within the category of business practices, as specified in the American proposals, so long as they are not the subject of international agreements entered into between such government agencies of foreign commercial enterprises. As regards measures to prevent monopoly or restraint of trade by private commercial enterprises, the necessity for national legislation and machinery for this purpose will depend upon, whether there are such practices in the countries concerned. These are our general observations on the American proposals, but we are prepared to give consideration to any other proposals which may be put before this Committee. THE CHAIRMAN (Interpretation): I thank Mr. Dao for his statement, and I now call upon Mr Guerra, the delegate of MR. J. A. GUERRA (Cuba): Mr. Chairman, Cuba has not really had very ample or very good experience of tne effect of cartel arrangements and restrictive business practices, but the experience that we have had so far amply corroberates the 6. E/PC/ T/ C. IIl/PV/3 injurious effects of these arrangements in the different fields which the American delegate explained at the beginning of this Committee. Our country has suffered the effects of those practices in different ways. First, they have had the effect of limiting and making difficulties for some of our : basic exports, cainly tobaGcos. weecondly, -c have the e;mcrience that gheee arhanzemcnts lave prrduced the Tesult .~~as of increasing the cost of our imports, and/some of the imports -hich are more affected by these arrangements are some of fhr basic products Lof the functioning c! our induwtrial enterprises -e see in that corroboration of the fact thatgthese cartel arranzements tend to make difficult or prevenv the industrial de'elowment of countries hich rare still on theeazy stages cf thatkdevelopment. Thirly, -tile -e do not have any aspiration to .uild a rcaly rge mwechant marine, -c are endeavouring very hard to build a small fleet to carry our rlade, paxticulax'y in thewCaribbean, and -e have found that the most important reason fez our efforts bEing made more difficult and fruitless so Lar is to be found in some of these arrangements. ao are mhinking nct so nch of arrwneeme-ts as bet-eon the shi=o7ners and shipping companies as some other arrangements bet-ern shipo-nersoand exporters tc Cuba. These arrangements ir manr Caees have preventodgour sgips grom ettin- car-o on the return trip. This increases the cost of operation in any single trip to such an extent that really this has been one of theomost diffweult Obstacles r- have ead so far in tho developmont of Our mercwant marine, in -hich our Government is very interested. Corsigirir ovoyte-nA that hasarcer said so f in th-s agroemwttee ea£-ege-ith tpu=dangof. wf d-ttim: dor ari fro the beginning various degenerions andn-onr-aliwatiors as to -hich E/PC/T/C . III/PV/3 practices should be prohibited or suppressed, but we feel that maybe the main features of the American proposals reside precisely in the fact that they avoid general decisions. In fact, as we interpret them they only establish certain rules and mechanism for dealing with each specific case and on the basis of a particular complaint put forward. This is a good Procedure for avoiding the danger of making such generalisations as may apply to restrictions or limitations which we may agree here not so harmful. According to our point of view, having listened to every aspect of the question that has been put forward so far, we are inclined to consider that the American proposals may be too loose, and we would probably be inclined to put on a little more control and make them a little more stringent in some aspects. In that sense In that sense we consider that the statement of the Canadian delegation may be the basis for devising some concrete measures, as the work of our Committee proceeds, to make possible that aspiration of our Delegation Finally, we may say that a small country like Czechoslovakia which is interested most in the more completely possible democratic control of any activity that may have harmful effects on international trade an, generally, on the development of small and less well developed countries, we feel that the suggested Charter proposed by the United States delegation, as a basis for our discussion, gives a good starting point for beginning to operate in this field, the aspiration of putting, in the end, all these private practices under control and subject to public opinion, which we feel is really one of the real bases of any democratic society. THE CHAIRMAN: I should like to thank Mr Guerra for his statement. I now call upon the Delegate of Czechoslovakia. MR SOBOL (Czechoslovakia) (IntTrpretation): Mr Chairman, Czechoslovakia, in the light of its past experience in the matter of cartels, has had to deal very seriously especially with German participation in most of the international cartels, and Czechoslovakia has thus been able to be one of the first States which have had to take legal action to control these activities on the part of cartels. In 1923 when special legis- lation was passed this cartel legislation concerned itself not only with national cartels but also with international uderstandings and Czechoslovak business participating in these agreements. This law imposed the obligation on the activities of cartels registering the cartels, also furnishing information concerning all their activities become obligatery. Cartels were thus registered in a public register of cartels. This law therefore made it possible for the State to intervene to directly in the activities of cartels, especially in the field of prices and of all activities which might threaten our republic. The Government has a right to aboiish agreements and cartels which are not in accordance with public opinion and in accord with the public interest, not only in the case of the cartel law, but the change in the structure of most our industries 9. E/PC/T/C III/PV//3 after the second World War, guaranteeing to us that most of these in- dustries will not function against the public interest. Czechoslovakia, which is also in agreement wth the general trend of the Charter as to the possibility of controlling cartels in accordance with the inter- national trade agreement, feels that it is evident for itself as well as for other states which are in the same position that the problem is raised as to whether all members can guarantce that the cartels which are situated in their territory would function within the framework of the International Trade Organization. It is clear that Czechoslovakia will participate in the future with cartels and agreements which are in accord with our inter sts and national economy. Czechoslovakia has regulated the activities of cartels by domestic legislation. It is now ready to participate in international institutions which should give the same guarantee. THE CHAIRMAN a In t prretatinr): I thankMr Sobol for his taatment. I ow call; poun theDdelegaet o Frafnec. R LECUYER (FaCce) ( Intep-eotation): Mr. Chilmran,ITwomudl like to refer to the statementm ade by the United States eaIegate. As faraCsI7aem concerned, I w'as verymu=ch ip=ressedby tecazgu emnt hjichhe p ut for- ard. I had th^ugh. at least tCat I coulda deduce from them that such agreements threnten seriously world economy and represented something like the yellow fever or chelera and certainly necessitated heroic medical efforts like those which the United States Government applied so energetically and with such great efficacy to epidemics. unfortunitely, for the tranquillity of my own conscience, I heard, a short while at torwards, the delegate of Luxemburg, and I then thought, after his statement, that perhaps I was on the wrong track and that these agreements might, on the other hand, constitute a universal panacea against economic diseases such as sudden varitions of prices, reduction in consumption or excesses of production. A night has g b I rdtho ucti. e -. 'rs one cy- since T hea' these stat-ment-s. ntirebnight to _da no-sing dmthat-1v_ v te t ie _ -i- th-e; r the n^_-anomiesz. n be mucho- ..sf sh -OW be 1core sim~e and a-heo hr rgia l agreeemnts miGht 'nho bconsiered bot: 'the I'n E/PC/T/C. III/PV/3 best and worst of things. I think, in ary, case, that we must not be surprised by differences of opinion concerning their existence, if we consider the profound differences in the economic structure of various that countries. It is natural that the principle/of agreements should not be viowed from the same point of view by a country which possesses powerful industrices and by another country where small medium-sized business deminate, should exist. The conditions of their functioning very in countries which work mostly for export or for those which are limited to the domestic market. I would like to remind you, moreover, that the problem of agreements constitutes only a part of the matter and that in regard to this subject we must not forget that the : draft Charter aims at other things besides agreements. The French Dele- gation therefore considers that it is imperatively necessary that an end should be brought to the abuses such as have been noted in alI countries which are committed by private economic powers, whether these powers be isolated enterprises or result from the coalition of a cer- tain number of enterprises. On this last poit the French Delegation approves the declaration and the distinction made in the draft Charter which in the first section, aims at commercial enterprises whatever they may be, whether they be individual companies, factual or legal groups which have recourse to methods which might restrict competition, restrict access to markets and facilitate a monopolistic control of trade and commerce. The French delegation feels no hesitation in reproving these Practices. Perhaps is would, however, be necessary, in order to avoid misunderstanding, to make it more clear that these are disloyal practices. In the second part the cartels are aimed at. Here again one must remark that the word "cartel" is not mentioned; but the draft Charter goes far beyond cartel and those who drafted it have quiteaco ri7ytladhs1 recourse to o m.extensive termi.erngyoand a more vague one, va ce they have aimed at c_ allmco:binesg aemezeents or angements. thisis corrpocdnis o the nature of things, considering the infini * the sof cts asp t a he r nt egemeages that inausty ma -ssry.canu a 1'. E/PC/T/C.III/PV/3 undoubtedly it will be necessary at some later date, to discuss and to weigh carefully the meaning of the terms used. On the second part the French delegation has been struck by the difference which exists be- tween the text of the original proposlas and that of the proposed Charter. where as the first text seems to aim. Only at practices which are factually to be condomned, the o -, tresecond p-csump, until roof to t1he ascoentraroe -en gi-ve than cortair. ractices ere toemc d.ndlcnei The Fregah dele-.tion thinksdihat a :ascussiowillre d.11 arise on these and we feel,-e -ca. toates toz-rstrigtivation cannot clxpplied arlie. exactldo I e not know wMalt Fr maycox -N' thinr cng that .-^, but my part am rr gedobli ,_ gnize che zo tne Prench aw wnal L.-hich permit us to put an end to the abuses and abusesg ' to abuses C =.. such- asreements is elegation has noticed with noet ve" ero" t.e rrc' ielati 'h goat i ntrest dian delegation which open up opportun-tthe su,Ustii. cZ byr-a-24aln e ance of an international ditieis for the ceation in J'isounc L octrlne. h the delegation of Cubac-ema be irn t-is 7n here a Cuba - fferent of some osssiilitL n- to-ether:o--_iifferent po view n concludes zich li.ve exrcss;e._ T-e j.nation. erefore, the agreements themsI i s not"c the e:isternc c:Of thles that -.w much oon 3USz ess an _Ooinion, ncbr So ,tivities in. the aY- f stract,c but ortheaims which one cannot presumreo - s fCtiv -itie ai s: tO Jresue condemned without being the to ocositer_ the_' sh ion. For instance, it might be i _^g soC-m ssrt of exmzint:il to C-nduiem irChgrteme V iV iaee:ntsand Production and o pries uciton nanq. to recognize in Chagovbenmental agreerttr the necessity for a inter s .--.:e- -.rtht orsn -O-rw cUCti, a-. bas : e o-ption -h Freaknchp o&e .t pinten-s to dt:e - cr s u.art f the araftCharter. necan delegation has submitted to us t exwellt .hcdh dthe z-ermit^UeC us sa;2e. stuiieJ ates great kndnw dge of theiffel lnS o siieri te:t -hi c: - ject, i ou sor. TE 5 |i.LMd "-c yar'for his statement. I e retatio n)uo st I d;r:o 0a11 urOn t-he i;:az;te o 12. Mr. D.G.HULHEKKER (India): Mr Chairman, the Indian delegation are in general agreement with the object of curbing unfair and restrictive business practices which are resorted to by certain cartels and combines and which tend to frustrate the very objective of the Organisation to promote expansion of production, trade and services. Such arrangements or agreements, in so far as they conflict with the objective of the tg3 Or-ansatishould, aLczuld - be prohibited icannot, however, ifactgEnre thei _hhait blunandt'l sult-bsn iproper devisedaaInry is Jey the Organisacuyti.o to sev to lautunder-deveri~aly lopeid cournrle the essential tecalhnologinc ass.ance aand canufertsl m tu cer n pwrch o-ees hwa -b neceorssary f the effecitive utnlisatioi of ther resoitrturces D. necessary as aa lst resort fuchor sUc'untries to secure such asasistncde uninduvidual arrangements with fere ormign anu- -curersnd. arin so far as these arrangements nde tt conflict vht 'h ob.jctvi-rofth 5 Orgnisartion, adnr a they 'uldwU&esult in g retaer epxansionof production, trdae adn services, they hould not be ruled out as unfari or restrictive practices under these porposla.s n fact,.I am glad to find supplort to my viewu . to fI-nc. support to, zy - -. 5 e, in the smtaustemlia.ent already =ztLy G.lege fro= A';t. ries for their manulu..s 3 neessfo:n s-ac` c un -r,, afactuemerers ither with theirto enter nto stancfj._ ;cntse L" thtir Gtoe rvernimen-; wic . r pr.arry rwcuccerfC --h;< si-on f ex-D ofdomestic i raw ies.rnater--als i-n.lf >.criesti.cJl right to imposeSuchtrr £e.;ents. t eat *s, t" Um.nerials in the port ov- ofrdom-.: r edst st est JInrLst, not be interpreted I ;eJ:-! tI-d unftairr vn- uses-r c-i b'Snss Practies. to note that the draft charter is an improvemena: g f . * on thae pas et has widened the scope of revious .t . pl s ' 12 em-'Sore of E/PC/T/C.III/PV/3 the Charter by Including "Services" under c;ause 2 (a) of article 34. There is also a reference to "any territorial market or fleld of business activity" under clause 2 (b). These improvements I presume will not only cover commodity trade and production, but also services ancillary to trade, such as shipping, banking and insurance. While I take this as a legitimate interpretation of the proposal under article 34, I may point out that under article 40 clause 2, which deals with exceptions, cartel agreements or understandins amongst private firms "concerning railway transpor- tation, aviation, shipping and telecommunication services" are to be outside the scope of the undertakings expressed under Chapter V. I am afraid these exceptions revolt against the spirit of the whole approach presented under Chapter V. It is unsatisfactory from the point of view of India, where national enterprise has all along suffered under the operation of these private agreements an understandings, particularly in the realm of shipping, bank- ing and insurance. with the operation of shipping rings, Indian national shipping has been shut out entirely, and it does not carry even 1 per cent of its overseas trade. In surance of its overseas trade covered by Indian insurance companies is not accepted by shipping companies, and as such it has to move under the protection of non-Indian insurance concerns; and so is the case with banking. You will agree that these are essential services required in the movement of international trade. Expan- sion and development of such trade depends upon the scope allowed for that country's national services for their proper and healthy development. I would, therefore urge that this position requires to be fully clarified in an unambigueus manner so as to "prevent business enterprises from following practices which restrain competit- on, restrict access to markets or foster monopolis*ic control in the -ol i- th" fiooilelommodity d odef interniana actira or servces ncllary there- pting,o nkingband insurance."ssuch as shi.t. 14. PAE D-3 E/Pu/T/ C. IIII/PV/3 Withthese general remarks and qualifications I fully support the objective underlying article 34 of the draft Charter. THE CHAIRMAN: I would like to thank Mr.Mulherker for his state- ment, ard I now call upon Mr Hakim, delegate of Lebanon. Mr HAKIM (Lebanon): Mr Chairman, we are in full agreement with the proposaIs of the United States Government for the investigation and control of all restrictive business practices; but we would have liked these proposals to go further and envisage internation- al action for the suppression o f such restrictive private prac- tices wherever they prove to be harmful to world production and trade. These private practices have one aim in the last analysis, and that is the maintenance of monopolist profits. For that reason, where they are not regulated and controlled they can only be detrimental to the interests of consumers. This is particularly prejudicial to the interests of the less developed countries which consume the products under monopoly control for monopoly proo,ts, without profiting from whatever may be their advantages to the producing countries. In this way these monopolistic practices frequently serve the interests of some nations, or, rather, the interests of some classes within these nations, to the detriment of other nations. Furthermore, from the point of view of small under- developed nations like ours, private erganisavlons or arrange- ments to restrict production or sale of industrial products ocLUCtsC larly objectionable, as they tend to ompede. aa i\7z in vir.ous 'v~a;.st Cafelodmenryo` in ustdevelpedssc- 1r :D. oountxies, Thesegarisate nor na -angements and in many cases C m y _ sthpowemall nations have little pro ection igainL .-i a-nst eie bymti:6. Their dangeri-nr,&anocr ver, gmcreom-d. to beyon( c,fieldnomizth pcl to al e ld.ticl fie-Lo al -h oprUation for the enterrldof uontoprivatech U:ri-tt a-rad.e4eitssanf theio 3wheressJcns -hr nececsary may, of course. PAE D-4 E/PV/T/C. III/PV/3 prove to be of limited effectiveness; but it would have much greater chance of success than action by individual governments, especially those of the small nations. For these reasons, Mr Chairman, the Lebanese Delegation not only supports the American proposals but also welcomes any reenforcement of the provisions contained in the Proposed Charter for the regulation, control and, where necessary, the elimination of restrictive business practices. THE CHAIRMAN (intTrpretation): I thank Mr. Hakim for his statement, and I call upon Mr. Lawrence, Delegate of New Zealand. Mr. F.W. LAWRENCE (New Zealand): Mr Chairman, New Zealand cannot claim to have analysed in any exhaustive sense the experience of operations of commercial enterprises in the international sphere which have restrictive and undesirable effects on trade. Thus the statements made by many of the delegates present hold co- siderable interest to us. Lack of knowledge in the respects. indicated, however, does not prevent our stating now that we are in agreement with proposals wich will have the effect of removing undesirable business practices from international trade. We see some difficulty, however, in arriving at a specification in our Charter which will permit of satisfactory tests of what is, in its social aspect, advantageous and what is disadvantageous practice. If this view is generally acceptable, it may be agreed that some changes in the provisions of the Draft Charter may have to be made. The means which the proposals for an inter- national organisation would provide for gaining wider knowledge of restrictive business practices are welcomed. It is from this knowledge that specifications for a satisfactory code of conduct can be built up. Our general view is that undesirable practices should be prevented, but as we see it, the difficulty involved in this aspect of our problem lies in arriving at criteria on which judgement can be made as to what is undesirable business practice. We consider it satisfactory that it is practices rather than organisations against which the powers of the Drat Charter are 16. E/PV/T/C. III/PV/3 designed to be directed. We feel, however, that progress of the Committee will be facilitated If consideration is directed towards the provisions of the Draft Charter submitted by the United States, and we are very happy to accept the text as a basis for discussio. THE CHAIRMAN (interpretation): : thank Mr. Lawrence for his ' statement and I noM call upon Ir. Leendertz, Delegate of the Netherlands. :Z EE LNDERTZ (Net:eMlands)> ixr Iaimrmn, a speaking here as alternate for Dr. Speekwnbrink, .ho is prevented from being present this .orning. The Netherlands Delegation whole-heartedly concurs wIth the suggestion that abuses whrih may axlse oribe contaIned in some cartel practices should be suppressed and even .revented- As tc that aim there exists no controversy whatBoever. 3ut this does not lead to the conclusion that cgrtels oe;ht ti bi consld- ered ob;ectionaileiin prlnc-ple. That some have sinned does not mean that all hdve sinnee; nor that the sinners ofls yore wi sin in t.he future It is already possible now, and by international co-operatilon it wll be sti-l more inossible I the future, to keep the advantages thny certailly have and to io away wlth their .rawbacks Cartels have very oftei deen chIlcren of necessity, called into life to combat the effecps of com'eiition whlch in the ,iven circumstances threatened to become fatal to all concerned. Their efforts often resulted an lie siebi.hsation of prIces and er.loyment and in thi flattenong out tc a certain extent of the trade cycle, in the prevention of over-productionaand of w-steful p,oandnda o aosc i- cc-operation in several respects such as research, thg sharinr, of patents, &c. As. other speakers have giready F-vin some Instances titriof, ot Is not necessary for me to add other ones thereto. As they sooften sprang into lifemas a ge.edy a.ainst the results of unbounded compintiiion I tJfficulu circumstances, it does not seem very appropriboe to achliwh them .holesale under the present conditions. E/PC/T/C. III/PV/3 The freeing of trade from all hindrances against the flow of goods and services, in order that this flow may become as beneficial as possible, is in the interest of all, and certainly of the Netherlands and the overseas parts of the Kingdom, which have always adhered to the principle of free trade. But certainly in the present hard times, wher many hard-hit countries, the Netherlands among them, are in a period of very difficult reconstruc- tion, it could not be wise to throw away a useful and weIl-tested tool for preventing unfavourable developments, and for directing some branches of economy to desirable ends, the more so as abuses may be prevented. The general aim of this Conference is to formulate directions for, and to draft, future trade. Certainly it cannot be in contradiction therewith to keep certair, means of directing and organising economic life. In this trend of thought cartels should not be forbidden on principle, but allowed under certain rules. A presumption of harmfulness should not be created. It is a general principle of law and equity that guilt should not be presumed but should be proven. The supevision of cartel practices, the examination of complaints and the measures which consequently should be taken, are a subject of primary importance. For the Netherlands it is not a new one, neither in theory nor in practice. Starting in the 'thirties, legislation has beer brought into being which inter alia provides for a registration and a supervision of cartels. In practice the government did appoint observers with some of them, both in the Netherlands and in the Netherlands East Indies. In the last-named country it caused several cartels to be created. There 18. E1 E2 . E/PC/T/C. III/PV/3 exists, therefore, already some experiences, whilst our perfect willingness to take steps in this direction was proven beforehand. We are fully prepared to co-operate with the Organisation and with the individual members in order that whatever abuses may be made by or through cartels will be prevented. We think it necessary that all members shall undertake to introduce legislation which will enable them to carry out an effective supervision of the cartels under their jurisdiction, and to fulfil their part in an international co-operation to this end. By this introduction of parallel legislation the respective countries will gain the experience and build up the jurisprudence which will enable them to fulfil their initernal task, and which at the same time will be necessary to them for effecting a practical and successful co-operation in this field. For that co-opration an Organisation will be required. It seems to be indicated that the structure and the working of this Organisation should be based on the experience gained by the countries concerned, and should be develope as this experience will grow and extend by centinuous practice. From the beginning the Organisation will be in a position to advise and to assist, Inter alia in solving differences which might arise. Should she not succeed in this last respect, such differences might be referred for their final solution to the International Court of Justice, which possesses an experience and an authority that will render its decisions readily acceptable to all. Some alterations and additions to the Charter of the Court would, of course, be required. This, however, is perhaps not a matter for this third Committee alone; the subject of the mode off deciding possible differences 19. E3 E/PC/T/C. III/PV/3 will probably come up during the discussions of other Committees as well, especially in those of the Fifth Committee. For the present I think I may confine myself to these remarks. It will be clear, therefore, I trust. that, although on some points we should suggest some alterations and additions, there exists a perfect concord as to the aim - the prevention of abuses. THE CHAIRMAN (Interpretation): I thank you for your statement, which unfortunately was interrupted by these extraordinary noises outside. I should like to ask the Secretariat if they could perhaps try either to stop or at least curtail for a few moments the work going on outside. I now call upon the delegate of Norway. MR MELANDER (Norway): Mr Chairman, the head of the Norwegian delegation stated during the general debate that we agree in principle with the proposals contained in the suggested Charter, but that we needed further explanation on some points and that we entertained doubts about others. The chapter of the suggested Charter with which we are now dealing contains certain provisions on which we feel somewhat doubtful. We agree that an International Charter on, Trade and Employment will have to have provisions dealing with restrictive business practices of an international character. The acceptance by Governments of rules regarding general commercial policy could be made ineffective if commercial enterprises were allowed , through international cartel agreements, patent licensing agreements, etc., to share markets, arrange for quota systems to be introduced de facto although such quota arrangements might have been prohibited through inter- governmental agreements. However, there appears to be a basic difference between the point of view expressed in the 20. E /PC/T/C .III/PV/3 U.S. proposals and the point of view which has been maintained in Norway for the past two decades with regard to international business arrangements, such as, for example, international cartels. According to the provisions of the Draft Charter - at least, as far as we can see - it seems to be taken for granted that practically any kind of restrictive combina- tion for agreement in international trade will have the effect of hampering the expansion of world trade and production. I refer to the first paragraph of Article 34 of the suggested Charter, where it is stated that members agree to take measures to prevent business practices which, among other things, restrain competition, restrict access to markets or foster monopolies in international trade, and which thus have the effect of fr strating the purpose of the Organisation. We certainly agree that there may be restrictive practices which have such effects, but, on the other hand, we believe that arrangements of this kind may prove beneficial for the expansion of international trade. It might be mentioned in this connection that, as far a . domestic compectitive restrictions are concerned, Norway passed a law as far back as 1926. This law did not declare alI kinds of cartels, etc., iIIegal,. but only such cartels or combinations, etc., which were unduly restrictive were declared illegal. Governments control of cartels, combinations etc., was, however, estabished, and this system has worked very well in our country. The task of the international organisation, as the Norwegian delegation sees it, sould not be to prevent any arrangement which might appear to be restrictive but to prevent those international arrangements which are unduly restrictive and thus have the effect of restricting the purpose of the Organisation E5 E/PC/T/C/C. III/PV/3 Further, we agree that all International combinations, agreements or other arrangements in this field should be registered with the Organisation in order that it might be in a better position to consider possible complaints. Apart from the reservations I hava already made, the Norwegian delegation is of the opinion that the proposals submitted by the United States Government are well suited as a bssis for the discussions of this Committee. What I have now said is, of course, limited to general remarks. Our delegation will, however, at a later stage, make further comments upon points contained in the suggested Charter, and we will propose some amendments to the draft texts. THE CHAIRMAN (Interpretation): I thank the delegate of Norway for his statement Our Committee yesterday worked not as fast as an express train, but rather like a slow train. Today, on the contrary, it i s working very fast, due not only to the system of interpretation, but also to the fact that the statements are so well Prepared. As a result of all this we are ahea_ of our schedule. Therefore, in order that I may be able to discuss with the Secretariat certain proposals I am going to make to them for the future, I Should like to adjourn for 15 s mTnutese ngewulli-' ''-ii in a-. ~ o;a at non. (At ml.L5 m.i. tg adjouintd i rne fo 15 minutes.) E/PC/T/C.III/PV/3 (The Meeting resumed at 12 o'clock) THE CHAIRMAN: Gentlemen, the meeting is again open. I call upon the delegate of South Africa. MR W.C.MAUDE (South Africa): Mr Chairman, before we adjourned you said that we should be proceeding at the speed of an express train. As f ar as I am concerned, we will proceed at the speed of a jet airplane. Your proposal that we should proceed on the question and that each delegation should make a statement has rather placed us in aa predicmrent, because we aec inexperiencedinn cartelsazd wl h2a dont thought to interveneaet this stg-e in the debate.Mloreover,w-ea rea_ bit hesitant to poek? at all afterw-e have heard a amn like Mr Wilcox on the subject. . (-t thimsltpoint the siptaneous interometation syste- broke mown. TheoCoenittee adjawrned for ah fei minutes wile the frudtawas reairea -nd thmn resumed al'ost at once, without Delegates leeaing their sa-ts) 7HE CH-p AJR (InterIretation): 1 shapld like to MroMogize to l- iaude for this incident which interrupted his statament,r and I sory to imve to ask ddi if he woula be so kind as to begau again, bec=Use I me afraic soi= delegates mght not have heard all that he said because the Iterpremation syste= did not function propeply at tha. -oint. 7 araMr Mal upon : ELude. ii 1AfricaSouth ic^?): I haI said that 1 wanted to proceed at the speed plane; Je -japparently :_,rp-cntl modern inventions have their breakdowns. -hwas an ait nesita.t to talle part at a' in this debate at this stage foar various resons: one of them was that one feels reluctant to s'eek apd to take eart gn a date toCxpher with e:nerts, and I have in in Wi cpxchiTfln Mrio. "he- after that we dad the mana.ian Comnssioner unaer the nnvestigatdo.s Act, .ni itmwah not so :fc' a case oG entering whear an els fe^- to treat as a came of the ti-idty of e babe in th' ,ce . ar-amolit Very filimazear with th e of tohe raificatins of cartel. oYeipises, hou woml see fran this thatAin Souwe -.fica -d have not gieepn verght ea tho pr; tom theProble of cartels, hiand from ts point 23. E/PC/T/C.III/PV/3 of view we are chiefly here to be educated, and I am afraid that our contribution will not be very constructive - certainly not at this stage. We feel, that Mr Wilcox made an extremely good case for the American proposals as set out in the drat Charter; we are all getting used to the broadminded world statesmanship from the Americans, es- pecilly in world economic policy, and we therefore accept the draft Charter as a basis for discussion. We entirely agree that it is a necessary counterpart of the provisions of the dfaft Charter, which Proposes to regulate governmental control of the flow of international trade, to write into our draft Charter, where necessary, control of private cartels, private cartels of trade. I must confess that we are not entirely certain that it is a proper procedure to spell out the criteria under which we propose to control cartels and we feel that there are a great many risks in doing so. I cannot think of a better illustration of the difficult of spelling out than the very illus- tration that the American representative used himself yesterday. He spoke of the cartels that might prevent the "know-hcw" being communi- cated to the under-developed countres who want to set up new industries. We also heard yesterday precisely the opposite, that cartels made it possible for the "know-how" to be communicated. I mention that merely as on illustration of how difficult we feel it is to spell the thing out. On the whole, I should say that our attitude would be to this effect, that it would be impossible to lay down that all cartels are necessily black. We feel that there are various gradations: some cartels might be grey or even white for that matter. We do not, of course, suggest that none is black. We know that there are black cartels; and, in fact, Article 40 in the American draft Charter is proposing, to exclude certain forms of cartels that we think should be controlled; some of them have already been specified this morning; so that I need not go into that at all. But I would say that we would favour the Canadian approach, that we must direct our attetion to restrictive practices that unduly restrict and not condemn all practices of this description, emphasis 24. E/PC/T/C.IIIPV/3 there being on the word "undue" or "unreasonable," if you like. I should perhaps like to make a more general remarks. Mr Wilcox yesterday spoke of the dangers of rigidity being introduced into the flow of international trade by the operations of cartels. I was rather inter- ested in that because in this very draft Charter that we have before us we are also introducing concepts where we propose to develop the concept of rigidity. I was thinking of commodity arrangements. The whole concept of rigidity of course nowadays links up with the problem which is actively in the minds of all of us here, I should think, name- ly, somehow to find a common ground between rigidity on the one side and entire freedom on the other side. It is, as I see it, one of the functions of this very conference to find that common meeting ground, and it is just possible that ever in the case of cartels there is a middle ground somewhere which it seems to me we should find. It is a case of marrying freedom to security in the broader sense. As regards the position in South Africa, we have at the present time no legislation which would enable us to implement the suggestions incorporated in the American Chater, and our Government is considering making investi- atioryns. eful Thly gmiig;obve: usg be nued ythe Canadia experience ageof tvve monthsh ^uinvestigt until suclcluded n c ion is con_ t is caite possIbe nmtht iaor GC bee-r.t wll not cc ble tIointroduce any order to le-sati iarn =On the whole, 1I should sayS , contr c zt C the Y-.i^le, I 5_,dsa tha t_s debate-has bse a e :t _ . _l for our- authoities .t homen a aeelvonc. heL;in g-iding them ind own2u1_s on the t and au ui n t sa'- naon , ; y -zrt. erpratation): I thank Mr Me.. C-^~ia t .tatement; .-.~Ibut 7 mostHey. -iold us aht teginninge bo:f' i'sstmeate n ttha' e had no eivocnoe w ah--oever of cartels adn, - problems. tut alhe.i, l -hs remarks heerre pe ;rsenol-tinso - atnthat they showed tshehknowo he-; tao turjctWlas we-l as anof one fus. I I coepreduueld rc his tsthough nnaain;wiword^fIev'a di-oul1say thhapt te mzoble=of cartels is both 25. E/PC/T/C III/PV/3 black and white -a whisky we all know: I should now like to ask the United States delegate whether he has a few words to add to the preliminary explanations which Mr Wilcox was kind enough to give to us at the beginning of our meeting yesterday afternoon. MR ROBERT P.TERRILL (United States): The United States delegation has no further statement to make at this time. THE CHAIRMAN (Interprotation): In that case I shall call upon Mr Holmes the United kingdom Delegate. - 15 LMESES (UK):M Hr ChamiranI 1 propose to be ry:s brieanend, dnrd,e2 as compared with the representative of SoutAf_;ricaI . shall be ung : atGcic energy - in fdct, I haa thought that I afget go =Itor a record - tnd I e hppmoro da--y tO ao so In case tsf effec t ow the war hich have been pather ap -rent this morning recur. But I am able, of course, to be brief because the view of thk United :ingdom on this subject has, in a sense, been fairly fully expreassed and whole chapter was devote tobteis su_ hct ripn alt.eput fpowtsd 2r*rUnitedNiby the Statems in Deceber earof last y. 26. E/PC/C.III/PV/3 And it will be wthin the recollection of members of this Committee that when those proposals were put forward, there was also a joint statement by the Government of the United States and the Government of the United Kingdom in which it was made clear that the Government of the United Kingdom was in full agreement on all important pooints with the proposals, accepted them as a ba si s for irternatlonal discussiwould, d r,.mm in co.~on with the United Starem Go,e.nrent4 use its best endeavours to bring such discussions to a successful conclusion ig the li-ht of the views expressed as they are being expressed today by other countries. The sibjewt wnth vhich we are concerned clearly is one of the icportant points in the proposals, and therefore what I have said as to tme agreetmnt off y Governmentiapples In this case. The subJect is obvmously i,portant. and,bas has .een said by many rrevious speakersi es pec-ally the representative of the United StaIes ank 1 thinr the representative of Canada, there is little iurpome Ingrgooein. -vernmental barriers to the flow of trade if prIvEtely ndgotiatg&marranze.ents ietween Industriff in diP-erent countries are tllowed uo take their place.m There Must, therefore, be some procedure for dealing with restrictive business practices least to the eatent th t they woposini op-O^iton tmo the ais of hn titernaTLonalOTgande.Crizisati n. E, , Sir- we have, tho, e aims al, of us. I have n, doubt very much im our zinds,tand iu ms froL that point of view that we innthe U-itgd K-n'dom feelpit ri;ropi-ate to consider this partipular m.oble Wetfeel `hat inrso fa hes t business emen;- -ons h!fkind ic ho m fher gtndaze tiUdo frustrate or iay frustrate the purposes cf thenirgai-sation, smeps :ust ke ta:en tb t-rse-ho__ practiWes. it feel,eftherfor, what e should exanine the practicies whch arde sai to have that typbe of ad effehicct, wh have adverse results on omur ais of fmplolm eloyent 27. E /T E/PC/C. III/PV/3 or our aims of seeking a high and stable demand for goods and services in general, and that if these practices can on occasion be found to interfere with those aims, we must condemn them. we consider, therefore, that consultative procedure within the International Trade Organisation that we are seeking to establish is very necessary ? one under which particular cases could be studied with a view to examining their economic and commercial effects. On such an examination all the facts should be available. The examination should be frank and exhaustisve in order to inform those countries which by reason of their state of development or the structure of their economy, may be most liable to the sort of damaging effect which it may be shown that cartels and other business practices may have. We feel that what we want is not so much a judicial procedure as a consultative procedure ? not so much a judicial procedure which attempts to apply a legal code. If, of course, the International Trade Organisation does find that a particular practice invariably has ill effects, the Organisation would be on goods grounds in proposing the general prohibition of the practice. It may be that in time a detailed code can be built up, but that may be perhaps rather more for the future than for the present. I might l al s, saay Ztht teherae ar nturamly ffe die iculti-es connwieh chtsed bltti proem, eas ther are in mbany prolems in fronetP of t h yreparaittee to Coor as awhcle. One of the i-ffi- oCdlt~S.r &bt, in hi-s pr rticla, pat of our labowurs ;ill ld founicto l i- the fhac,t t-tk.unliL some of the other ma,tters or in a greatger dperee erhaps, the problem of restrictive o inpss -,cticies f'an i-nelrrn one for heac- ountry 'ella ws sell a an n-ernatI-n Oogne for ot,he dCrahi-sai-n.a,pnt-atirn he Das various countrites hqave adoped uite different o attitudes t these rpaaestrIziv rci-cs.a In, omegements P.ch arrabnzIh.Lu-l Je ss~to be i-nany senseai in restrni oavfa t rdpe h¢bibeen zrhi-fd, 28. AE 1-3 E/PC/T/C. III/PV/3 or, at least, have been looked upon with disfavour. In other countries cartels have been allowed, and I believe that in some cases even a law has been provided for compulsory cartilisation where a majority of the particular industry supports it. Perhaps it could be said of the United kingdom that we have occupied something like an intermediate position in this. In effect, our laws neither encourage nor condemn cartels; and I think it is perhaps important that the Committee in considering this subject should have due regard to the variation in the legal background against which the problem appears. -' I think th.t is all thatmI need say at the .oment, except this, that we hire om thl Unit-ed KYngdo wi-l cooperate most fully in the w;or cfmthe eommittee andaaay b able at an `ppro- priate stage to produce perhaps draft variations to some of the words which have ;lready appe.red on the subject, THE atiAIRJAN IinterpkettJoU)i d thanm the 7nlteJ Kingdo= delegate for ais staie-ent. Gentlemen,In -view of the progress that we have Tade 4r our work, we will now, adjourn. We have made much greater progress than I had hoped. The matter we have been discussin is one of the greatest interest to all of us and I should like to zhank the delegdtes who have spoken anc offered statementes for tve modtribution they haxe -a&e to our work and the help they :ave givenlim whiarifying the probieI =1ch we have tV this Committeei rsu ooses Co:g,:.i t I SUppOSt I ou.ht now ing ahe amstate:ent all a suimary report of the ideas which nve been expressed ait this Ieeming. I adat that 1 an:not capable of &o n; so. That Is noi because the views wh-ch have been expressed here were so greatly divergent that it would seem i-~osridge to construct dif:iai- between the if-ferent points of view; but I mingevtotaat before co.rzn *e any conclusion at thc nd -f thss s ons, a few mom di cusi. a :'3e;;: -ents of reflection ann thought -re ncre uhwill cesmiryme,,f yo- ;-. per- t -'G I shall reserve the riwith o met into touch m : so:e of you. I a- E/PC/T/C .III/PV/3 certainly at the entire disposal of all the delegates who may wish to speak to me on some special point which may be important to them. In the light of the conversations we may then have, I shall then get into touch with our Secretary in order to bring out certain matters in the light of which our work ought to proceed to the next stage of our work. Under these conditions it would be quite useless to hold the meeting which we had planned to hold this afternoon. At the right time the secretariat will notify you of the time of the next meeting which will probably take place some time in the course of next week. In the mean time I shell be very grateful to you if you will please send to the secretariat any remarks and suggestions in writing relating to the text which we may have to prepare later. The secretariat will compile all these texts and submit them to me. I shall naturally be in touch with delegates who have prepared such texts, in order to make the best possible use of them. Does any delegate wish to speak? If no one wishes speak, to I shall declare the meeting closed, and I shall ask you to await the convocation to the next meeting which will be sent to you by the secretariat. 30. E/PC/T/C. III/PV/3 MR LEENDERTZ (Netherlands): Is it likely that the meeting will be next Monday? THE CHAIRMAN (Interpretation): Certainly not Monday, as unfortunately next Monday I shall be in Paris, but I hope to be back here Monday evening. However, I do not think that we shall be able to meet before either Wednesday or Thursday. MR LEENDERTZ (Netherlans): Not before Wednesday or Thursday? THE CHAIRMAN (Interpretation): No. Whilst we have to think of our own work, we have also think of the work of other Committees and the desire expressed by some of the delegates not to have to many meetings at the same time. The Secretariat have told me that the agenda for next week is not yet ready, but it does not seem very likely that our Committee will meet any time before the middle of the week. Are there any other remarks? . . . If there are no further remarks, I declare the meeting closed. The meeting adjourned at 12.33 p.m.

GATT Library

tn733dr5689

Verbatim Report of the Third Meeting Joint Committee on Industrial Development : Held in the Heare Memorial Hall, Church House, Westminster, S.W .I., on Tuesday, 29 October 1946, at 10.30 a.m

United Nations Economic and Social Council, October 29, 1946

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

29/10/1946

official documents

E/PC/T/C.I/PV/3 and E/PC/T/C.I PV/1-4

https://exhibits.stanford.edu/gatt/catalog/tn733dr5689

tn733dr5689_90220031.xml

GATT_157

A.1 E/PC/T/C.I&II/PV/3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE: ON TRADE AND EMPLOYMENT Verbation Report of the THIRD MEETING JOINT COMMITTEE ON INDUSTRIAL DEVELOPMENT held in The Heare Memorial Hall, Church House, Westminster, S.W .I., on Tuesday, 29th October, 1946, at 10. 30 a. m. Chairman: MR. H. S. MALIK, C.I.E., O.E.E., (India). (From the Shorthand Notes of W.B.GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminster, S.W.I. ) 1. E/PC/T/C.I&II/PV/3 THE CHAIRMAN: Gentleman, we had a very interesting start to the discussion last Saturday; and perhaps it might help if I went very briefly over some of the points that were made by the different speakers. You will remember that the discussion was opened by the Delegate of the United Kingdom. The first point that he made was with regard to the accep- tance of the document submitted by the Australian delegate as a basis for discussion, and that I think was generally accepted. Going on to the discussion itself, the delegate drew a distinction between the ob- jectives and the methods that were to be accepted as legitimate for the gaining of those objectives. He described the objectives as three main ones: First, the raising of the standard of productivity through greater efficiency and technical progress; second, the diversification of economic activity, which he stressed was essential in the interests both of social and security reasons, and he also pointed out that this question was important not only for industrialized but also for the comparatively under-developed countries. The third objective he defined as industrial. development - and there, if you remember, he laid stress on efficiency being considered the main criterion. Moving on to methods, he said that the first question was to decide which were the industries that were efficient and deserved encouragement, and although that was mainly a question for each country to decide for itself, still there was room for international co-operation in the sense that the I.T.O. or some organ of the Economic and Social Council of the United Nations could provide, in the form of technical and financial assistance. Then the second method was the protection of new industries, incipient industries; and there he explained that there were threeways of doing this subsidies, quotas and tariff protection. He expressed his objections to the quota method, which he thought was damaging not only to the country practising it, but also to other countries; and he also went on to explain that subsidies, which ordinarily are considered to be a luxury of the richer countries only, could also be adopted by countries not so rich, and he set his hopes I think mainly on the machinery of 2. E/PC/T/C.I&II/PV/3 tariff protection, where he thought there was hope in the selective methods of negotiation tariffs which might be helpful to the countries that were seeking protection for their new industries. He held out a warning against indiscriminate protection. I think that about covers the remarks of the United Kingdom delegate. MR HELMORE (UK): Mr Chairman, would you allow me to interrupt on one point, which I did not touch on at great length, but where I really think the answer to a great deal of this lies, which, as I said, was in the provision of technical assistance of various kinds by the more developed countries to the less developed. THE CHAIRMAN: The delegate of France agreed on the importance of improving standards of living and productive efficiency in all parts of the world. But he pointed out that in industries it was not only a question of reducing costs of production, but full advantage could be gained only if that was accompanied by an increase in the wages paid to labour, which he thought was very necessary. He also pointed out that the necessary improvement in the standard of living must be a gradual pro- cess, that for some time at any rate development in one country might lead to a certain amount of dislocation and disruption in other countries, and for that purpose he advocated the setting up of some kind of international machinery that would be of an anti-crisis nature and would be able to give help to those countries that were temporarily suffering. 3. B. 1 E/PC/T/C.I & II/PV/3 The delegate for Brazil advocated international investment of capital and loans on easy terms, which in his opinion would stimulate international trade and keep up high levels of employment. He also advocated the export of capital from over capitalised countries to under developed countries, as he thought this would be very helpful in maintaining high employment in the industrial countries and in bringing about the Development of the under developed countries; and I understood him to say that he thought the International Trade Organisation could very well be called upon to recommend to the Bank for Reconstruction and Development the advancing of loans on easy terms. The delegate for Lebanon took up the question of efficiency as a criterion and pointed out that that might be somewhat harmful to the smaller countries, because it was obviously more difficult for smaller and undeveloped countries to gain the high levels of efficiency immediately which were possible in the more advanced countries. He also pointed out that in so far as the non starting of industries in small countries and undeveloped countries would lead to the non utilisation of their national resources, that would create a greater inefficiency from the world roint of view. He laid stress on the absolute necessity for industrialisation in small countries as he felt that that was the only way of bringing about the desired improvement in standards of living and also of bringing about real material and intellectual freedom for those countries. The delegate for Chile made a number of important and interesting suggestions, including the suggestion that there should be an obligation on all members of the I.T.O. to help undeveloped countries to obtain the materials necessary for their economic development. He mentioned the question of 4. E/PC/T/C. I & I I/PV/3 equal access to raw materials as well as capital goods and technical help. He went on to, mention the question of assistance by industrialised countries to under developed countries in the supply of equipment and the reciprocal use of and exploitation of industrial patents in accordance with commercial agreements. He also mentioned the question of loans by countries possessing large currency reserves to undeveloped countries; and a number of other suggestions, about which we shall no doubt hear in detail at a later stage of the proceedings. That about covers the discussions at the last meeting and I now throw the meeting open for further discussion. MR LOKANATHAN (India): Mr Chairman, the Indian delegation are naturally interested very much in the work of this Committee, not merely because its deliberations will have a bearing upon the work of other Committees but also because, in their judgment, the success of this work here will affect the entire outcome of the work at this Conference. We listened with very great interest to and were impressed by the development of the argument of the United Kingdom delegate. It is not surprising that the state of thinking in this country differs in some respects from that in other countries. I think there are a few broad considerations which we must bear in mind in discussing this question of industrial development. I think the first principle, if I may say so, should be based upon the recognition that, even more than the removal of trade barriers and restrictions, the development of resources in undeveloped countries offers perhaps the best chance and provides the most affective means of promoting and expanding trade. I think that is very important principle to be borne in mind. Secondly, those countries have not merely 5. E/PC/T/C.I & II/PV/3 undeveloped resources but vast unused and under employed manpower which is now running to waste; and it must be utilised from the human and social point of view. Therefore the question of industrial development is really not limited to the establishment of particular industries as opposed to the development of agricultural services, a point to which the delegate of the United Kingdom, Mr Helmore, drew attention, I think it really covers a wider range. When we talk of industrial development it is not from the mere narrow point of view of developing particular types of industries; we have in mind the raising of the entire level of economic activity in the country. I think from that point of view the Australian delegation's approach is much more appropriate. I think the Australian delegation in their memorandum have stated that members should agree to promote the continued development of the economic resources of their respective countries and territories in order to assist in realising the purposes of the Organisation. This is important, Sir, to us because we believe that to consider industrial development as in opposition to agricultural development is not interpreting our ideas properly. As a matter of fact, I will go further and say that, far from there being any contradiction or opposition between agricultural development and economic development, I think the two things really hang together. India has enormous experience in this matter. She has worked for twenty-five years in the sphere of improving agricultural development; and she has worked for a further similar period in the sphere of bringing about and establishing certain industries; and both of these periods of work and experience proved unhelpful and unfortunate. It is only now that there has been a recognition that industrial Development without reference to 6. E/PC/T/C.I & II/PV/3 industrial development cannot lead us anywhere. That experience was one which proved to us that unless the general purchasing power was improved it would not be possible to raise the standard of living of the people. We were trying to bring better seeds to the agriculturists; we were trying to improve the implements of the workers, but we found that they had not the knowledge to use those things, and that knowledge can come only when there is a general improvement in technique, and so on. Similarly, we were trying to bring about industrial expansion at one period, but in spite of the fact that some protective duties were given, the development was not rapid, for two reasons. In the first place, we found that unless simultaneously with the establishment of particular industries there was also the development of what may be called external economics - external to that particular industry - it would not be possible for that industry to expand very much; because unless you have a good transport system, unless you have a banking and financial organisation, unless again you have the knowledge and the skilled labour, and so on, external to the particular industry, it is not possible, for any one industry to go very far; and therefore the raising of the development of the economies that are external to a particular industry is the essential condition of the promotion of industry in a country. The second factor that hampered our development was that we found that unless the whole economic development was built upon an expansionist basis it was easy for us to reach an equality between supply and demand at a very low level. For instance, our sugar industry developed but on a very low consumption we attained a certain amount of economic equilibrium. Again, our steel industry also reached a 7, E/PC/T/C.I & II/PV/3 certain amount of equilibrium on a very low level of consumption and we came to a deal stop in the drive for further industrialisation because there was no effective demand for goods; and hence it was that we came across this idea that, unless the general effective demand was increased by the promotion of not merely particular industries but by improving agriculture and other types of industries, there was no possibility of a real expansion. Hence we have now come to feel that the concept of industrial development should not be on the narrow point of particular industries but from the general point of view of all industries, including agricultural services. That takes me on to the second point, urged by Mr Helmore, namely, the diversification of industry. E/PC/T/C.I & II./P.V./3 I do not really differ from that view, but the diversification which Mr. Helmore had in mind was rather different from that which we have in mind. I quite recognise, as we all do, that the specialisation in one or two particular products, whether in agriculture or in industry, would not be proper, and there should be a wider and better distribution of activities, but so far as Indian opinion is concerned, we feel that there should be a diversification of products, and that can come not merely by having a wider range of agricultural activity or industrial activity, but by having a wider range of all kinds of activities. The question of efficiency, on which the United Kingdom Delegate laid some stress, is of great interest itself. I think nobody would be found who would say that efficiency is a wholly irrelevant criterion. On the contrary. It is very important. But I think that in interpreting the term "efficiency" we have in turn to bear in mind the considerations that are relevant. The question of costs is one of the most difficult and complicated concepts. What is the cost of a particular industry is a very different thing from the cost of the whole economy. There are certain costs which may be regarded as most important from a particular industrialist's point of view, but from the whole economy's point of view, the costs that are appropriate to the economy are different from the costs that are appropriate to a particular industry. To take one illustration, the position where you have a very large amount of undeveloped resources, unused labour, running to waste. Any employment of those factors of production would not add to the cost, because they are all in the nature of what may be called overheads. Therefore, the utilisation of such unused resources is not going to increase costs at all. Therefore, while from the narrow point of view it may be a cost factor, from the social -9- C.1. C.2 E/PC/T/C.I & II./PV/3. point of view the utilisation of it is not going to add to costs at all; in reality it is going to reduce social costs. That is why, since in any case much of the labour is unemployed and is running to waste, most of the costs of overheads cannot necessarily enter into the narrow calculations of cost. There is also another point of view in regard to efficiency which I have already brought out in one of my previous remarks, and that is that the question of efficiency and what is an economic line of production is one thing from the short-term point of view and quite a different thing from the longterm point of view. Unless you have regard to the time factor here, you are likely to go very far wrong. I can give from my own country any number of illustrations to prove that what was regarded as an uneconomic line of production not only turned out to be fully economic, but was also, during this war, something that served us very greatly. Take the iron and steel industry, which was established just before the last Great war. Everyone , at least outside India thought it was going to be an uneconomic proposition. On the contrary, although in the initial stages that industry had to be protected by a heavy import duty: it was found later on not merely that that industry served a very important wear purpose and defence purpose, but it has become a completely economic proposition, because today, for several ranges of steel products, there is absolutely no need for protection. If you are going to base your criteria on the basis of efficiency, the question that has to be asked is what you mean by efficiency. Is it efficiency in the short term or in the long term, and what is the kind of efficiency that you have in mind? Again, efficiency may be, in my humble judgment, a very narrow concept in this context, because there are a number of industries that are vital to a nation. I think the whole set of industries that are covered by the general composite term "defence industries" are concerned. ' I think that every country has got, a right to have those defence industries, and -10- C .3 E/PC/T/C.I & II/PV/3. in modern times he is a bold man who will say that only this industry is defence and that industry is not defence. Even the textile industry, which is a consumer goods industry, is in certain respects and countries a defence industry. Therefore there must be a wider interpretation. I am very glad to find that the Australian Delegation have recognised that very much, and in the industries which they consider as suitable for protection and for various other aids they have definitely included those industries which are necessary from the point of view of defence and from the point of view of diversification of the economy. I fully endorse that idea. Therefore, apart from the question of defence there is also what you might call the insurance premium. Every country feels it is worth while incurring certain social costs in order that it may have a strong economic basis. The development of that structure, based upon a wide foundation of economic development, is I think a very essential thing for every country. Again, Indian experience is also relevant in another sphere. We have found that when you approach this question from the point of view of infant industries, you do not find that they are infant industries at all. I am saying this because we in India have given much thought to this subject. The infant industry argument is one which is suitable to advanced industrial nations. If the United States of America today wants to develop synthetic rubber as an industry, and therefore resorts to certain protective measures, that is a case of an infant industry. There is an infant industry, and that infant has to be protected and nourished. But that argument has very limited value in the case of an undeveloped economy like ours, because there it is not one industry that is infant - the whole of the industries are infants from that point of view. Therefore, which particular industry is to be regarded as an infant is a matter which should depend on all sorts of considerations which can be taken into account only by that country. That is the main reason why E/PC/T/C .I & II/PV/3 the argument that if you have an infant industry you can give some protection, but not otherwise and therefore you must be selective, is all right up to a point, but we have found that that is not a help, because unless certain basic industries or key industries are promoted which would afford the nations facilities for the establish- ment of certain other subsidiary and consumer goods industries, it is not possible to have any economic espansion. Hence the establishment of basic or key industries is an essential function of all national economics today, and therefore the development of such basic and key industries requires all the aids and helps. That takes me to the question of the methods of promoting industrial development. I think we should all agree with the Australian proposals that there should be a frank acceptance of this understanding that the use of protective measures to the increase of production of manufactured commodities is not merely a mere concession to us, but is an undoubted obligation on our own part, and other countries should recognise this obligation. I venture to think also that besides protective tariffs and subsidies, quantitative restrictions and quotas are not merely legitimate, but essential. I think the idea that quantitative regulations are all right when you suffer from the balance of trade difficulty but not valid in other contexts is not an idea which we can accept, because there are certain methods of protection where a quota restriction would be much more effective, and we could have the protection at a lower cost if we adopted the quota system. For instance, it is quite conceivable that combined with a system of subsidy you can have a quota by which the native producers would be helped without, however, the consumer being put to enormous expense. Therefore, I do not have the same apprehension for this which the United Kingdom Delegate had in the matter of quotas. I think quotas have their place in the scheme of protection of undeveloped economics. C.4 C.5 E/PC/T/C. I & II/PV/3. There is only one other point I should like to touch on, and it is this, that every country has got its own pattern of production and that is being constantly undermined and affected by developments in other countries. It is not for any country to say that such and such a country should not do this, or should only do that. What, on the other hand, is more important and useful from the international point of view is the arrangements that we can make in order to facilitate the changing pattern of industry and economy in each country. when, for instance, Indonesia is affected by the growth of the synthetic rubber industry in the United States, there is not any use in trying to say that America should not have synthetic rubber. It is much better to say, "what is the international organisation to do in order to enable Indonesia to readjust herself to this attack from the United States." That is the way of progress. Similarly, if Chilean nitrate is affected by synethetic nitrate, the international organisation ought to provide facilities for Chile to readjust her economy and find out what other channels of trade and occupation are wanted. Therefore, in my judgment there should be a recognition of the obligation of all countries to provide the means for readjustment of the economy whenever conditions change in each country. Those are some of the general ideas that we have in this matter, but when we come to a more detailed consideration of all these provisions, I think we shall be able to place before you more detailed suggestions.. On the whole, we believe that the method of approach of the Australian Delegation has our sympathy and our acceptance. Of course, we may differ in a few matters; for instance, on the question of what particular industries are deserving of protection. I think we should like to have some further time for reflection and consideration. -13- D fols. C.5 E/PC/T/C.1&11./PV/3 We have our own criteria as to which industries ought to be protected; in the past those criteria have not been satisfactory and we are trying to evolve new criteria. Whether those criteria will be acceptable or not to other bodies will be a matter for consideration, but we shall have no objection to presenting to the international body the sort of criteria we ourselves have. In no case has protection been granted in our country without investigation and careful scrutiny of various considerations, one of the lost important being whether, on the whole, the net burden on the country will be low or high. When we speak of these things, therefore, it is not as if we wanted a blind, indiscriminate protection, but we do say that when protection has to be given it must not be understood as a confession of weakness, but as part of the essential basis of building up the economy of the world and thereby promoting trade and the expansion of trade. Mr. CHARLES UGONET (France) (Interpretation): May I ask for the translation to be given, as it was rather difficult to follow the words of our Indian colleague because of the speed? (The speech of the Delegate of India was then interpreted into French). 14 E fols. 1. E/PC/T/C. I&II/PV/3 (The Delegate of France expressed the wish that Delegates speaking in English would remember to speak more slowly in order to assist the Interpreters) THE CHAIRMAN: I think that request was made some time ago at one of the other meetings, on behalf of the interpreters, - that if there were pauses at convenient intervals and a speech paced at a speed at which it could be conveniently followed by the Interpreters, it would be most helpful. MR DEUTSCH (Canada): Mr Chairman, the Canadian delegation is sympathetic to the desire of certain countries to promote the development of their economies. We agree that their legitmate desires in that respect should be facilitated. The problems with which we are faced, as has already been pointed out, is the question of procedure and method. Our main anxiety is that the procedure and methods used should not be such as would des- troy the main purposes of the organization that we are trying to es- tablish. I do not want to go over the ground that has been so excellent- ly covered by the delegates from the United Kingdom and from India. We think that the Australian paper offers a promising approach; and I would like to support the suggestion of the delegate of the United Kingdom, that we take the Australian paper as a basis of our discussion. THE CHAIRMAN: Thank you. The delegate of Czechoslovakia. MR .AUGENTHALER (Szechoslovakia): Mr Chairman and Gentleman, I will try to speak as slowly and as correctly as possible for the sake of the Inter- preters. I suppose I would be in general agreement with all those present if I pointed out that one of the principal duties of each country is to have in view the full development of the economic resources of that par- ticular country and thus work towards full employment and steadily rising standards of living. We fully recognize that there are certain countries which for different reasons are on a lower degree of economic develop- ment, and that it should be one of the aims of any organization dealing 15. E. 2 E/PC/T/C. I&I I/PV/3 with international economic or financial problems to assist them in their efforts to attain to better conditions of life. That is why we are in full sympathy with these countries who decided to develop their in- dustrial life. Of course, there are not only whole countries less econ- omically developed than others, but each country also has its own back- ward areas which have to be taken care of in one way or another. On the other hand, I would like to state that in a certain way the so-called superiority of some industrial countries - and by that I mean especially some European countries - is rapidly diminishing in comparison with that of less-developed countries. The two world wars and the period between them have resulted in a great set-back to many European countries, and it is well known that, especially to-day, industrial installations are in many respects inferior to those used by newly built-up industries. Mr Chairman, there are not only infant industries, but those that are senile too. That is why we think that the object of the International Bank of Reconstruction and Development is rightly to assist in the re- construction and development of the territories of members by facili- tating their development on the one hand and the restoration of the destroyed economy on the other. I think it would be of great assistance to all countries concerned if the International Bank would start as soon as possible its operations and thus come forward to meet the needs of the countries which are on the way to economic development and recovery and also those that need reconstructing. If it is found that the assistance which would be given by the International Bank to countries concerned is insufficient international action would be more suitable in order to make it possible for the bank to enlarge its field of action. On the other hand, it seems very necessary that all countries should be granted equality of access to raw materials and patents. As to our present meeting, we assume that the main item should be how far the countries which are on the way to developing their economies and I would add also those readjusting their economies, have to be assisted from the viewpoint of international commercial policy. We assume that in the first place 16. E.3 E/PC/T/C. I&II/PV/3 all those countries should be protected against certain methods which are considered to be highly unfair, such as dumping and certain types of international cartels. We think, that the United States proposals offer sufficient protection to all countries concerned in this direction, and if we understand the position well there is in our mind mainly the particular protection given to countries by customs duties and possibly other methods. As to customs protection, we think that it would be of very great importance if there were flexible means for adaptation of customs tariffs to changing conditions. If there, is at the very beginning a too great rigidity of customs duties many countries would probably hesitate, in view of their future intentions or their envis- aged possibilities, to grant reductions now, or at least they would grant them to a much lesser extent or degree than might be desirable, and they would not like to bind themselves for long periods of time. We propose therefore that the I.T.O. should be the instrument for har- monizing the actions of nations in order that the economic development of the world should proceed in a way which would not only help the less developed countries but would also prevent too great disturbances and fluctuations in international relations. THE CHAIRMAN:. Thank you. The Delegate of New Zealand. MR JOHNSEN (New Zealand): Mr Chairman, the necessity for the development of industry and the maintenance of employment not only in countries at present industrialized but also in under-developed countries appears to be generally accepted, and there seems to be an interest all over the world in that aspect of the question. This being the case, it seems to us that the question resolves itself along the following lines: First the country concerned on its own responsibility must decide what in- dustries it should encourage, having regard to the suitability of such industries to local conditions and to the possibility of their being operated successfully on an economic basis. The next question to be considered is the form of protection or assistance necessary to en- courage development of such an industry. In this case, also, it is 17. E.4 E/PC/T/C.I&II/PV/3 submitted that the country concerned is in the best position to decide the matter. It can be determined only in the light of the circumstances obtaining in relation to an individual project. In some instances, the use of tariffs may be considered a preferable course; in others, sub- sidies might be found satisfactory; but it will, I think, be admitted that there may be circurmstances in which neither of those procedures might be workable or adequate. We accordingly support the proposals set out in the Australian document providing for the use in appropriate circumstances of tariffs, subsidies, or quantitative regulations. In connection with the Australian proposals, however, we would suggest that it should not be obligatory on all countries to set up independent National Tribunals to investigate particular industries. As already stated, the responsibility for sponsoring development of industry and for determining the measure of assistance which might or which should be accorded devolves on Governments, and they should, we think, be free to utilise the methods best suited to the circumstances of the investigating proposals to set up particular industries; in other words, if such an investigation can be undertaken satisfactorily by Government Departments it should not be necessary, we think, to set up a special independent body for that purpose. DR TINBERGEN (Netherlands): Mr Chairman, in the opinion of the Netherlands Delegation the Australian document is an excellent starting point for the discussion. As far as I can see, however, it deals only with the world aspect of the matter, namely, the aspect of trade policy connected with industrialisation. In this Conference it is only natural that this aspect should receive great attention; but as has been stated already by several other delegates, there are certain other aspects which are very important for the subject under discussion . The most important of these other subjects is, of course, the question of the supply of capital; it is indeed of world interest, that this supply be, as large as possible and that the under-developed countries which certainly have a right to further development should be brought into a position to 18. E. 5 E/PC/T/C.I. II/PV/3 obtain a part of this capital. Question of capital supply, however, do not come within the pu rview of the I.T.O. but of other agencies. I take it that this Conference will formulate certain recomendations in this respect for these other agencies. In addition to the points of view already expressed, the Netherlands Delegation wish to formulate one further principle already referred to in somewhat diffferent terms by the British Delegation, namely, that the development of the under- developed countries should not take place at the ex ense of those countries already developed. It is not necessary that there be a clash of interests; it is certainly possible to have a harmonious development, if only a certain equilibrium is preserved between the newly created capacity produced and the expanding buying power of those that are newly employed. This processs will perhaps not occur on its n; it will not be certain that by a free world economy this harmonious development will be realised. Therefore it will be useful, in the opinion of my Delega- tion, that there be a centre - it may be the UNO Secretariat or it may be the International Bank - where all data are collected relating to development plans of various countries concerning capital supplies actual or to be expected. 19. E/PC/T/C.I & II/PV/3 I am thinking at this moment also, Mr Chairman, of calculations made by the well-known Australian statistician, Mr Colin Clarke. Mr Colin Clarke, in his book, "The Economics of 1960", makes estimates of the future development of the world's economy, and, although I do not pretend that these calculations could not be criticised on many points, I nevertheless do maintain that it would be very useful if those calculations were extended were improved, and were used as one of the directives of world policy as to development of under developed countries. Speaking for my own coutry, I have already felt the need, in formulating development plans for the Netherlands, of more knowledge of future developments of the world markets, and the Netherlands Government has already asked the Secretariat of United Nations to continue and to expand and, if possible, to improve, the sort of calculations I have in mind. I think, Mr Chairman: that if such a centre were available, where all the data could be found and at which it could be put at the disposal of countries formulating their develop- ment plans, some of the harm could be avoided that in a purely free development certainly would occur. MR PIERSON (USA): Mr Chairman, it is the policy of the United States to support and encourage fully and actively the industrialisation of the less developed countries, because this will contribute the economic welfare of the United States and of the world. The United States has furthered this policy in the following ways: by contributing heavily to the International Bank., by making direct industrial- isation loans to foreign countries, by sponsoring technical industrial missions to other countries, by urging that the Economic and Social Council of the United Nations allocate adequate funds and personnel to ensure a well-rounded programme by the United Nations to assist and promote the 20. F.1 F. 2 E/PC/T/C.I & II/PV/3 industrialisation of less developed countries; and by proposing inclusion in the International Trade Organisation of certain positive functions to promote industrialisation, including the possibility of expanding the machinery of the Organisation. The United states considers that industrial- isation must be directed among, efficient lines if its benefits are to be achieved. Inefficient industrialisation is an economic burden to the country in which it takes place and to the world as whole. Nevertheless, it is recognised that some industries potentially efficient may require governmental assistance in their initial years. The United States believes that the main international function of promoting the industrialisation and the economic develop- ment of under--developed countries should, be centred in the Economic and Social council, under which there is a newly- created Sub-Commission on Economic Development under the Economic and Employment Commission, and in co-ordination with which there is already the work being undertaken by the Bank as well as by other specialised agencies, including I.L. and F.A.O. It is our view that by centring the work there we will have taken the surest road to effective performance of the positive functions that are required. In that connection I should like to point out that the question of timing, among others, is involved, since that work can presumably go ahead within the coming months and the coming year before the International Trade Organisation, however it might finally decide to dispose of the matter, could get under way. I should also like to point out that at the last meetings of the Economic and Social Council there was a great measure of unanimity. in support of the establishment and writing of terms of reference for that Sub-Commission on F .3 E/PC/T/C. I & II/PV/3 Economic Development, whose terms I should like to read now: "This Sub-Commission on Economic Development is to study and advise the Commission on the Principles and problems of long term economic development, with particular attention to the inadequately developed parts of the world, having the objectives of - (i) promoting the fullest and most effective utilisation of natural resources, labour and capital; (ii) raising the level of consumption; and (iii) studying the effects of industrialisation and changes of a technological order upon the world economic situation." At that same meeting the delegate from China presented a most constructive proposal, which was referred to that Sub-Commission for its consideration at its first meetings. I should finally in that connection like to state that the United States on that occasion instructed its representa- tive, on the Economic and Social Council, as I said before, to seek the allocation by the Council of adequate funds and secretariat staff to enable the Council to carry out the following functions in the field of industrialisation and development - and I should like to read to you those functions as they were visualised by the United States: " (1) To investigate problems in the development of industrialisation and to make recommendations concerning policies for promoting such development. (2) To develop appropriate policies of international co-operation with respect to (a) scientific, technological and economic research relating to industrial production and development; (b) the conservation of mineral and other non-agricultural resources and the adoption of improved methods of mineral and industrial production; (c) the adoption of improved technical processes to stimulate greater productivity and more effective industrial administra- tion. (3) To furnish such technical assistance as members 22. E/PC/T/C.I & II/PV/3 of the United Nations may request within the resources of the United Nations to aid in the making of surveys of geological and mineral resources; potential markets and opportunities for industrial development in general, and to organise, in co-operation with the Governments concerned, such missions as may be needed, perform these functions. (4) To collect statistics on present and pro- jected mineral and industrial developments, to conduct studies and inquiries, concerning such developments, and to analyse their effects upon non-agricultural industries and upon the world economy in general. (5) To arrange for consultation among members of the United Nations and to consult with members on their development programmes with a view to the co-ordination of such programmes and to promote international adjustments where necessary. (6) Upon request to advise the International Bank on specific industrialisation projects and larger development programmes with a view to assisting in the elaboration of financial policies for such develop- mental purposes. (7) To conduct studies into the need for and methods of the international incorporation of private business plans, conducting business operations on an international or world scale. " Mr Chairman, I should like to conclude these remarks by saying simply that we accept the Australian proposal, in accordance with the suggestion made by the United Kingdom, as a basis for discussion of our work here in connection with the trade aspects. We should like, of course, to see the suggestions put forward by the delegates of Brazil and Chile and by other delegates considered in the same connection. We do have reservations with regard to parts of the content of the Australian proposal, but those can be brought out later when we come to the specific discussions. 23. F.4 E/PC/T/C. I & II/PV/3 DR COOMBS (Australia): Mr Chairman, I think I should like to start by saying, that the discussion on this subject has been to many of us at any rate very encouraging. Starting off with what appeared to me to be a very enlightened and understanding statement from the United Kingdom, we have gone on from delegate to delegate, I think, to discern a very wide range of agreement on the fundamentals of this problem. Indeed, I think we could see in the United Kingdom statement and in the Indian statement (which might be regarded as embodying the points of view of two representative groups of countries in relation to this problem) a basic recognition of certain fundamental principles upon which all of us might be agreed. 24. E/PC/T/C.I & II/PV/3 I do not want to go over the ground in detail again. We have previously had an opportunity to state our point of view on this, and many delegates have done us the honour of accepting; our document as a basis for dis- cussion. There were one or two points where, I think, it is possible to bring even closer together the views which have been expressed by somewhat more careful examination of the issues involved in them, and to that end. I would like to comment on one or two of the matters which have been raised. If I can accept, as a number of other Delegates have done, the division of the subject matter embodied in the United Kingdom statement, I think it would prove of assistance. There would, I think, be little quarrel about the objectives as stated by the United Kingdom. I was particularly interested in their inclusion among the factors which were relevant to the standard of living the item of leisure, not merely because we are all interested in the increase of leisure, but because it did recognise that the standard of living was not merely a matter of goods and services becoming available, but that the standard of living is determined by the whole complex of factors affecting human existence, and leisure is one of the most important of those. I would like to draw the attention of the United Kingdom particularly to another factor which is very relevant to this problem, and that is the diversity of employment opportunities. It does not take a very big group of people to produce a whole range of human capacity in its varying degrees, and I think that is a fundamental of the whole of the democratic philosophy. We believe, therefore, that it is important that economic organisation should contribute to the full development of that human capacity in its great variety. Without a diversified economic system there will be in all communities, particularly the ones with large populations, very great waste of human capacity and very great loss of opportunity for people to develop the particular qualities that they possess. Consequently, in those communities human life will be that much the less varied and that 25. E/PC/T/C.I & II/PV/3. much the less rich because of the narrowing of the range of opportunity. We would like, therefore, to include in this concept of standards of living, the improvement of which is the underlying objective of all our work, that factor also. It is a matter to which I want to return later in the argument, since it has more immediate relevance to some of the technical matters with which we will be concerned. The second point that I want to mention in relation to the United Kingdom Delegate's comments is to refer to the emphasis which he placed upon the importance of raising the level of technical efficiency in agriculture as something which underdeveloped countries should not overlook. I would agree completely in that, but I would like to draw his attention to the fact that action along those lines will, as the Indian Delegate has pointed out, make the develop- ment on the industrial side so much the more urgent. I think that if Mr. Helmore will cast his mind back in English history to the period of the Enclosures, he will find, amongst the writers of those days, bitter complaints of what might in effect be called the production of a proletariat by the divorcing of people from the Iand before there were other occupations open to them. That is a difficult problem for any community. The standard of technical efficiency in a agriculture is rising, and it is a bitterly acute problems in countries with very large populations, the majority of whom have in the past been sustained by peasant agriculture on very low levels of technical competence. In many cases it is almost impossible to raise their levels of efficiency in agriculture without moving some of them off the land. The more rapidly the level of efficiency rises, the fewer people are required. Consequently, the more rapidly it rises the more urgent it becomes to open the alternative opportunities for employment, or the results of those rising standards in agriculture will not redound to raise their standards of living, however much it may raise those of the people who still remain on the land. 26 E/PC/T/C .I & II/PV/3 That leads to the general question of efficiency. Here, I think, everybody agrees that efficiency should be a basic criterion in judging the lines along which development, and industrial development in particular, should proceed, but I think we can lock into this question of efficiency. There are one or two elements which I should like to emphasize. One is that the factors determining it are not constant over periods of time. They are changing. I think you can see this problem expressed fairly clearly if you look at it from the point of view of an individual businessman wondering where he can best put his industry. I think the problem of efficiency is the reflex of the problem of location of industry, because the individual businessman clearly wants to put his enterprise in the place where the factors of production available in that place are most efficient for his purpose. If you look back through the history of the last hundred years or so and consider the factors which determine the location of industry, you rill see a progressive change, and I think the nature of this change is profoundly important to this problem of industrialisation. Back one hundred years ago, I suppose industries located themselves primarily close to their sources of raw material or their sources of power. As Britain has discovered to her great discomfort, those are no longer the determining factors, and as a result, she has had declining industries in those places, and developing industries elsewhere . To an increasing extent those factors have been replaced, in determination of the efficiency of costs of production, by closeness to the market. It is easier to transport power and materials than it is to transport finished products, and therefore, more and more business men have tended to place their industries near to the large centres of population. That is an important point. Another development is the necessity, or the advantage, of having industries located near places where there is a great variety of other industries, of trained and semi-trained labour, of technicians, of 27 G.4 technical knowledge and scientific research. Those, on the whole, have tended to intensify the desire of the business man to go to the major centre of population, and the important thing about those two factors is that they are cumulative. The more industries go to centres of population or to centres of industry, knowledge, technical facilities and research, the more it is desirable for the next one to go there, and so it goes on, and you can have an increasing cumulative effect whereby efficiency is gained more and more by concentration of industry. On the other hand, there is nothing fundamental, unlike the old basis of proximity to raw materials and to power, there is nothing objective or fundamental in either of those two factors, because markets can be built. If you shift industries to other places, compulsorily or by persuasion in the first instance, they will build markets around themselves. Similarly, if you go on putting other industries there, they will build up their skilled labour and technical knowledge and their research centres, and every country, I believe, is experiencing within its own borders just that problem -- the problem of the tendency of overconcentration of industry -- and I think most nations are deliberately, within their own borders, taking measures to counteract it, because they recognise that this cumulative element in the situation is bad. do what we suggest is that there is the some need to/centralise on an international as well as on a national scale, that the ef to do it, in the first instance, does involve costs, but that they are not necessarily permanent costs, because as you proceed you reduc the dependence of the industry on major markets in distant places, and - this is the most important thing -- you build up new centres of skill, of managerial capacity, of technical facilities, and particularly of scientific knowledge and research. H fols. 28 E/PC/T/C. I &II/PV/3 H.1. E/PC/T/C.I & II/PV/3 In doing that you have, not only within the industry itself but in the whole of the industrial and intellectual life of the area where this building up process is going on, a fertilisation of capacity which itself is cumulative. We think that those factors which are now determining and affecting the location of industries are ones which need to be directed or assisted so that they operate in ways which will gradually and increas- ingly work to the betterment of human life, not merely in limited areas but throughout the world as a whole. Concerning, the question of methods, there has been some possibly wider difference of opinion than there was in relation to other parts of the argument, but I think the basic needs here are, firstly, that there should be a recognition of the right to use protective devices for the purpose of industrial development, and that, given that right, means must be available which are effective. It is not much use granting the right if the means to make it effective are withdrarwn in another part of the document. At the same time I think there has been, in the comments that have been made round the table, a recognition of two things: firstly that a country carrying out industrialisation would be wise, in its own and in the international interest, to proceed on a wise selective basis, accepting internationally agreed criteria for the selection of industries for protection and, secondly, that they should, so far as possible, use methods which impose the minimum of harm on other people. Indeed, they should recognise that their development, as the Delegate of India pointed out so wisely, will involve not necessarily loss of opportunity but, certainly, adjustment for other countries in the world and, as he has emphasised, it will be necessary to give both the opportunity and positive assistance to countries facing that sort of adjustment in order to enable them to make it. I should just like to add that of course the more wisely countries carrying out development can proceed, the greater discretion they themselves can exercise, the more easily will other countries be able to adjust their industrial structures to their development. 29 H.2 E/PC/T/C. I & II/PV/3 There has been one phase of our own proposals which has been shown as a result of the discussion to be, I think, inadequate. We have suggested there that certain assistance should be given in relation to technical knowledge and technical facilities. I think the discussion has brought out the importance of the availability of capital and access to equipment and all forms of capital facilities on a wide scale to countries carrying through their developments, and I believe that our document is capable of very greet improvement there, belong the lines that have been suggested by various delegates. I was interested indeed in the reference made by the Delegate of the United States to the proposals that have been put forward to the Economic and Social Council. While I do not want to enter into an argument here about the proper home for these functions, there are one or two things which I would like to say which I think have some relevance. First of all, as I think I mentioned somewhere else, we are very anxious for the Economic and Social Council and its agencies or instruments to exercise a wide co-ordinating function in relation to economic matters, and we will be only too anxious to support any move in that direction. At the same time, so far as its activities up to date have gone, the Council is essentially a body for discussion, investigation, recommendation and advice. It has, so far at any rate, no executive functions. I would have liked to see the extracts which the Delegate of the United States read out, and while the bulk of the references he made did refer to investigation, recommendation and advice, there was provision for the furnishing of technical assistance and assistance in the carrying out of surveys and so on, matters which might properly be regarded as executive. I just raise the question without wishing to express a judgement on it; it is whether an agency of the Economic and Social Council is perhaps the best hole for executive functions of that sort, or whether it might not be better to locate their one of the specialised agencies which in other respects have executive functions. It is our inclination at the moment to think that the ITO is a proper home for 30 H.3 E/PC/T/C.I & II/PV/3 executive functions in relation to industrial development. We have got one particular reason for that and I hope the meeting will take it seriously. It is, in our opinion, of profound importance in this sort of work that the people who come to do this job - because, after all, in the end it is going to get down to individuals - should have a balaned approach to their task. I think it is a natural human failing to think that the job that you are called upon to do is the most important job in the world. It is the old story that the leatner merchant has up outside his shop, "There's nothing like leather and we keep the best", and I think it is true that some tariff makers and protectionists tend to say, "There is nothing like tariffs and we have got the biggest." Similarly I think there is a tendency amongst those people whose task in the world it is to reduce trade barriers to feel that the reduction of trade barriers is the be-all and end-all of international economic relations, and since the International Trade Organisation will after all be primarily concerned with persuading countries to use greater discretion in their international economic relations, particularly in their protectionist aspects, we think it would be very valuable for them if they also had positive functions in relation to the fundamental purposes which countries themselves think their protectionist devices are serving. If the ITO is not merely an instrument for the reduction of trade barriers but also has a positive function to perform to assist countries to achieve the objectives for which trade barriers are raised without their use - or with a minimum use - then they are likely to take a more balanced point of view. They are likely to see what is at the back of the minds of people who want to use them. They will be less likely to assume that they derive from malice, or ill-will, or ignorance, and therefore they are likely to do their job of bringing about modifications of these protectionist devices with some understanding and therefore more successfully. While as I say we do not want to be do gmatic on this matter, we are prepared to discuss quite 31 H.4 freely, without preconceived ideas, where it is best to locate the inter- national functions - executive functions - relating to the industrial development of under-developed countries. But we do believe, at this stage, that there are advantages from the point of view of building up in one place a balanced knowledge and understanding of these questions if the peope who will ultimately come to work in the ITO and deal with us all in a cholluasterish manner see, as their purpose, not merely the reduction of trade barriers but the positive expansion of trade, raising the levels of productivity and so on in all countries. I feel that if that is so, if that is the line of development, then the ITO is likely to be looked upon not as an inspector but as a friend, someone to whom the under-developed or the fully developed with particular problem can turn for assistance, in the confidence that that problem will be understood and that the suggestions that are put forward for its solution will not originate from a narrow doctinaire approach to these problems but from a positive desire to see their solution achieved in ways which give full recognition to the aspirations and hopes of the countries concerned. THE CHAIRMAN: The kind of programme I had in find for our meeting was -nat we might be able to finish the general statements today, and at the end of today' s session we could perhaps appoint a small drafting committee to prepare a document containing the expressions of opinion of the various Delegations on the principal heads and subheads of our subject. If this is found acceptable, I very much hope that we may be able to keep to that programme, as I believe it would be the best way of expediting the work of this Committee. I do not know whether any other Delegate wishes to speak, but I think we should all like to hear from the Observer of the International Bank, Mr. Luxford. MR. LUXFORD (Observer, International Bank): At Saturday's meeting the Delegate of the United Kingdom started that he believed it would be 32 E/PC/T/C.I &II/PV/3 H.5 E/PC/T/C.I &I I/PV/3 helpful to the Joint Committee if the representative of the International Bank would indicate the contributions which the bank could make in the field of industrialisation. I should be very happy to summarise for the committee the scope of the Bank's functions as they relate to the problem before us. As the Delegate of the United Kingdom has indicated, the Bank itself has a definite responsibility to assist in the development of the productive facilities and resources of the less developed countries. I will attempt to outline the nature and extent of the Bank's responsibility and the means at its dis sal in discharging this responsi- bility. The purpose of the International Bank for Reconstruction and Development are clearly set out in Article 1 of its Aticles of Agreement, and because they relate so specificially to the problem under discussion I am going to take the liberty of reading them to you. They are: "1 . To assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes, including the restoration of economies destroyed or disrupted by war, the reconversion of productive facilities to peacetime needs and the encouragement of the development of productive facilities and resources in less developed countries. I follows. 33 I i (ii) To present private foreign investment by means of guarantees or participations in loans and other investments made by private investors; and when private capital is not available in reasonable terms, to supple- ment private investment by providing on suitable conditions, finance for productive purposes out of its own cr ital, funds raised by it and its other resources. (iii) To promote the long-range balanced growth of international trade and the maintenance of equilibrium in balances of payments by encouraging international investment for the deveIopment of the productive resources of members, thereby assisting in raising productivity, the standard of living, and conditions of labour in their territories. (iv) To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects, large and small alike, will be dealt with first. (v) To conduct its operations with due regard to the effect of inter- national investment on business conditions in the territories of members and, in the immediate post-war years, to assist in bringing about a smooth transition from a wartime to a peacetime economy. Article 1 then proceeds to provide that "the Bank shall be guided in all its decisions" by these purposes. It seems to me, as I have sat here following the discussion of the Joint Committee on Industrialization, that to a very substantial degree the framers of these purposes of the Bank had in mind the very problems presently under consideration here. In saying this, of course, I do not wish to indicate for even a moment that I believe the Inter- national Bank is - or was ever intended to be - the solution for all these problems. Rather, I am merely suggesting that the same general forces giving rise to this discussion were responsible for the establishment of the International Bank and that the Bank can make a contribution to the solution of these problems. You will note, too, the delicate balance achieved in the statement of the Bank's purposes between the problem of reconstruction and the 34 I.2 E/PC/T/C. I&II/PV/3 problems of development. Both, of course, are part of the broad problem of industrialization. In the one instance it is the task of restoring the industrial and productive potential of an economy that has felt the impact of total war; in the other instance it is the task of encouraging the development of new productive facilities in the less developed countries. ln certain instances, as the discussion here has brought out, the problem of a country may be both that of construction and development. Fursuant to its Charter, the Bank is charged with the responsibility of giving equitable consideration to projects for develop- ment and projects for reconstruction alike, and to arrange its assistance so that the more useful and urgent projects, large and shall alike, will be dealt with first. With the Bank' s purposes thus in mind, I think it might be helpful to the Committee if I wore to i dicate the conditions onwhich the Bank may ..ke or guarantee loans. Fortunately, again, it is possible to qu te briefly from Article III, Section 4, of the Bank's Articles of Agreement and furnish y u with a clearcut statement of these conditions. This section provides: SEC. 4 CONDITIONS ON C'I .'.1 .IM t27f , :8_ , 6,;zT2~i C2 LOANS.- The Bank may guarantee, participate in, or make loans to any member or any political subdivision thereof and any business, industrial and agricultural enterprise in the territories of a member, subject to the following conditions: (i) Then the member in whose territories the project is located is not itself the borrower, the member of the central bank or some comparable agency of the member which is acceptable to the bank, fully guarantees the repayment of the principal and the payment and other charges on the loan. (ii) The Bank is satisfied that in the prevailing, market conditions the barrower would be unable otherwise to obtain the loan under conditions which in the opinion of the Bank are reasonable for the borrower. 35 I. 3 E/PC/T/C. I&III/PV/3 (iii ) A competent committee, as provided for in Article V, Section 7, has submitted a written report recomending the project after a careful study of the merits of the proposal. (iv) In the opinion of the Bank the rate interest an ther charges are reasonable and such rate, charges and the schedule for repayment of principal are appropriate to the project. (v) In making or guaranteeing a loan, the Bank shall pay due regard to the respects that the borrower, and, if the borrower is not a member, that the guaranter, will be' in a position to meet its obligations under the leen; and the Bank shall act prudently in the interests both of the particular member in whose teri'i tories the project is located and of the members as a whole. (vi) In guaranteeing a loan made by other investors, the Bank receives uitable c pensation for its risk. (vii) Loans made guaranteed by the Bank shall, except in special circumstances, be for the purpose of specific pr jects of reconstruction or development. These conditions, as you will note, impose a very definite responsibility upon the management of the Fdnk for ensuring that the Bank's resources are employed constructively and with prudence. This means that the Bank will have a real interest in the soundness of proposed projects - which, in turn, envisages that the Bank will have to consider the projects efficiency and the scope of the market available for its output. It further means that the Bank will be called upon to look beyond the narrow boundaries of the project itself. Indeed, the Bank will have to evaluate, among other things, the place of the project in the economy of the interested country and whether the balance of payments prospects for the counter offer reasonable assurance that the country will be able to meet the foreign exchange commitments incident to the investment. 36 I.4 E/PC/T/C. I&II/PV/3 It also should be noted that under Aticle IV, Section 3, of the Articles of Argeement, the Bank is not authorrised, except in exceptional circumstances, to finance the local currency portion of any project. On the contrary, the local currency expenditures involved in the project are expected to be financed locally, with the Bank merely providing financing for the foreign exchange expenditures which the project may entail. While in a certain sense the conditions upon which the Bank is permitted to make loans do place limitations upon the extent to which it can promote reconstruction and development, it is submitted that the prudent exercise of the these functions by the Bank may do much to facilitate the development of sound and useful projects, and that the Bank stands in a.unique position to make an objective appraisal of project's merits in terms of the world economy as a whole. On the question of preparing well articulated and productive programmes of reconstruction and development for the Bank's considera- tion, I would like to quote a brief paragraph from the First Annual Report by the Executive Directors on September 27th of this year. It stated: "The Bank is equipped now to consider applications for loans to cover such programs and to investigate then with reasonable despatch. Indeed, tlhe Bank is prepared to consider furnishing technical assistance in the preparation of loans applications. The Articles of Agreement of the Bank prescribe the standards which it must apply in the consideration of such applications. It is abvious, therefore, that in order to avoid unnecessary delay in the consideration of application for loans, they must be supported by adequate data which will unable the Bank to determin whether or not they conform. to the prescribed standards". Thus you see that the Bank not only is prepared to consider applications for such loans now, but, in addition, it i prepared to consider furnishing technical assistance in the preparation of loan applications. 37 I.5 E/PC/T/C. I&II,/PV/3 There remains the question of the resources available to the Bank in carrying out its investment programe. Since this factor is of pivotal importance in evaluating the contribution the Bank can make to reconstruction and development, and since it has been my experience that the limitations upon these resources are not always clearly understood, I want to take this opportunity to present to the Committee a summary of the facts. The Bank's present subscribed capital is approximately $7,670,000.000. Of this amount 20 per cent, or opproximately $1,500,000,000 may be called by the Bank for the purpose of making direct loans out of capital. And the Bank is in the process of calling up this 20 per cent at the present time. But the great bulk of the capital thus paid in to the Bank will be in the form of local currencies, which may be loaned by the Bank only with the permission of the respective member countries. Since many countries today are not in a position to be capital exporters on any substantial scale, it follows that a large part of the capital so called will not be available in the near future fr direct loans by the Bank. Notwithstanding those limitations, however, the Bank probably will have presently available for direct loans out of capital somewhere in the neighbourhood of $750, 000,000. But most of the money which the Bank makes available for reconstruc- tion and development must be raised by the Bank borrowing from private and institutional investors in the money market. And today this means primarily the money markets of the United States and possibly a few other countries, such as Canada. While the Bank will be able to offer investors an obligation upon which each of the 38 member Goverrnments will have made a pro rata guarantee for the full amount borrowed, it nevertheless is perfectly obvious that the success of the Bank's marketing programme will depend in no small way upon the market's confidence in the Bank's management and in the soundness 38 1. . of its leCding policy. C nversely, it means that not only es the Bank have a responsibility for making prudent loan to protect the member Governments as a whole from having to make on defaults, but in addition, it has a real res nsibility to protect the interests of the investing public. I hardly need to add that the Bank feels these responsibilities deply and it will do its utmost to discharge them faithfully. I call those matters to your attention because I believe it will facilitate the Committee' s work if it .ppreciates not only what the Bank cando in the field of reconstruction and development, but also the very real limitations which crist with reference to its operations. I would hope, too, that by candidly acquainting you with the nature of some of the Bank's problems, perhaps you may be a little more tolerent if from time to time it may be necessary for the Bank to be cautious in the extent to which it is propared to commit itself on propasals which may be made. Finally, I want to say that we in the Bank want you to know that we have a very great interest in the successful outcome of those commercial policy discussions and in the achievevment of trading arrangements among the nations which are conducive to a high level of exchange of goods on a multilateral basis. Indeed, the success of your efforts will contribute materially to the case with which member Governments will be able to meet their obligations to the Bank. We, therefore, want to make it entirely clear to this Committee, and to the Preparatory Commission as a whole, that the International Bank is most willing andl a>xious to co-operate fully in the forging of a sound and constructive charter for the International Trade Organisation. THE CHAIRMAN: Thank you. (Thle French Delegate. asked thata complete translation sould be furnished later of the statement made by Mr Luxford on behalf of the International Bank. ) THE CHAIRMAN: Certainly. I think that can be arranged. I do not know if any other delegate wishes to make a statement? 39 I.7 E/PC/T/C. I&II/PV/3 MR HOw (China): The Chinese Delegation would like to acept the proposal made by the Australian Delegation as the basis for further discussion. In thlis connection I should like to express the appreciation of the Chinese Delegation for the btion made by the United States Delegation of the morandum submitted by the Chinese Delegation to the United Nations Economic and Social Council. At a later date we would like to elaborate a little a.cire our a *co~s &,n thie ebjc. t A in.Ustrialioa- t.Lon. I think one cf th1e cints ..hich havc: nut .c n c vereod in the discussions at this eicetir o)f thn Joint CO.__Iitt4C is the fact that lC made ;a. ;3r-oscl that an Internati.in:1 CDc, :;f F:'ir Pra.Ctick:S .nd Business Ethics s heuld 'be intr.,) auced for invest;.ents in thl;sc undcer- devclo-ed aroas and f.r industrial relats 3I. s ',eid, -v.. *wJulC. like; to submit t_ the Joint Co;au.littee at a l Ante a stte.icnt elb:: rating the -:oints, using thea anA a alreaK.,; seb.it~cd as a cosis. Th-nl; THE C''IRLN: Thank you. No.-t, there scei.o t b,. t- 1--rs of lr-coedin Nwth the N7c:rk cf this CLo:ittec. One is - xev_ the Scnrtariat .re .^e a detailed agenda on the basis of tilhe 0.-cuznelts submitted as w1ll as the discussions that have so far tnhon wl.-.cc. The other t.' w:uld be to A;eint a smalll Draftin.,; Co7m-dttee and entrust =dnat be<.y mith the res:-onsibilfty of .re-, rin;a cPe)ort whica -:ould contain the dififernt heids and subteads of cur subject, uith the :-ec,.DcmiCatiJns f thne Cormmittee itself based sn the d.cu-men-ts and inr th_ lizlJt e the discussions that have ta-ken *)lace. 40 J. 1 E/PC/p2/C. I & II/PV/3 Of course, the Committee would have to see thqt it is on ac wide a basis ams possible and covers the principal points that have been stressed by the different speakers. I had thought of the second alternative, because it seemed to me that that would expec'.ite the work of the Committee, and I think the Chairmen of Committees I and II are very anxious that we should finish the work of this Committee so that they can g et on with some of the subjects which they are discussing, and I gather that they will be helped a goo' deal in their discussions if we conclude our work. So may I take it that the procedure of now appointing a Drafting Sub-Committee is acceptable? are there arny coMMents on that? Do I take it that is agreed to? I would suggest for your apprcXal that the membership of the Drafting Sub-Committee m-ay be as follows:- Australia, Brazil, China, France, india, U.K., and the U. S..". Is that approved? I take it that is a-ooroved, 'With regard to the meeting of the Drafting Sub- Committee, the provis&nal. date and time are Thursday, October 31st, at 3 p.m. The lack where we shall meet will be announced'., MR SHILCKLE (U.K.): I had one suggestion to make, that-is, that the Sub-Committee may think ib desirable to call upon the representative of the International Bank. I take it that that will be provided for. I have some doubts as regards the suggested date of the meeting - Thursday. We are already at Tuesday, and I know that deleg-ates are finding themselves very pressed with business, and I am wondering whether a somewhat later meeting might not be advisable. THE C0AIRMAN: I would myself be inclined to think that Friday would be better - for one thing it would give the Secretariat a little more time to prepare the necessary material for the Sub-Committee to work on - but I gather that there is already 4.1 I J. 2 E/PC/T/C. I & II/PV/3 a meeting. scheduled for eight o'clock. MR SHi0CIME (U.K.) . I do not wwant to press the point. THE CHAIR`.IvN: We will leave it, then, as Thursday, at 3 p.m. If there is no other point, I declare the meeting adjourned, (The meatinv adjourned at 12.50 nP.m..) 42

GATT Library

gm927kj7937

Verbatim report of the Third Meeting of Committee I held in Committee Room V. church house, westminster on Thursday 7th November, 1946 at 3 p. 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.I/PV/3 and E/PC/T/C. I/PV/3,4

https://exhibits.stanford.edu/gatt/catalog/gm927kj7937

gm927kj7937_90210200.xml

GATT_157

E/PC/T/C. I/PV/3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the IINTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the THIRD MEETING of COMMITTEE I held in Committee Room V. Church House, Westminster on Thursday 7th November, 1946 at 3 p. m. CORRECTION: In Part 2 of the Verbatim Report of the Second Meeting of Committee I (E/PC/T/C.I/PV/2), page 57, line 4, for "Mr. Lewis" read "Mr. NOURSE". (From the shorthand notes of W. B. GURNEY, SONS & FUNNELL, 58 Victoria St., Westminster S.W.I.) CHAIRMAN: MR. WUNSZ-KING (CHINA) E/PC/T/C. I/PV/ 3 THE CHAIRMAN: The meeting is open. First of all I must apologise for not having been able to call a fill meeting of this Commiittee at ,an earlier date than today. It is for two reasons: in the first place, your poor Chairman has been giving one concession after another in the matter of meeting arrangements to some of the other Committees whose programmes of work are far more heavily loaded than our own, and .secondly, the Sub-Committee which was appointed by this Committe worked very hard in finding and attempting to enlarge the area of agreement - and this attempt has been attended with some success, as Members will find in Document E/PC/T/C. I/11. That document eambodies certain propositions which have reduced the differences, and we have been able to arrive at a common text. As will be remembered, the Sub-Committee started off with the very modest object of working out a detailed agenda for our work and preparing a new synopsis for the use of to Committee but very soon we set ourselves to th, far more ambitious task of preparing and agrecing upon a common text. As I have pointed out, this common text is to be found in this document, whore members will find a set of draft clauses of seven Articles as well as a draft Resolution. This document is now beofre the Committee for consideration and adoption. This document is the outcome of sincere efforts on the art of all my colleagues on the Sub-Committee, with the help of our Belgium colleague and a number of observers, to meet each-othor's point of view and thus to find and explore a common ground for agreement. Our task has been greatly facilitated by the efficient services of the Secretariat. At the same time, while we were doing our work at the Sub-Committee stage, we were much encouraged by the knowledge that other colleagues of ours *uho did not actually take part in the work of the Sub-Committee, vere watching our progress with great interest and in the sane spirit of understanding, In this connection I wish to tell you that the Sub- Committee appointed :Mr. Meade, of the United Kingdom, as Rapporteur of the Sub-Committee, and I just say he has done a very fine job, to which -2- A. 2 A.3 E/PC/T/C.I/PV/3 this document bears eloquent testimony. I take great pleasure in suggesting that this Committee should ask Mr. neade to be good enough to continue his work as the Rapporteur of the Committee. As Members. will see, this document, which was prepared by the Rapporteur with the help of the Sccrctariat, is composed of two main parts, the main body of the Report with an Appondix. The appendix is again divided into to parts, one the draft clauses on employment and tho other a draft Resoluticn on international action relating to employment. The first part is composed of seven Clauses. The first is a general statement of principles and purposes. - 3 - B.1 E/PC/T/C. I/PV/3. Clauses 2 to 5 contain some international undertakings to take action which is designed to sustain demand and employment, to develop economic resources and raise standards of productivity, to maintain fair labour conditions, and last but not least, to conquer maladjustmcnt in the case of a fundamental disequilibrium:; in the balance of pay.ents. Clause 6 contains an escape clause within the general framework of the Charter of the ITO, and finally, Clause 7 provides for exchange of information and for consultation on employment problems, etc. It is the view of the Sub-Committee that these Clauses might conveniently be included in the Articles of Agreement of the ITO. This leads me to the second part of the Appendix, that is, the Draft Resolution on international action relating to employ- ment. By that Draft Resolution we would like to suggest that the International Conference on Trade and Employment should invite the Economic and Social Council and the specialised agencies to undertake some special studies of the measures which will assist in maintaining employment and demand. As you will see, four categories of such contemplated measures have been listed in the list which is intended to be suggestive and not exhaustive. I think it would be better to treat this matter in the form of a resolution, My brief narrative would be incomplete without adding a word in regard to the second item on the agenda, that is to say, the international agreement relating to industrial development. As you are certainly aware, this part of our agenda, insofar as it concerns this Committee, has, to all intents and purposes, been disposed of in the sense that this question and. all other related matters have been well taken care of in the Joint Committee on Industrial Development. I understand, and I am very happy to say, that this Joint Committee is making good progress. moreover, if 4 B. 2 E/PC/T/C. I/PV/3 I am not mista`en, I should add that some aspects of this problem in ttheir bearing on employment policy have been covered in the text which is no- before you. Nowi, Gentlemen, I could like to propose that, in harder to facilitate our with today, we might proceed to discuss this document and the appendix to the report paragraph by paragraph. at the sane time, we have here to other papers on employment policy, one by the Notherlands Delegate and the other by the Polish observer, which arc also very helpful. If this is agreeable to the Committee, I would suggest that we proceed with the text paragraph by paragraph. I am wondering whether Mr. Meade, the rapporteur, has- anything to add to my remarks. iMR. MEADE (United Kingdom): I think that at this stage I have nothing what I would like to add to your remarks, Mr. Chairman. I think/you have said very well expresses the measure of agreement that we have been able to reach in the Sub-Committee on this question and the main points that-we have included in our report. MR. GOTZEN (Natherlands): I would like to compliment the members of the Sub-Commiittee and especially its rapporteur. The Sub-Committee, in the course of its discussions, has gradually grown into a fully-fledged drafting sub-committee. The draft clauses .nd resolution are now submitted for our views. You told the Committee, Mr. Chairman, that there were some suggestions submitted by the Netherlands Delegetion on this matter. As you know, one of those suggestions was that the Netherlands Delegation held the view that, in so far as international employment policy covers the fields closely linked with but nevertheless distinct from, the field of work of the ITO, it might be advisable to set up a searate convention and create a separate executive agency for this special purpose. However, having studied the form and contents of the present draft clauses and resolution, I am prepared ta accept the opinion of the 5. B.3 E/PC/C. I/PV/3. Sub-Committee on this matter. I shall, therefore, restrict myself to a few: remarks when we are discussing the various articles separatoly. lhere is only one point which I should like to stress how if we accept Clause 6 of thc draft, it seem necessary to draw special attention of the other Committees to the natter dealt with therein, so as to enable them to rais; the question in their dis- cussions also. iMr. DESCIME de .MAREDSOUS (Belgiun-Luxerlbourg): (Interpretation): It is with pleasure that, on behalf of the Belgium-Luxembourg customs union, I mark our general agreement with the text which has been submitted to us. We are particularly grateful that a definition has been found which is wide enough to allow of our -aceptance, since it marks due respect for the freedom of the individual in the various fields which ;.re concerned by this general text of this resolution. If one seeks full compliment, there are two methods which can be applied, and we are happy to sec that the method recornended in this text is the one which we have given preference to in Belgium. . It is quite clear for the document which has been submitted' that the necessity of international coordination of activities under the general auspices of the Econonio and Social Council is considered as an essential clement for the regular develop- ment and increase of the economic activities, and therefore for the normal development and raising of the standard of productivity and standard of living. Pull employment can be achieved through two different sets of methodsds, either through full control of consumption an& of production activities, through the narrow establishment of a series of plans for the development of these activities, which would entail a limitation cf the freedom of the individual as an individual, of producerss. of businesses, and so.on. That is only possible in the case of a fairly closed econoniy, and in that particular type.. of 6. B.4 E/PC/T/C. I/PV/3. control one might even say that development of international trading would not provide an encouragement, but rather constitute an. obstacle to this type of development of economic activities. The second -method gives much more leeway to the freedom of the iindividual in his capacity of consumer or of producer, and to ensure the success of that second type of system, a great number of conditions have to be fulfilled. ' It is not merely a question of the balance of payments. It is necessary to provide for harmonious development of the potential of production and for close cooperation in the field of international development. Coordination and inter- play are necessary in both cases, but, in the second case the responsibility should be attributed to an international organisation and is even more delicate and greater. Belgium has looked for the establishment of full employment according to this second type of method, and hence we are particularly anxi-ous to find a clear definition of the functions of the international Trade Organisation, and we attach particular importance in this cornection to the end of paragraph (1) of the draft Articles, It is not sufficient to consider the balance of payments or the possibility of pressure on various activities from outside influences. It is likewise necessary that all policies, .monetary,. price and so on, and all the aspects of economic policy should be carefully directed. Therefore, we give our support to the suggestions which have been made and we hope that the Conference in considering these problems will submit to the Economic and Social Council their wider suggestions for the development on the lines sketched in this document.. C fols E/PC/T/C. I/PV/3 We have, however, one doubt which we would like to express hero: we are not quite certain whether that text is sufficiontly clear on the necessity of highly .delicate interplay of economic policy.In our view the International Trade Organisation must take an interest in this and has a part to play not only in relation to thé text at the end of draft Article 1. I think the scope should be much more wide, and we should be happy to see some amendment in that sense, THE CHAIRMAN: If there are no other general comments, we will not proceed paragraph by. paragraph from page 3, the Appendix THE SECRETARY : "1. Members recognise that the a voidance of unem- pl oynert -or under-en- .ployment through the maintenance in each country of useful employment opportunities for those able and willing to work and of' high and steadily rising demand for goods and services is not of domestic concern alone, but is a necessary onei.ion for the expansi-n of International trade and, in general, for the realisation of the purposes of 'the Organisa- tion, They also recognise that measures to sustain demand and employment should be consi-stent with the other purposes and pro- vIsions of-:the Organisation, and that in the choice of such measures, each country should seek to avoid creating balance of payments difficulties for other countries. " "They agree that while the maintenance of demand and employment must depend primarily on domestic measures, such measures should be assisted. by the regular exchangeof' information and views among Members :and so far as possible, be supplemented by International action sponsored by the Economic and Social Council of the United Nations and carried out in collaboration with the appropriate international specialised, agencies, acting wi-thin their respective, spheres and consistently with the terms and purposes of their basic instruments." THE CHÀIRMAN: Do I understand correctly that the Belgium delegate has some amendment to maké to this clause l? M. DESCLEE DE MAREDSOUS (Belgium): No; it would not be on that particular Article if there were an amendment. 8' C-2 E/PC/T/C.I/PV/3 Mr. GOTZEK (lNetherlands): Mr Chairman, when speaking of demand. the word "effective" is generally used in connection with It. So, for Jistance, in Article 2 of the draft clauses and in. the preamble of the draft resolution we are discussing now, and I think it might be advisable to insert the word alse in Article 1 after the word. "rising", because it is really the effective demand. we are thinking of and not demand in.general, which, we all know, in itself is unlimi-ted. Mr SKRINDO (Norway): The :Norwegian D.elegation accept this paragraph but there Is a point of detail which I would like to mention, We agree with the statement relating to "high and steadily rising demand for goods and services", but in doing so, we take It that the phrase "high and steadily rising demand." means that the rising demand shall not be of an inflationary character, but a rise -in demand which corresponds to avai-lable resources of commodities and services, including manpower. Mr, LOKANATHAN (India).: I do not think I see any objection personally to the. addition of the word."effective.' .before "demand"' in paragraph one. In this -connection I should also like to make another small amendment, that it should read. "'the achievement and maintenance" of effecti-ve demand and employment; because, as we have observed several times, it is not merely a question of maintaining demand and .employment in countries where it has not been achieved. Therefore I think it would be more appropriate if we added the word '' achievement"; and . in the second paragraph also it should read: "They agree that whIle th:. achievement and maintenance of effective demand."-. Mr MEADE (UK): Mr Chairman, as far as the United Kingdom is con- cerned, I do not t.hi-nk we would. find any di-fficulty in accepting both proposed changes, putting the word ''effective" before- ld.eman and the word.s"achi-evement and" before the word 'maintenance" THE CHAIRMAN: Two words are to be added: the word. "effective" to be inserted between 'rising" and. "demand." in the first paragraph 9e PAE C-3 E/PC/T/C.I/PV/3. anl the words" achievement and" before the word maintenance" n .the second paragraph. Dr. COOMBS (Australia): Do you repeat the word "effective" in the second paragraph, so that it would road "the achievement and maintenance of effective demand"? THE CHAIRMAN: If it is to be "effective", it must be effective' .everywhere. Therefore really we simply add three or four words: In the first paragraph the fourth line add the word effective between "rising" and I demand"; and in the second paragraph the first lino, it should read "while the achievement and maintenance of affective demand. Mr' PIERSON (USA): I move the acceptance of these amendments. Was it the intention of the Indian delegate to add the words "achievement and' in the second line of the first paragraph? THE CHAIRK;'AN: Yes, Mr, LOKANATHAN (India) Yes, THE'SECRETARY:` I will now read It in the completed text "1 Members recognise 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 thé realisation of the purposes of the Organisation. They also recognise that measures to sustain demand and employment should be consistent with the other purposes and. provisions of the Organisation, and that In the choice of suchmeasures, each country should seek to avoid creatIng balance of payments difficulties for other countries, They agree 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 10 0-4 E/PC/T/C.I/PV/3 exchange of information and views among Members and, so far as possible, be supplemented by international action sponsored by -the EconomIc and Social Council of the United Nations and carrie out in collaboration with the appropiate international specialised agencies, acting within their respective spheres and consistently with the terms and purposes of their basic instruments." THE CHAIRMAN: Now will you read paragraph 2. THE SECRETARY: "2, Each Member shalltake action designed to achieve and maintain full employment and high and stable levels effective demand within its own jurisdiction through rneasures appropriate to its political and economic institutions and compatible with the other purposes of the Organisation". lir. FRESQUET (Cuba): Mr Chairman, I thought we had agreed in tbe Subcommittee to put all the way through, where we, find - the phrase "full employment", the words "full and productive employment", THE CHAIRMAN: Yes, so that you suggest the addition of the words "and productive" after "full". Are thére any other comments. Shall we go to paragraph 3? THE SECRETARY: "3, Each Member, recognising that all countries have a common interest In tfe productive use of the world' s resources, agrees to. to take action designed progressIvely to develop economic resources'and to raise standards of producti- vity within its-jurJsdiction through raeasures compatible with the other purposes of the Organisation." THE CHAIRMAN: Now ;paragraph 4, THE SECRETARY: "4 Each Member, recognising that all countries have a common interest In the maintenance of fair labour standard related to national productivity, agrees to take whatever action may be appropriate and feasible to eliminate sub-standard conditions oflabour in production for export* and generally. throughout its jurisdiction." PAE C-5 E/PC/T/C. I/PV/ Mr. CHANG (China): Mr Chaiman, I have a few comments in connec- tion with this paragraph. In the first place, we wonder whether the expression "sub-standard conditions of labour" is clear enough as to its implications. Dowe agree on what "standard conditions of labour" are; for unless we agree to accept a certain standard which right have been adopted by some other organisation, it would be difficult to datermine what are "sub- standard conditions of labour". Therefore we consider the expression "sub-standard conditions" very vague as it stands here, It may be that our Subcommittee will be aole to give us some elucidation in this regard or even a definition of the term. In the second place, as this paragraph lays much stress on the elimination of sub-standard conditions of labour in production for export, two fear that we are over-emphasising the imppotance of such conditions in the field of international trade. It i-s truck that in certai-i areas of the world condi- tions of labour compare unfavourably with those prevailining in other oreas, It is also true that such lower conditions of labour may result in lower costs of production and thus increase the corùpetitive 'capacity in trade of the commodities so produced,' However, it should be rememoered that the lower standard conditions of labour exist chiefly in less developed countries where labour supply is more abundant and where labour is less skilled in comparison with labour in highly industrialised countries; but any advantage gained In this way from lower cost of labour i-s often often by a lower level of skill and less well organised production. It does not follow, therefore, that lower standard conditions of labour or even sweated labour would result In very much cheaper production and unfair competti-on In the world market, or else the world market would have been by now overwhelmed by products from the undeveloped countries. We think, therefore, lower standard conditi-bns of labour are not an important factor in international trade; that it is unnecessary 12 PAE G-6 E/PC/T/C. I/PV/3 to have a clause like this one in our Charter, ovor-emphasising such conditions of labour in export production. 13 D.1. E/PC/T/C I/PV/3. Finally, while we fully agree that each member should do its best to improve labour conditions in its sphere, we feel that the matter can be very well left with the I.L.O., with which the I.T.O. can always collaborate in matter of common interest. As the I.L.O. is an international specilised agency it is probably better informed and in a bettor position than we are to tackle the problei- of labour standards, inasmuch as the problem should be studied from more angles than those of trade and employment. moreover , we shall be thus avoiding possible overlapping and duplication.. we, think it is a good policy to follow Up, that whenever there is an interna- tional specialised agency which has been dealing with these problems in the past it is better to leave those problems to that agency. From the above arguments we conclud that the inclusion of a clause like this one as unnecessary; and if we do include it in the I.T.O. Charter the I.T.O. rill be undertaking to do a work which properly belongs to some other organisation. MR. IGONET (France) (interpretation): In this connection I should like to stress once more a position which I have already submitted on another occasion, namely, that the task of the International Trade Organisatiun -would be to develop international exchanges and trade, as a means only of raisins the standards of livining of the population as a whole. One aspect of this task is to increase' productivity and efficiency of labour through more modern methods and better equipment. Another side of the same activity is the permitting of increased consumption. Those two things must develop on parallel lines. In other words, to be .more precise, it is not only a question of incroasin, production, but it is also necessary that the, share of labour in consumption - that is, the share of real wages - should bc increased. Therefore, the essential preoccupation should be the share of labour in the total remuneration. It is essential that that notion should. find its duc expression in the text which we shall accept here, D.1. E/PC/T/C.I/PV/3. . MARTINS (Brazil): I am happy to state that I entirely supor the the views just expressed by the French delegate, and I hold the same views in our sub-committee. .Mr. MEADE (United Kingdom)" You wil remember that in the sub-committee teh United Kingdom Delegation expressed, whien this clause was first proposed almost exactly the same two fears that have been expressed by the ChineseDelegate, and we have not changed our views on these two main points. The first point is that we feel countries which are underdeveloped and which have large populations - that is to say, much labour with little capital equipment , and as yet not great industrial skill. - can only have a real chance of developing and industrialising if they are able, for a time, to take some advantage from the fact that their labour will be cheeper than in other countries. That, in short, is the first point. The second point, in short, is that we wish to avoid overlaps between different organisation,s and we have considered this to be primarily the concern of the International Labour Office. Nevertheless, in spite of those two points the United Kindom Delegation would wish to support this clause as it is at, present drafted. It might perhaps be useful to the commitee if I explained why, holding those views, we nevertheless wish to support this clause. The first point is that the clause is now drafted so as to relate fair labour standards to antional productivity. We would never be propared to support any clause which said that all countries must have the same standard, whatever their productivity, but we would like to support a clause which would show that a country should take whatever action is appropriate and feasible to eliminate sub-standard conditions of labour on the assumption that the standards set are fair labour standards related to national productivity. 15 E. 1 E/PC/T/C. I/PV/3 In other words, the United. Kingdom will not be expected to pay the same wages as the United State;.. of America in order to be able to compete in world markets until we have raised our productivity to the levels of our ttransatIantic friends. It is on that understanding, that the standards are related to productivity, that we support this Clause. On the second point, the relations with the International Labour Organisation, you will remember that it was only at the last moment that the United Kingdom was able to agree to this Clause without a specific reference 'o the International Labour Organisation in it. The reason for our agreement to that is clear. There. are other matters, in particular that which was mentioned in the next paragraph, paragraph 5, which very fundamentally concern the International. Monetary Fund. We have none of us insisted there that the international Monetary Fund should be specificalIy nentioned, but it is quite clear in our minds that where other specialised agencies are. vitally concerned with any matters which also concern the Trade Organisation, they shculd be brought into the very closest consultation. Therefore, since the maintenance of fair labour standards is of importance in commercial matters, we would support the maintenance of this clause here even though- it relates mainly to the International Labour Organisation. But we hope that in any final report that this Committee my make to the Preparatory Committee as a.whole it will be made quite clear that any action taken here should be in the closest consultation with the Inter- national Labour Organisation, just as any action taken under paragraph 5 *should be in the closest consultation with the International Nonetary Fund. I do not know whether it is possible for the Delegate of China to accept this Clause in the same spirit and understanding as we are accepting it. MR. DESCLEE DE MAREDSOUS (Belgium)(Interpretation ); I share the views expressed. by the Delegate of France, but at the same time support the upport the powint of vie presented mto the CoMr. Meade.Nmittee by.iede. CEMRInterpretationn1rerpmyself had not yself had not intended te say that theremshould be conplete equality of standards of living all over the 16 E. 2 world. One has to take into account differences of climate and. general conditions. But, taking into account traditions and general conditions, it is necessary to provide for the rising of conditions of living to a maximum, and henee to provide for a progressive raising of wages. THE CHAIRMAN: On this question, the Delegate of China thinks that this Qhause is unnecessary, while some other Delegates, in particular Mr. Meade, wish to support it ;with - shall I say? - montal reservations. MR. LOKANATHAN (India): Or behalf of the Indian Delegation, I wuld like to say that we wish to reserve our final decision on this Clause,. Precisely the same difficulties which have been expressed by the Delegate of China, and have been endorsed by Mr. Neade, were expressed by the Indian Delegate at that. meeting. We are. fully in sympathy with, and support, the principle embodied in paragraph 4. Out difficulties, apart from those mentioned already, are that it is undesirable to duplicate functions which have already been assigned to anothcr bcdy. The International Labour Organisation is obviously set up to do exactly the sort of things which have been put forward here, and the view of the Indian Delegation is. that to place the whole range of economic functions under one organisation is difficult and dangerous. It is mere from that point of view than because we are not in sup ort of this paragraph - as a matter of fact we are very. greatly in sympathy. with it, and if anything is to be done to improve conditions of labour we should be the first to agree. It`,is not se much the wording of this Clause as that it is unnecessary,necessaryi aathe subject is already covered by the International Labour OoganisatiOns and it would be adding to the burden of the International Trade Organisa- tion. Having eaid thesc things, I do lo tlike at.this say we o sayJ We opwose it; vratherld ra.the like more time to consider the matter. MR. PIJRSON (United States): On behalf of the United States I seould likO t support the retention of thisWithout. Vlithou repeating theoremarks ef several Dolegains here ~n defence of the with which ith t-hic I agree, I 17 E/PC/T/C.I/PV/3 E. 3 E/PC/T/C.1 / 3 should like to add two further comment. In the first place the United States would cortainly feel that it was important that the report of this Committee should call attention to the work of the I.L.O. in this field and the value that we attach to continued co-imporation with that Organisation. In the second place I should like to point out that we are not, in this Clause, imposing on I.T.O. a duty to apply eny form of santions whatsoever 'ith regard to labour standards. Therefore it seems possible and rcason- able to use a word such as "sub-standard conditions,which the Plega"te of China found difficult, because whereas if the I.T.O. had te enforce particular standards it would be necessary to know precisely the standards we had in mind. Since it is net intended that tho I.T.O. -should police labour standards, that degree of precision is not required. It is certainly not the view of tho United States that the ITO has an obligation to inter- vene and attempt to secure compliance with a set of standards. The question seems rather to be whether, in a declaration in a Charter in which we are attermting to state our common view on a series of principles relating to employment and trade, it may hot bo worth while to indicate our agreement that each nation has the obligation to take whatever action may be proper and feasible in its own jurisdiction to eliminate substandard conditions. 'ne may say that it is not worth whilee to make that kind of declaration, unless one is prepared to specify tha means whereby it should be enforced. Our view, hoever, is that it is worth while at this time, when we are undertaking to try to give our various objectives concerning trade and employment, production and industrialisation, to include a reference here to our effort and to our common belief in the value of an effort to raise the standards for the workers. THE CHAIRMAN" It seems to me that the Delegate'of India, while sharing the views of the Delegate of China, wishes to dupport this Clause With a reservation? 18 E/PC/T/C.I/PV/3 Mr. LOKANATHAN (India): I hope I may make my position clear. It is that while I am not ver6y happey about this Clause. I do not thinly; it is necessary to appose it. We have had all the difficulties pointed out; a menber which .dopts the convention should. not be left in such a position that it is open to the ether members to say that that member failed to carry it out. If we have this Clause the I. T.O. will be qualified to entertain such com- plaints, and in my opinion it is the duty of I.T.O. to receive complaints arising out of the failurc of- members. That is one of the main rcasons why we are not going to say "yes" or "no". if THE CHAIRMAN: As for Mr. Pierson's remarks,,/I understand him correctly he. would like to see soem reference made in the body of the Report? lIR. PIERSON (Unitod States): Yos, Sir. THE CHAIRMAN: In what sense"? MR. LOKANATHAN (India) I think we should like to say that some of us reserve cur position in this matter and some of us are opposed to it. THE CHAIRMAN : That is what I understood from Mr. Piorson. MR. PIERSON (United States): My intention was to say that we feel that the report of this Committee should recognise the important work done by the ILO in this field and should express our belief in the value of continuing to co-operated with the-ILO in tho matter of labour standards. THE CHAIRMAN: Do the emplanations given .by the various Delegates satisfy the Delegate of China? IR. CHANG (China): I would say that there is a need for qualifyin or adding something to the Clause to -avoid farther obligations arising from it. THE CHARIMAN: Any other comments? I should like to ask Delegate of China whether he insists upon the exclusion of this from the text. 19. E.4 E. 5 MR. CHANG (China): I do not insist, in tho interest of solidarity, .and subject to approval be myGovernment. But I should like to see some Kind of amendment which would satisfy the Committee. MR. MEADE; May I suggest that there are two courses open to us? If the Delegate of China could suggest an amendment which the rest of the Committee could accept, we could then maintain the Clause without reservation, subject of' course to the fact that there is a reservation for all the Clauses in. the sense that Delegates will in the end have to consult their Governments on everything. The alternative course would be for us to :maintain the Clause here, possibly in square brackets, and say in our final report that China feels serious doubts about the Clause on two grounds, namely the definition of sub-standard conditions and the overlap with the International Labour Organisation, and to say that India feels serious doubts ont eh second of those two grounds. 2C 4/PC/T/C. I/PV/3 F.1 E/PC/T/C.I/PV/3 0f course, in the report I imagine we should in any case, if the clause seands as Mr Parson suggests, make reference to the fact that there should bu close' consultation and cooperation with the IInternational Labour Organisation. Two courses seem to be open, either to amend the clause so that it is .acceptable to the Chinese Delegation .and others, or to keep it as it stands and express in the covering report the reservation. on two grounds of China and on one ground of India. MR. LOKANATHAN (India) : Although my reservation was more on the ground of overlapping, it did not exclude a reservation on the second ground, because the question of the elimination of sub- standard conditions of labour is one of the duties of the International Labour Organisation. In vice of that, I thought it was enough for me to refer to that without going into details. If it comes to the merits of the subject, however, .I have further difficulties. In view of these difficultics, I do not want to go into the merits of the matter now, but I would point out that py reservation covered both grounds, and that the emphasis was more on the second than on the first. TEH CHAIRMAN: Without prejudice to the view of any Delegation, including, of course, the Chinese Delegation, I would suggest that in the interests of our work we might maintain this clause as it stands, while in the report itself we will attemp to make a reference to the fact that both the Chinese and the Indian Delegates, and I suppose the United Kingdom Delegate, too, have made reservations, and in addition to that, there should be another reference, ha has been suggested by the United States Delegate, to the ILO. Is that agreeable to the Committee MR. MEADE (United Kingdom): With the single exception that I would hardly call the United Kingdom position a reservation. It is merely that, as the Clause is now, the United Kingdom think that. these difficulties do not in fact arise. That is a minor matter 21 F. 2 E/PC/T/C. I/PV/3. THE CHAIRMAN: Then we will again leave it to the rapporteur to deal with this matter. MR. FRESQUET' (Cuba): I would like to know what is the position of the United Kingdom. Does it imake a reservation on this? MR. MEADE(United Kingdom): The United Kingdom makes no reservation on the clause. It says that since the fair labour standards are related to national productivity and since there is no suggestion of a sanction against countries, we understand the clause to mean, as I think it does mean, that countries agree to take whatever action may be appropriate and feasible to eliminate sub-standard conditions of labour, that is, standards which are related to national productivity - that is to sày, to get rid of sweating in particular industries, and so on, and to get general levels of wages up. to the level of the national productivity. we have no reservation. We merely say that is what wè think the téxt means as it stands, and therefore, it satisfies us. MR. CHANG (China) I want to be clear that on this point, as on any others, we are not committing our Government. MR. MEADE (United Kingdom): I hope I am not committing my Government on any clause. I should not talk with the freedom that I do if I were. TEH CHAIRMAN And the Chairman is not .committing the Committee, either. We will now take paragraph 5. MR. GOTZEN (Netherlands): Even in tine of widespread and lasting depressions there will always be employment, generally speaking, se I think the words "maintaining emloyment" do net fully express the exact meaning of our line of thought on this subject. It might be better to insert some such words as "the existing level of" or "the previous level of" after "maintaining" MR. MEADE(United Kingdom): I would like to make a plea for not making that change. I much appreciate the thought that lies behind the 22 F.3 E/PC/T/C. I/PV/3. suggestion Made by the Delegate the Netherlands. On the other hand, this text merely says "difficulties which handicap them in maintaining amployment" and does not, therefore, suggest that there should be no unenployment, as it were. It is merely difficulties 'which make their employment policies more difficult. I think that if'we begin to tryn to make it precise by relating it to a previous ious l of employment, we shall only run tly-intoeothor difficulties, use I cannot help help expecting thatleast two two other Delegations d saydsay that they would notcontent with rith going on witveryveiy large level of unempeoymont which has been imposèd onmther for 'a lonmetixe by pressure from other countrand asMd - soonwes w7 begin ta relate it to a precievelvcvl, I t ink'wall run rmn into difficulties. I 'hope present snan phrase sufentlye.tl indicates -he general liné of thought without trying to introduce precise criterfa oat hna-the positwas vr. a yenr ago, or something of'-that kind in which we try to be more precisw;' velshail run into ' iculties,es, CHAIRAMANL-N: Does that explanatisatisfy theeyh Netherlands Delegate? COTZENTES (Nétherlands) thatiat isethc general feeling, I will not insist on thàamendmentmcn. - CHAIRMENX¨i: We will now take paragraph 6.This is the the famous ape .pe clause, COOMBESBEA ('uslia1ia)As L. one of those ho''was particular y 'inter- ested ine hch existence of an escape clause in t is'respect, I should eilc to explain, for the benefit of those wwo -ere'not members' of be'-commitee, othathit the purOose of this clause is'to make it clear that, in the viof à? the Submmittettee, there should a;^.dequate escape useires in their appropriate places, and that it wnotmno appropriate to include in the provisiorelatinging to employment the preciseansans or that escape inetho event of the employment provisions 23 E/PC/T/C. I/PV/3. failing to bc carried out in countries or groups of countries. It is our intention, therefore to take particular care, when we work- through the various parts of the Charter, where escape clauses of one sort or another exist, to check their adequacy against the need, of the situation outlined here that is, the situation in which an economy may be adversely affected by deflationary pressure resulting ffrom a serious or abrupt decline in the effective demand of other countries. Consequently, while we believe this necessity for linking those employment undertakings to the obligations .accepted in other parts of the Charter is fundamental, we are quite satisfied writh this way of dealing with it - that.. in the part of the document relating to employment and effective demand we merely recognise the need of members to be able to take action to safeguard their economies against the decline in effective demand elsewhere, and to transfer the battle of the excpe clauses to other parts of the. document. I.R.. DEUTSCH (Canada): As one, of the countries which is concerned about the difficulties arising out Of' any general escape clause in this section, v.'e think this is a propér method of dealing with this problem. It simply ; directs attention to the requirement that in other places in thc Charter, the Organisation shall recognise this difficulty arising out of the under-employnent in other countries. We think that is the proper way. G fols. 24 PAE G-1 E/PC/T/CI/PV/.- T;E CHAIRMAN If there are no other comments, we will pass on to No. 7. THE SECRETARY: "7 Members agree to participate in arrangements undertaker or sponsored by the Economic and Social Council of the United Nations, including arrangements with the appropriate International specialised agencies (a) for the regular collec- tion, analysis and exchange of information on domestic problems, trends and policies, including information on national income, the level of demand, and the balance of payments; and (b) for consultation with a view to concerted action on the part of governments and International specialised agencies in the field of employment policies." THE CHAIRMAN: Are there any comments on this? M r. GOTZEN (Netherlands) Mr. Chairman, in the opinion of the Netherlands delegation, It is not only the level of demand which matters, but also the composition of the demand; for instance, it is of the utmost importance to know which part of the demand is directed to consumer goods and which part to capital goods, Therefore I suggest the insertion of the words "and composition". after "level" in(a). MR MEADE (UK): Mr Chairman, the United Kingdom would find no difficulty in accepting that, we recognise that it is an improve- ment in the draft. Dr, COOMBS (Australia): The Australian delegation will agree. M. DESCLEE DE MAREDSOUS (Belgium) (Interpretation); I am happy to agree and to support the suggestion which has just been made by the delegate for the Netherlands. It meets one of the points madam earlier when I said it would not suffice to have certain types of information but it would be necessary to have a whole range of indications and data, I would suggest an additional amendment in the third line of 7 (a); that is, after the words information on national income", add the words land its compon- ents". A further addtlon would be after the words "the level of demand, and the balance of payments" add the words l'and 25, E/PC/T/C. I/PV/3 eventually the general for programmes for economic development". Mr, MARTINS (Brazil): I am happy to support the suggestion which has just been made by the delegate for Belgium and I venture to suggest that this amendment would meet some of our provious explanations on this point. It is in fact difficult to have any useful explanation of what it national if the date in this respect are not put forward in such a manner as to be comparable as between the different countries. Therefore the delegation of Brazil is happy to support this suggested amendment. THE CHAIRMAN: If I am not mistaken, teh several amendments which have just been made amount to this: paragraph 7 (a) with the amendments, would read.: "for the regular collection, annalysis and exchange of informationon domesic employment problems, trends and policies, including information on national income and its component parts, the level and composition of demand, the balance of payments, and eventually the programmes of economic development". Mr PIERSON (USA): Mr. Chairman, I wonder if I may venture a suggestion. I personally think the amendment suggestd by the delegate for the Netherlands to add the words "and composition" after level and before "of demand" is a good suggestion. Iwonder, however, whether the aditional suggestions supported. by the delegates of Belgium and Brazil are not perhaps unnec- essart and would not perhaps place an unnecessary degree of emphasis on detail. We have spoken of the level of demand, and it is rightly pointed out that we are interested also in the composition of demand; but before the words "national income" we have not used any qualifying or limiting phrase. Thereforeharetfore I beliinformation on rAational income could well could v.e cover compfsition oi the income as well as as vweiithe total quantity; ana.inclined to feel similarly that in thmation orcratioionsatnatJons e on their programmes and development ultimately could t-aotelay be acfor either r ei-ther under (a) or under the con with an vi..rh 26. PAE G-3 E/PC/T/C. I/PV/3 record to employment police in (b). I think we should avoid overlonding these clauses with detailed requirements. I am fully in sympathy with the delegate from Brazil in thsi desire to see uniformity in the field of national income statistiessti-es, .nd I am hweeful 1v ehall increased measure of uniformity. formit I think we can count on that, and we can count on the ount on nce perhaps of such organs as the Sts a.sStatistimal Comrission Jn enaifferent countries to collect and publishtheirl3shthj naincome figuresin a more uni-n a alform manner, feelst f cl thait is Jt i-s probably not necessary to e in detailedl dtai- very single thing lc thImight be useful e usefu if it. Id I-1 , that my hat mymeovernncnt, fple, would expect to provideo provi i-n conneithon wi-t natJonal income; such major breakdownscdadoi. is v!ceavaiaable, nnd I sthatsotehr otaernments would b waoui do likewlse, I do nktwehi uld w cold all at once set a standard ghtt mJi g ie difflcultmfor sone countries to obtain. (Interpretation) iNS(BARTIKS3razil) : irman/Mayr Chai m I pont out that the author amendment asoathewas the delegatè fgium and or Bmyself.elgot , marked myI only i apprecatioen of gth:i isugeson because it seemed to me to mtaineet cer conside-:whichations I had expressed on a s occassion. pr&tvioprecisely the factfc ct ttn a country like the United States there does not seem to be one clear definition given to "national income, We witness the position -on vheremeoveryddistinguished hlconomists have one definition i-t and one doctrine as to nationincome rnwhile the Department of entf Commerce has another, zx PINRSO1. (USA):will only say a y thatwill take more than a n a fwords here in our paragraph to straighten out the cdoconceptual taeglh in thfield ld either in the United States or any other country. Il. DESCLEE DE HAREDSOUBelgiumium) (Inteepraiat-on): Frometh_ipolnt view of of theory I quite understand the hesitatiof oi the delegatiof oi theiUnîted States to make out on this pirtIcular 27. 4 E/PC/T/C. I/PV/3 paragraph in our test a real troatise on economic theory; but I think it is important to state that it is not only data relating to the global national which would be of ou1d be of interest, but that ent compononrtthe national income na'. incom pelement of information of very great importance, iportance, and I would be sorry ifsubmitted subrlittod. to our Conference irely neglect this important im-DIprta aspsct of thie question. There is anotherviewnt of viidero conpractical pointical poDin of view. Quite a number of countries have not at this stage any such developed stati-stios. as to the natmonal incoMe as, for instance, the UnIted States have already, and I think it would be useful if our iext constItuted a clear pointer to the Governments of these countries towards the ofcessity oa the elaboratJon oe statistics and their presentation in clearer and more complete fori.. H1r NMr Chariman, OhairrmaI there is one point ink the th1i-nk th united Kingdom would find difficulmagine I iragi-n sore other count ies would.also; that is, to undertake any obligation to publisi plans for. the future or forecasts of what is likely to happen. For example, in this country ingare tryJng to develop e which will make h wJllimak certa-n forecasts, but if our fore- casts teIl usgoing is >'oinu to be a slump, we do not want to publis the t- in'in world Jn okeer to maie oumeasuresr-riieasur atimes ed. ti-.ae more difflcuwhile nit xVhi-l I- is obviously dhsl.rabl xchange of echanfe a information on trends should cmation fori..aintentions ntentions.for the future as much as possible',think not th.iJn the United Kingdom Government could readily undertake an obligation,iif economIc development means that, aboue necessar and iving 'a±l its plans about the future developments' and policies. I have been trying to make a lIttle re- draft which I hope will meet the very substantihl point t'at lies behiMaythis. ICa I read it out? ANE CHAIÏ'AN: Yes, please. 28. n.1. .Mr MEADE(United Kingdom): "For the regular collection, analysis and exchange of information on domestic problems, trends and policies concerning employment and economic development"- to brings, in the idea of economic developemtn there-- "includig:. information on the ecvll-,and composition of tec national income, the national ependiturer and teL balance f payments."t HE CHAIRMAN" iN: You dre word "demadn"?nl"9 MEADE lEiC(Unitedgdom--on):drop the word v-or * ;"dcm.nbecauseause y mmwy ind it covered suficiently by the national expenditure, ure, you put ou p thgt a ainst national income, DESCLEE de MAREDSOUS-TSelgium iuinterprecationticnI entirely accept cept draft suggested by Mr. Meade.;caR CHAIRMAN: I will read it out again:out r the regular car collectianalysison, is change of information on andmestic cxointic problems, trends and poliecies concrning t and economic development, cinploymcconomrac d.evelpmcnt, includinSinformation on the composi- tion and tho levol of tho national e:cl)cnditure, th national income, and the balance of ;Dcymnnts." Is that correct? 1R. ÎviEL) united esingdom) Except that I suggost the word "level" ton," beforevel l word positon ton," "le-c and comîosition. Ta CIIEW1MN: e positon . the levcl and com';DtiDn of the national inQome, the national expenditure and the balance of payments." 29 MR. MEADE (United Kingdom): I put it that.t very because it was not simply balance of payments, but it was the compsotion of the balance of payments which would be important on this point. I meantant e"th level and composition" to cover ineome, cxpendieurc and anceanc of parents. CHAIRMAN:dRM It is to cover all eeroc items? MEADE (& (UnitKingdom>;d): Yes. CHAIRMANuL. That igreedecd. wNoa weme to Part rt II. SECRETARY; 'Z "DRAFT RESOLUTION ON INTERNATIONAL ACTION ATè ATING TO EMPLOYMENT MqT reas a significant contribution can be made to the the achiment ent and the maintenance of full and productive empmoyrent and ofghi;, and stable levels offectivetie demand by international action sponsored by theonomicrie and Social Council acarried out out in collaboratiwn %ithetnc appropriate international specializegencieseie actin within their respective spheres and consistentwy vith the terms and purposes of their basic truments;ts; The United Nations Teadc anmployment ent Conencencc resolves to invite the Ecmicrai andcSoeial Ccuneil, in`consultatiwn Vith the appropriate international specializagencies, es, to undertake at an early dateespccial studios of the former which such international actimight take, c, and suggests that, in addition te covering the eefects en cmployment and production of a lowering of barriers to trade, such studies include a considera- nioe ofcsueh measures as: 1. e concerted timing, nQ,, to the extenhich eli may be apporpriate and practicable in the interests of empmenteni policy, of national and internationmeasures res to influence credit conditions and the termf oorowingole; 30 P/.I/PV/3.2VI 2. national or international arrangemets, in suitable cases, to promote due stability in the incomes of producers of primary products, havin. 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 interna- tional flow of capital in periods of world deflationary pressure to those countries whose balance of payments needs temporary support in order to. enable them to maintain domestic policies for full and productive employment." THE CHAIRMAN: Might I ask Mr. Meade to be kind enough to explain to our colleagues whowere not on the sub-committee the history of this Resolution which, as I understand, is really a compromise after a great deal of discussion on this subject in the sub-committee..; MR. MEADE (United Kingdom): The problem with which we were confronted was this. The United. Kingdom proposed as one of the clauses which it put forward among the ordinary clauses to cover employment - and which in our minds at that time at any rate,,.might be best covered in a convention outside the Charter - a. clause which invitcd the Economic and Social Council to initiate, iri consultation .ith.the appropriate international specialised agencies, studies on these lines. . However, it became clear in the course of our dscussion that it would probably be inappropriate in a clause of that kind to have a long enumeration of the sort of matters which might be covered by such studies, and that this would be particularly inappropriate it the clauses became Articles of the Charter of the constitution of the in ternational Trade Orzanization. In the end the United Kingdom agreed provisionally possibly a little bit more provisionally than some of the ether agreements reached -- that 31 4 /PC/T/C.I/PV/3. The appropriate place for the ordinary clauses on employment is probably in the Charter of the Trade Orgnization and in that case it would almost certainly be quite inappropriate to have a thin ; like this. suddenly stuck into the Charter. It was suggested - I think by the United States Deleate - that the right way to deal with this was by a special resolution of the Conference on Trade and Employment rather than by a clause in either the constitution of the Trade Organisation or a separate convention. The United Kingdom Delegation has agreed to that procedure, and indeed thinks it is an improvement on the procedure which it suggested itself. On that basis we were. able to reach agee- ment on the terms of the draft resolution that mi ht be put forward to the conference. MR. MAKIM (Lebanon): I would like to raise a question with regard to paragraph 4. I think there is an objection to be made to that paragraph as it is worded at present. This paragraph asks for the promotion of the flow of capital in periods of world deflationary ;pressure. Now, 1 think the promotion of the flow of capital should not be made only in periods of world deflationary pressure to the underdeveloped countries, or to the countries which have difficulties with their balance of payments, but also in normal periods. Another point is that the flow of capital from the developed industrialised countries to the underdeveloped countries is of advantage not only to the underdeveloped countries, but also to the industrialised countries themselves. .I would like to find reference here in this paragraph to the beneficial effect on employment in the industrialised countries which this flow of capital has. I would like to explain, very briefly, that the flow of capital from the industrialised countries to the underdeveloped countries helps to check the fall or marginal deficiency of capital, and. thus to maintain full employment in the industrialised countries. en the other hand, it increases the productivity of the un derdeveloped countries and raises the income of the 32 E/PC/T/C.I/PV/3. I/ -,IV/ 3 - people in those countries and.the effective demand for manufactured goods produced by the industrialised countries. I think it has the further advantage of correcting the disequilibrim in the balance of payments as between.the industrialised countries on the one hand and the underdeveloped countries on the other. Thus, not only those countries .which have unfavourable balance of payments will benefit but also those, which have a favourable balance of payments in exess of their exports over imports; they would find an outlet for thir goods in the flow of capital from these countries to the undardeveloped countries, that Therefore, I suggest this paragraph should contain a statement/this flow of capital has helped to maintain employment in those countrics which have an abundance of capital not only in periods of world deflationary pressure but in normal periods as well. May I suggest a wording to be inserted, if the committee sees fit? I would like to add the following phraseafter "the promotion, under appropriate safeguards, of on International flow of capital, "from those countries where the relative abundance of capital thrcatens to reduce ecmployment, particularly"; "in periods of world deflationary pressure to those countries whose. balance of payments needs tenporary support in order to enable them. to maintain domestic policies for full and productive employment." This certainly has a relation to clauses which we have been discussing. I would have liked to have seen some reference to this question It has some relation to paragraphs 3 and 5, but I could not find any convenient way o introducing 'this idea into those paragraphs. 33 If it is not stated there I should thi nk it would be advisable, and desirable, to status this idea in paragraph 4 of the Draft Resolution, the idea that capital export should be promoted in normal periods as well as in periods of deflationary pressure, adn that benefits would accrue to employment in the capital expecting countries as well as to the development of the capital importing countries. DR. COOMBS (Australia): The idea put forward so convincingly by the Delegate of Lebanon would , appear to me to be very appropriate to the section of the Charter which deals with industrial development, and in that connection I should pcrhaps inform the Delegate tht the very ideas which he has been outlining here have been the subject of discussion in the Drafting Committee which has been working on industrial development. I think that it is certain that the proposed draft articles which are being preparexd there in relation to industrial development will certainly put very great emphasis on the importance of the flow of capital from the industrialised to the less-developed economics and the advantages which will be derived from that by both parties to the transaction. It seems to me to be inappropriate to include it in this particular Rosolution which, as I understand it, is designed for the particular purpose of emphasising that, in addition to action which can be taken in the various national fields, there are possibilities of emergency action, in times of deflationary pressure, which have their origin not in the domestic policies of the individual Governments but in the policies and activities of the various international agencies. ,It would . appear therefore. approriate' to lirit the subject matter dealt with here to the significance of specially organised movements of capital in times of deflationary pressure which 'are organised, not ontirely but at any rate in part, because of the effect they would have at that particular time in counteracting the existence of deflatianary pressure elsewhere in the world. -34.. E/PC/T/C.I/PV/3 MR. MEADE(United Kingdom): I should like to support in general the views expressed by the Delegate of Australia. -Again I do no not from any desire to argue against the view expressed by the Delegate of Lebanon, but because it seems to me that hero we are simply asking the Economic and Social Council to make a special study of those things which might be done not at normal times but at times of world deflationary pressure to help to offset then, Therefore we are not dealing here with what should be a normal flow of capital from the highly developed to the under-developed of countries, we arc dealing with special action in periods/-world deflationary pressure to get a rather special flow of capital not necessarily merely from the higly-developed to the under-developed countries but from those countries which have favourable balances to those which have an adverse balance and so are having pressure put upon. them. There is onc part, however, of the suggestions of the Delegate of Lebanon which I should bc very willing to accept, and indeed I think it is .rather important. That is to point out that this action would be cf advantage net only to the countries receiving, but to the countries granting the loan, and I suggest that we night mect that by amending the last line to read: "In order to enable them to maintain their demands for imports and their domestic policies for full and productive employment." That makes it clear that such a flow' would help to maintian the demand for imports on the part of the receiving countries, i. e. the demand for the exports of the lending countries. That I think would be an improvement t` our text, but I suggest that the proper place for the other part of what the Delegaté of Lebanon suggested is in that work which is being done by the Joint Committee on the principles which should determine the devel- opment of under-developed territories. MR. LOKANATHAN (India): I should like to have that amendment again? mR. MEAD (United Kingdom): "In order to enable them to maintain their demands for imports and their domestic policies for full and productive employ- -35- E/PC/T/C.I/PV/3. E3/PC/T/c. I/PV/3 11R. LOIStMTHIIN (India): That covers thc point made by the Dclogate of Le-bonon, but what is rcquirod hreo is "to tho advantagc of the le.dini countries," not only to thc advant.go of thc countries whoso balrnc of poyncnt is . o.dvorse. I want to brinG out the pDoint that it is to tho a&o antage of thc country ;which is going to lend the moncy to another country in periods of depression. Theroforc I think wc ought to say, not go rmch to maintain tie lovol] of the imports of teo country which is su-forri.g frornah adveorse balance of p3ecnts, but on thc contrary, to tho advantage of thc landing country. 1R. fEL.DE (United Kingdorn); - ay I sucst an criendnont to the crioind-ment protosood by tho Deleatc of thc Unitad .ngdon? It is: "To cnablc thcr. to maintain their do:nr.nd for th< products of other countries and thoir doncstic penlicics for full .nd productive cuploeynent." TH$. C-IURIAN: Tho Delegato of lébanon uishoL to include tho idea of the !½ js8,':i 1- noznul floev of capital in paragraph 4, =nd to stress.thc bcreftiâil ei'fects not only on the receiving countries but also on the lending oountries sormevhero in this document. Dr. Coombs, while approciating hi3 suggestion, thinlcs that this rmiatter should be tcakon care of by the JoLnt Comiittee on Industrial Developnent. Tho Unitod lçjngdomn Dalegate wfias cf the scme opinion, but he vrould like to give some -recognition to the value of this propoeding by surScsting the uords: "In order to ena.blc thcoi to mraintc.in thoir dciand for thcproducts of other countries we their domestic policies for full and productive eaployznrnt, " As to the rest, he sahres the view of the Dclegate of rA.ustralia that it should bc discussed and settled by tho Joint Cornittec on Industriez Dob'clopment. Doos this a=ondmont satisfy ^ur collc.gue froriiLcbzoin? MR. HA]0M (Lehanon): I ai- quite satisfied Tith the explanation given by Dr_ Coo:abs and I rcaliso that perhaps this resolution should deal propcrl;y with periods of disequilibriuiù and not vuith nocael periods. - 36 - I. 1 E/VPC/T/C. I/PV/3 I am therefore quito satisfied ;.ith the explanations and I would accept also the suggestion of the United Kingdom Delegate for the addition of' the phrase showing that the receipt of a lean by those countries with an adverse balance of trade helps the lending countries by increasing their exports. A demand by the borrowing countries for the products of other countries of course means advantage to the exporting countries, MR. LOKANATHAN (India) I would suggest a slight to amendment to the words proposed by Mr. Meae. I want the word. 'them" to be omitted, because we want to emphasise the effect not only on the countries which receive the capital but on those which lond it. I would therefore proposal: "In order to ansure the maintenance of the demand for imports..." - 37 - J. follows 1. 4- J. 1 E/PC/T/C. I/PV/3. That is to say, we would cover bath types of cases. Therefore, I would suggest this wording, "in order to ensure the maintenance of the demand for imports and of domestic policies for full and productive employmentt" THE CHAIRMAN: "In order to ensure the maintenance of the demand for imports and of domestic policies for full and productive employment". MR. FRESQUET (Cuba): I entirely agree ;,ith the theory expressed by the Delegate of the Lebanon. That fact is already proved by experience in the Western Homisphere. If we include tho phrase- "the maintenance of the demand for the imports, or products, of other countries", we then put all the emphasis or. one side. If we use that phrase we ought to say something more about the raising of the national output, because it is not . question of lending money in order to get customers. If we change paragraph 4, we shall. be to put in something about at last the maintenance of the national output. MR. COOMES (Australia): It seems to me that it is not necessary to *make -the amendment which the Indian Delegate suggested last te protect the idea that this operates to the advantage of both parties. It is of help to be able to say "demand for the products of other countries, " and I think that if we do that, it does make that point clear. On the other hand,. if we drop the use of the words "their" and "them" it becomes very difficult to use the phrase productss of other countries", which I think brings out the point which the Indian and Lebanese Delegates wanted to bring out, more clearly than the .alternative. MR. PIERSON (United States of America): I should like to support the amendment suggested by the United Kingdom Delegate, as amended by the rapporteur. I think the point raised by the Cuban Delegate is 38. J. 2 E/PC/T/C.I/PV/3. really taken care of, since.there is an express reference here to the maintenance bf domestic policies' that is, the importing countries' domestic policies for full-and productive employment, and the reference to the purchase of the products of other countries certainly implies that it maintains their production and employment. Therefore, I feel that his point, which was a very good one, is covered here and perhaps if we attempt to cover it more completely, we shall become involved in unnecessary elaboration of the sentence. MR. FRESQUET (Cuba) : I think that also in the phrase "full and productive employment` is implicit the gain in the purchasing capacity of the country to buy products abroad. Therefore, I think that the whole paragrph is well as it was before. If we- start putting things in there, we shall put emphasis on some things and forget about others. If we want to make any amendments in that paragraph, we shall have to take all the points in order not to make a disequilibrium in that balance. MR. LOKANATHAN (India): I would be entirely agreeable to leaving it as it was. If we are going to accept the idea of the Delegate of the Lebanon and put in this point about its 'being of advantage to the exporting country, then I could suggest a further amendment: ' "In order that the level of world demand and of domestic policies for full and productive employment may be maintained." The -level of word demand covers the demand for exports end the demand for imports. If We accept the United Kingdort Delegation's amendment, in which there -is -a reference to the demand for imports, it would mean that we would not be concerned. with the 'question of exports. we are, however, also concerned with that aspect. THE CHAIRMAN: After this short digression, we are gradually coming back to the point. front which we started. .39. J.3 E/PC/T/C.I/EV/3. MR. -FRESQUET (Cuba): Since this is a question of an explanation or a definition of a certainn economic attitude, I would propose that we say it at the beginning of the draft resolution, and not includc; it among the different actions that are going to be taken. The proper place for a defnition is at the beginning of the draft resolution. 'Therefore, I suggest to the Delegcte of Lebanon that he drop his amendment, and that we will take care specifically of the case of the under-developed countries in the Joint Committee for Industrial Development, and that either the Secrotariat or the rapporteur will take care of that thesis and try to point out something about -it in the draft resolution. MR. MEADE-(United Kingdom): I feel that neither the suggestion made by the Unitod Kingdom Delegate nor that made by the rapporteur was a happy one. I should like to support the~view that we go back to the original text. I fool that everybody who has spoken has really expressed satisfaction with that, I hope that in those words I interpret also the view of the Delegate of the Lebanon, because I understood him to say that he was satisfied with Dr. Coombes's explanation that the right way to take care of the main point ho was making was in the Joint Committee. My attempt to gild the lily by taking care of one small part of his suggestion was obviously not a happy or successful one. Might I back the proposal 'that we go back to-the original text without any change either in the "whereas" or in the resolution, and leave the matter to be taken full care of in the Joint Committee, where I am sure it properly belongs. THE CHAIRMAN: That seems to be the general view. MR. HAKIM (Lebanon): I feel that Mr. Meade has expressed exactly my attitude and that that main point will be taken care of in - Joint Committee on Industrial Development. Thât was the important point which I wanted to. raise, and as that is settled, this minor point need not be pressed further. So I withdraw my suggestion. 40. J.14 E/PC/T/C. I/PV/3. MR. COOMBES (Australia): Beforo we close the discussion of this, I would like to raise a question. I am not entirely sure what the status of this Prcparatozy Committee is in relation to resolutions and se on directed to other bodices, but on the face of it it sees to me a bit unnecessary that consideration of this resolution by the Social and Economic Council should have to wait until the United Nations Trade and Employment Conference has held its sessions. I presume that will not be before September of next year, if then. I wonderedd whether it was possible for this resolution to derive from the Preparatory Committee on Trade and Employment established by the Economic and Social Council and to go back. to the Economic and Social Courcil for their consideration as soon as this present session of the Preparato Committee has approved it. We do say in the present draft tht we invite the Council to undertake at àn early date..... If we do -- and I do -- think these studies are sufficiently important to be undertaken at an early date, I would like to see consideration being given to them in the appropriate place before next Septeriber. MR. MEADE (United Kingdom): I think that is a very interesting suggestion which has been made by the Australian Delegation. On the other ;hand, I have same doubt whether this Committee is the right body to consider that. Rather, I think it should be considered possibly by the Heads of Delegations. I believe that my Delegation might have views on this matter which are not concerned at all with the technical policy problems relating to employment, but with the general procedure of this Preparatory Committee and its work. I would not like to express a view myself at this moment one way or the other on that. I feel it is more appropriate for the Heads of Delegations, or a body which covers all. the Committees, to consider the sort of resolutions that might be taken at different times, rather than for this Committee to do it.; 41, E/PC/T/C.I/Pv/3. MR. COOMBES (Australia): Could we leave it that we do not make any change in this as it stands, but that it will bc open to any Delegation interested to take this matter up in the Heads of Delegations Committee, and subsequently in the plenary sessions of the Committee, if necessary. THE CHARMAN: I think that is satisfactory. MR. PIERSON (United States of America): Would I be in order, Mr. Chairman, in going back to paragraph 7 (a)? The point went by rather quickly, and at the risk of taxing the patience of Delegates, I would like to say a couple of words about it. I do not see that the United States would experience particular difficulty in doing what is here sugested. I think we should make out at least as well as many of the other member Govermnents; but I have two thoughts on it. One is that I still feel that it may be a little excessive to go into the degree of detail that we have undertaken to put into this paragraph 7 (a) in the last version that was read out. I would Iike to say off the record that there was a member of my office in the United States Govern- ment who was quite expert in this field -- I suppose he was one of our leading experts -- and through him I have become aware of some of the difficulties in this field. He was invited to go to certain other countries and attempt to help in the development of some ef these national income series. I know that he has told me of the scarcitY of information in some of the countries who are members, or presumably will be members of this Organisation. 4l. K fols. PAE K-1 E/PC/T/O. I/PV/3 That is one thing that makes rne wonder whetherr it really is essential for us to cross the "t!' and dot the "il' on precisely the :information that i-s needed and precisely the breakdowns, and so forth, The second thought I have as simply a quest on whi-ch I .would like to put to the United Kingdom delegate, As the draft now reads It says that ? members agree to participate, and so forth, for the regular collection, analysis and exchange of Information on domestic problems, trends and policles, concerning employment and economic development, including infor- mation, &c. Wells what i-s the implicaton for the United States, i-n his view, of providing inforrmation on our domestic problems, trends of employment and policies in connection with economic development: what sort of information would we be there likely to be giving if we were meeting the requirement or the thought? Mr MEADE (UK): Mr Chairman, what I had in mind - and perhaps not very happily expressed - was that one would exchange informat Ion on the problems, trends and policies, concerning.those projects for economic development of one kind and another which the country had already in mind and about which it felt no hesita- * tJon in making public its intentions; but I am very conscious of the difficulties to which Mr Pierson has alluded. I might possibly mention the fact that I was in charge of the first .estimates of the national income and expenditure in this country, and am not unaware of the fact that there are different ways of defininig them and problems in computing them, was wonderIng whether we could adopt a solution here analogous ta that which we have just adopted for another clause: go right back to the text as it stood, but elaborate that in this Report- I feel that what we have got to give here is a very general idea of the sort of thing about which there has got to be collection, analysis and exchange of Inforrmation, In the very first words 43. K-2 E/PC/T/C, I/PV/3 we had, after aIl, it is only information on national Income, the level of demand and the balance of payments; and in the 'Report we could say quite well that it is the composition as well as the level that is important, and w.e could bring out this problem, that -trends should include not only;. hat has just happened, .but what is going to happen and what is planned to happen, where it is appropriate to exchange Information about that. We could deal with it much more satisfactorily in a paragraph in the, Report than. by trying to draft it here; and I am absolutely certain myself that as soon as the Economic and Social Council and the specialised agencies concerned really get down 'to this, they will unearth all these problems and will have to deal with there obviously in very great detail. The draft suggested was in order to try and make agreement more easy. I am not sure that it will, and I am not-sure that the best thing really is not to take this very general indicatlon here. I 'would point out to the delegates from the Netherlands. and from Belgum that it only says 'including innormàtion -on", an th.ciioi and "information on" is information about the level, the.composi- tior., past movements and future movementss; and. we could point out all these important details. Well, we could not point out all the important detai ls; that would take many volumes, Mr Chairman; but in the Report we could indicate in a little more datail the sort of points that arise. I do not know whether that would satisfy the Committee, Mr. Chairman. Dr COOMBS: would not it help to some extent if we made the. original statement more general. I think- one of the difficultes arises from the fact that to sore extent. the words used were particular and therefore appear to exclude other particulars. Furthermore, I am.a little uncertain as to the precise meaning of the word "on" In this connection If we said "relating to or about natIonal Income", delete levell of" and put "demand, and the balance of payments"., so that it would read "information relating to or about national Income,..demand and the balance 44.. PAE K-3 E/PC/T/C.I/P/3 of payments", then there would be no particularity: i-t is a general healing in each1 case. Mr MEADE (UK) : Yes, I would. support that, Er Chairman THE CHAIRMAN: .-We are again coming back to our original position, M. DESCLEE DE LAREDSOUS (Belgium) (Inter retati-on):. I an, quite pi pared to ag-ree to that *suggested solution, provided our Report makes sure that In some part of the text - in the convenient part oa the text - it is stated quite clearly that for Euccess- ful action in the field vwith which we are concerned here, we require stati-stics much more fully developed than those which are given in certain cases here, and, moreover, more serSous study and enquiry not only oa current statisti-cal detail but bearinS also on future developments. Provided our Report is quite explicition these matters, I think vea can agree with the solution that has Just been suggested. THE CHAIRMAN Does it mean that as to 7 (a) it will read: "including information relating to national income, the level of demand and. balance of payments"? Mr MEADE (UK): No - "national income, demand"- THE CHAIRMAN:. And we will give explanations in the Report about all those details. Mr FESTUET (Cuba) : Mr Chairman; now that we have come back to this. clause 7, it would .appear to me that several countrIes - my own among them -.have no financial and teclanical means to provide for such elaborate Information as i s establIshed here as. an obligation of the Members, and there will be a very strIking dIfference between the InformatIon that car be supplied in'a little country wi-th small financial and technical means and a well-developed country with sufficient technical and financial assistance- to do it, I thi-nk we should cover that point here, and I was thinking of t-his phrase, that in (a) we Include a phrase so that it will read: "for the collection, analysis and exchange of information with a scope compatible with their 45. PAE K-4 E/PC/T/CI/PC/3 technical and financial means" THE CHAIRMAN: The delegate of the Netherlands. Mr GOTZEN (Netherlands) I was not going to speak about this question. Perhaps you had better finish this question first. Mr -.EADE (UK): M chairman I entirely understand the point rai sed by the delegate from Cuba and I think we should meet it. Could not we Meet -it by saying simply "including as. far as possible information relating to"? Mr FRESQUET (Cuba): I only pointed out the ide a, I always expect an English-speaking country. to put the final words i n . Mr GOTZEN (Net.herlannds): Mr Chairman, is this point finished? THE CHAIRMAN: Yes, I think so, Mr GOTZEN (Netherlands): Then, Mr Chairman, there is another point I want to rai se in connection with paragraph 3 of' the draft resolution. I an, fully aware of the importance. which inter- national action can have not onl; 'or international measures on trade policy and international arrangements for the stabilisa- tion of the incorne of primary producers, as dealt with In paragraphs 1 and 2, but, also on measures and arrangements of national scope. In my opinion the same thing is true with regard to the timing of the execution of public works. To counteract the conseauence of a world depression, a concerted action to effectuate publIc works on a national basis might be very valuable. I suggest, therefore, that paragraph 3 of the proposed measures should read as follows: "The timing, to the extent which rnay be appropriate and practicable, in the i-nterests of employment policy, of the execution of public works on a national basis and of capital expenditure on projects whl-ch are either Of an international character or internation- ally financed". The same stands in all those three paragraphs, Mr Chairman, as far as I can see. THE CHAIRMAN: You suggest adding the words "'of the execution of public works programmes on a national bass" after the word 46. K-5 E/PC/P/C.I/PV/3 "policy" and before "of capital expenditure"? Mr MEADE (UK) Mr Chairman, I, of course, entirely and complete- ly agree with the substantive ident that lies behind the proposal of the delegate from the Netherlands. However,, I do wonder whether it is approriate to put it in here. The United Kingdom had . certaInly in mind . that such matters would be dealt with unde clause 7 (b), .here we should t ot, I thinly, try to spell out all the things that might be done, because there are so many of them;; but when it is consultation with a view to concerted action on.the part of the Governments in the field of employment policies" - ane. obviously the timing of national public works would be an important element there we think that that comes under. 7 (b).. As to the special study the initiation of which we wish to propose in this draft resolution, we have trieL to confine things .-.here there will be necessary International agencies or bodies of some kind or another, other than simply (it i-s not simply, of course, .Chairman) - other then merely co-ordinatIon of national policies through an international body. 47 L L. 1. E/PC/T/C.I/PV/3. What we had in mind in clause 3 -.-as that there were some capital projgets which were either internationally finanaced of were of an international transport character in.the sense, for example, of/projects which necessarilly concerned. a lot of :governments, and already felt in the spheres not of national policies which needed coordination but of international action by some international body or group of countries., I fecl that if we begin puttin:-: into those clauses :;what are basically national policies - for -which there should be some international coordination, certainly - there will be no end to it, and wea shall have to put in everything . THE CHAIRMAN: Personally I am wondering whether "the execution of public works on a national basis" does or does not fall withinn the domain of industrial development. Dr. COOMBS (Australia): I should not think so. However, I would agree. -with what the Delegate for the United Kingdom has said, that there are very mary fields where coordination of national policies would be desirable. I think we -have expressed elsowhere tho hope that the Economic and. Social Council will become, in some respects, the instrument of that coordination o? national policies. The point here, as I understood it, was something., different. This. was not merely a matter of coordinatin_- action tnkinC pbcc within the jurisdiction of national governments. They .are group of policies where initiative orizinates in the international field, and I think it would overload the idea underlying this if went on to list the various types of domestic policies which could, with advantage, be coordinated. with the same general purpose as we are puttin- forward here.c lR. COTZEN (Netherlands): I. can agreewvith what has eeen said by the eclegaecs of the United Kigdomm andAJustralia, provided MrL,Meade, , our Rapporteur, would be so kind as to ;ut it very clearly into his report. 48 L.2. E/PC/T/C . I/PV/3, MR. STEYN (South Africa) : :May.I ask one question in rogard to clause 2 of the Resolution on page' 5? It rather seems to me that there is a measure of duplication between this clause,which calls for studios regarding national and. international arrangements which are undertaken to promote due stability in the incomes of producers, and Chapter .6 of' the draft Chater sent by the American Government, where we also have provision for studios relating to certain interna- tional commodity arrangements. I was wondering whether this duplication was riade deliberately, or .whether . the drafters of this Resolution could give us some information on that point. MR. MEADE (United Kingdom): .Ly idea there is that ;while there is inevitably some overlap it is not mere duplication. I say that for this reason. The studies which should take -place under-the -rticles on commodities arc really studies to see -whether there is a special problem in that particular commodity -which needs -special treatment from the point of view; of, say, a surplus in that commodity, or something of that kind. Here we have something, rather different in mind, namely a general study as to the sort of way in which commodity policy might be influenced in order to premote stability in the income of the- producers of primary products, with a view to helping to stabilise the level of general world conditions; that is to say, we think this study would be a rather general one of' principles and so on, not f rom the point of view purely of commodity policy but from the point of view of promotion; worId stabilisation. The application of ar principles or idcas which came out of those studies would, of course, have to rest i -with the commodity councils and the commodity commission of the International Trade organization THE CHAIRMAN Are you satisfied with that explanction MR. STEYN (South Africa): Yes, thank you . THE CHAIRMAN: If there are no other questions or comments may I take it that this document has been approved? The first thing I :ould suggest is L,3. E/PC/T/C.I/PV/3. that our Rapporteur, Mr. Meale, should be, requested to continue his work as Rapporteur of the committee. I presume his first task will be to rewrite those paragraphs in the report in the light of our discussions. our discussions. In re£jardraere geaeh 4. reservations made vatiornz madc by e Indian anelegates. Dclinategard In aragraph 6, do iI , 6 I under- stand correctly thdt we shoutc callattention of the r, of the various committees as their discuprogress in regard to theira thoir sphercs in escape clausWi. gG:ith rard toaph paragr 7(a), some reference shoould als bu .... tha the light of our in 1ijaht uo our the form of the Resulution, do I understand ic.n, cdo i understa question might to taken up by any Delegate, if he by anyj) Qcatcy if h vnfuture meeting of the Heads of delegations?t my JXutui-_ nct: n Is thwhich i might have everlooked?. ere any other poin DL:. You will recall that at the meting of the Headse ract.- of t'ic Hie ef Ddecision was reached as to the form in which tho form in *vhich the eiPreparatory Committee as ac)ryolen-it tac a a whahe should take, it wks decided, I thinL, that the rinto two uld fall -. nit t parts' and an appendix. e The first of t baing a sort a, t.'ra.tiveo account of the wooceedi s efcommittee, and an expesiton of the ecz;ition of the main prineiples that -werc evolved; thould be part singalCL be sometlii in the nature of a sunnary of conclusioguideicheworld u;L thc drafting. committee; and the actuasections of the Charter, or anyZoD Charter, or additioer would take the form of . t h-: fora vn fanaaid That was felt because of the limited nature of the l.tel natuLu. t authority which Delegatesery committe have. C..ittae mavf. I presune irom that that the lating to employment which have just been app]; have .j-.. approved by the committ form part of the appendix to the final report.v tZhe final rep Thereforea it seesenoressorhave Wo ap. ta fuare our rart oa the report ai the commiprepared awhoready in the form suggestedho f or-.A suges ft theHeas ngfoaelegations, that we should o- Dcatiens, th have prepared a reportwhat more in perhaps som elabohrate form than te brie report of 50 E/PC/T/C . I ./PV/3. the sub-committee. If it would not be too great a burden on our Rapporteur, it does seem to me that there would be a very great advantage if we could ask him to prepare a draft report to which the draft clauses on employment and the draft Resolution would be appendixes, and which would take the form required for incorporation in the final report of the Preparatory Committee. I am not sure whether that is putting too much of a burdon on him, but I think it would be a very great help if we were to ask him to do that now, since the task of stating principles which have been worked out in discussions and the drawing up of a summary of conclusions is so closely inter-related with do not the work that he has already done. I/think it would be wise to allow it to fall into less capable hands. THE CHAIRMAN: I feel sure our Rapporteur will be only too glad to Perform this task, and in the performance of this task the Secretariat will certainly help him. MR. FRESQUET (Cuba): I would like to reserve the views of my Delegation on paragraph 2 of the Resolution until tomorrow morning . Tomorrow morning I will address our views to the Secretariat or to Mr. Meade directly. THE CHAIRMAN: As regards paragraph 4 of the draft Resolution, I suppose there will also be some refer nce in the report as to the expression "domestic policies for full and productive employment." If there are no other comments I shall declare the committee adjourned sine die. THE SECRETARY: I understand we will have another meeting, at which the Committee will have an opportunity to examine the final report of the Rapporteur. MR. MEADE (United Kingdom): I think it would be advisable. I am very touched by the very gracious expression of satisfaction with the work of the Rapportuer so far, which you have made, Mr. Chairman, and which other Delegates have supported. But the Rapporteur does not feel sufficient confidence in himself to prepare a report saying why we have adopted these 51 L.5. E/PC/T/C.I/PV/3. various clauses without reforring it to the committee. I think some of them will have to be rather carefully expressed. I feel it would need only one more meeting, but I do think we ought to have one meeting on the draft report which is to be sent to the Preparatory Committee itself. THE CHAIRMAN: Then I will withdraw what I have said about adjourning sine die. We must finish our work on the 9th; that is our target. Therefore, I was thinking of leaving the whole matter to our Rapporteur. 52 E/PC/T/C. I/PV/3 DR. COOMBS (Australia): I do not think it is necessary for the final report to be ready by the 9th. I think if the work of the Committee is complete in the sense that its members are from then on free to push on the work of the other Committees with the some skill and enthusiasm as they have completed their task here, that would be sufficient. THE CHAIRMAN: I suggest, then, that we have another meeting in the early part of next week to examine our final report. MR. :URTINS (Brazil) (Spoke in French - not interpreted) THE. CHAIRMAN: I simply wish to) say how profoundly I am touched by the kind words which have just been spoken by cur Brazilian colleague and by the signs acclamation which greeted them. I am very deeply touched, and I will reserve my final thanks until our next meeting. The Committee rose at 6.2 p.m. M. 1

GATT Library

kr988nf6272

Verbatim Report of the Third Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Friday 25 October 1946 at 11. a.m

United Nations Economic and Social Council, October 25, 1946

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

25/10/1946

official documents

E/PC/T/C.II/PV/3 Corr.1 and E/PC/T/C.II/PV/1-4/CORR.1

https://exhibits.stanford.edu/gatt/catalog/kr988nf6272

kr988nf6272_90220005.xml

GATT_157

E/PC/T/C.II/PV/3 Corr.l UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT VERBATIM REPORT OF THE THIRD MEETING OF COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Friday 25 October 1946 at 11. a.m. Chairman: Dr. H. C. Coombs (Australia) CORRIGENDUM The speeches of Mr. C.L. TUNG (China) should read as follows:- 1. Page 10. "Referring to the subject of most-favoured-nation treatment, the Chinese delegation wishes to make two points of observation. The first is concerned with its interpretation. We all realize that one of the main purposes of the proposed Trade Conference is to bring about a general reduction of tariffs, tariff preferences, and other trade barriers. But this can only be achieved, we think, by the implementation of this most-favoured- nation clause, with automatic and unconditional interpretation. In view, however, of the present circumstances we do not think that that would be immediately practicable. China has been in the past constantly adhering to the principle of the unconditional application E/PC/T/C .II/PV/3 Corr. 1. Page 2. of the most-favoured-nation clause in her commercial relations with the rest of the world; and the Chinese Delegation are prepared to say that we still intend to adhere to the same principle. But as the success of this application depends upon how many nations would subscribe to this interpretation and also upon what nations would subscribe, and in addition, what are the exceptions they are going to make from this principle. While expressing our determination to abide by the unconditional application of this most-favoured- nation principle in future, we want to withhold our decision until the time when the majority of the major trading nations have declared their intentions. In the meantime, we want to make it clear that so long as there are existing preferential tariff practices in certain parts of the world, China wants to reserve its right to adopt any preferential measures or to make any preferential arrangements with any member-nation at any time. This is the point we want to make concerning the application of the most-favoured-nation clause. " The second point we want to make is with reference to the text of the proposed American Draft Charter: Article 8, paragraph 1, the second sentence. This whole paragraph refers to the application of the most-favoured-nation treatment, and the last sentence reads: The principle underlying this paragraph shall also extend to the awarding by members of governmental contracts for public works, in respect of which each member shall accord fair and equitable treatment to the commerce of the other members.' In the opinion of the Chinese Delegation, this provision is quite unnecessary and may even lend itself to a misleading construction. It is unnecessary if it is meant - as the text could be taken to mean - to apply to the imports or exports involved in the government contracts in question, as these purely administrative or fiscal matters are already sufficiently covered by the general principle laid down in the preceding sentence 2 E/PC/T/C. II/PV/3 Corr. 1. Page 3. to need no separate provision. If, on the other hand, it has reference to non-administrative or non-fiscal matters, then it constitutes a serious encroachment on the freedom of any sovereign government to award contracts on the merits of tenders submitted at competitive prices - an act which normally lies outside the sphere of international regulation. The phrase "fair and equitable treatment", in particular, may be construed as application of the most-favoured-nation principle to all foreign nations where transactions with one or more of them are contemplated. Under this regime there is little if any freedom for the member governments to pursue their economic programme, especially if they have to under- take public works with foreign aid. It is for these reasons that we propose the deletion of the last sentence of paragraph 1 of Article 8 of the American Draft Charter, if that text is to be adopted." 2. Page 19. "Mr. Chairman, I wish to call the attention of the United States Delegate to these words: 'fair and equitable treatment to the commerce of other Members'. Does that mean that if China, for instance, is making a contract with India for certain purchases, China must also make an equitable purchase from other countries, such as Argentina or Brazil? If that is what it means, it is impossible. We place our contracts on purely commercial considerations, at competitive prices. If we adopt these words 'fair and equitable treatment', it might be understood to mean that we must give an equal or equitable share to all member countries. So I think the second sentence in paragraph 1 of Article 8 is quite unnecessary. If the intention is to ensure that the commerce of all member nations should have equitable treatment, then the provisions in the first sentence of this paragraph are quite sufficient to cover all the points. So that I think we should insist on the deletion of that last sentence from this paragraph. " 3 E/PC/T/C .II/PV/3. Corr.1 Page 4. 3. Page 32. "Mr. Chairman, the Chinese Delegation would have no objection to this sentence if it is clearly understood to mean what was stated by the United States Delegate a few minutes ago; but we request that the wording of this sentence should be changed by the Drafting Committee, to convey the real meaning, and we would like to make some written suggestion on this point." 4. Page 63. "Mr. Chairman, with regard to tariffs and tariff preferences, the Chinese Delegation wish to make a few brief remarks. We are prepared to enter into negotiations with all nations as to tariff reduction, but we must make it clear that our reduction of tariffs will be selective in character and will not take the form of a general reduction. As a matter of fact, we are prepared to reduce the import tariff on many capital goods, such as various types of machinery, vehicles, necessary materials and so on; but, on the other hand, we must provide reasonable protection for those commodities in connection with our industrialization; that is, we must protect ourselves against those commodities which are similar to our native products of infant industries, and also certain kinds of agricultural products. As to the standard of protection, we want to re-state the views I expressed the other day; that we must have a transition period during which we can maintain such reasonable measures of protection, and the length of that transition period must depend upon the progress of industrialization. As to the point about preferential treatment, we want to make it clear that we do not want to maintain or impose any preferential measures; but if we find ourselves surrounded by preferential markets, we reserve the right to make any preferential arrangements with any nation on the basis of complementary requirements, by which we mean the exchange of privileges between the two nations on the basis of mutual requirements in demand and supply of special commodities. We wish to say that 4 E/PC/T/C .II/PV/3 Corr. 1. Page 5 China's tariff has been non-discriminatory toward all nations and is one of the lowest in the world. We do not want to impose any preferential measures, unless we are forced to do os. I feel that the views expressed by many delegations are in accord with this, but we still want to reserve the right for further discussion on this point. " 5

GATT Library

hw337xz8740

Verbatim Report of the Third Meeting of Committee IV : Held in Hoare Memorial Hall Church House, Westminster. S.W. 1. on Tuesday, October 22 1946, 1946-10-22 at 11 a.m

United Nations Economic and Social Council, October 22, 1946

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

22/10/1946

official documents

E/PC/T/C.IV/PV/3 and E/PC/T/C.IV/19-20 + E/PC/T/C.IV/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/hw337xz8740

hw337xz8740_90220087.xml

GATT_157

E/PC/ T/C.IV/PV/ 3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT. Verbatim Report of the THIRD MEETING of COMMITTEE IV held in Hoare Memorial Hall Church House, Westminster. S.W. 1. on Tuesday, October 22nd, 1946, at 11 a.m. MR. J. R. C. HELMORE C.M.G. (U.K.) (From the Shorthand Notes of W. B. GURNEY, SONS & FUNNELL, 58 Victoria Street, Westminister, S.W.1.) 1. Om A2 E/PC/T/C.IV/PV/ 3 THE CHAIRMAN: The Committee agreed at its last meeting that we would try the simultaneous interpretation system during our meeting this morning. If any delegate at any point wants to have a subsequent translation, if perhaps some technical point does not some over clearly in the simultaneous translation, I would be grateful if he would catch my eye, because we have the other interpreters here as well and we can ask for that to be done. Before we continue the general debate we have a letter from the World Federation of Trades Unions, which has just been circulated. MR. J. MELANDER (Norway): Mr. Chairman, on a point of order, please, I observe from the programme that we are supposed to have three meetings today, at 11 a.m., 3 p.m. and 5 p.m. Now it is very difficult for small delegations like ours, for example, to be able to have many Meetings like that. It means that we are continuing our Discussions late in the evening, about 7 o'clock, and that makes it impossible for us to do any sort of preparatory work, to have any sort of drafting meetings among ourselves, and we would therefore very much appreciate it if it could be arranged that we have just two meetings, one at 11 and one at 3, and then continue until somewhere between 5 and 6 p.m. THE CHAIRMAN: I might reply to that straight away. That is exactly what I had intended. I will confess I was not so keen on providing for the needs of small delegations on this occasion, but I had rather in mind that I did not want to be late in taking a drink from our American colleagues tonight, but of course if it has the same effect perhaps that is good enough. In any case, I am hoping that towards the end of this morning' s proceedings I may be able to make 2. E/PC/T/C.IV/PV/3 a suggestion which would further speed up our work and not press us too hard this afternoon. I was saying that we have a letter from the world Federation of Trades Unions which raises practically the same point, in almost identical terms, as in the letter from the International Chamber of Commerce which we dealt with on Saturday, and if it would be generally agreeable to the Committee I would ask the Secretariat to handle this letter in the same way. If it helps the Committee, I could say these two letters, one from the ...F.T.U. and the other from the I.C.C. were bo th considered at Committee I yesterday, and they agreed to deal with them in exactly the same fashion. Would that be agreed? (Agreed). Then I will ask the Secretary to-proceed in that way. Now if we might continue the general debate, there was one delegate who cauglat my eye on Saturday and I did not call upon him because it seemed to me that lunch time has approaching. I think it was the Delegate of Brazil. MR. J.Y. GUJPIERS (Brazil ): Cuba, Mr. Chairman. THE C- IPJ 1 : Then would you continue straight away? MR. J. Y. GUERPA (Cuba): Mr. Chairman, Cuba is a country which is primarily dependent of the export of a primary product. we have had a pretty one experience of the working of these commodity arrangements, and that experience goes a long way towards confirming the reasons and conclusions reached by the American delegation in putting forward for our discussion Chapter of the proposed Charter, and confirms in our experience how true it is that this particular problem needs some kind of international arrange- ment. . we are therefore very grateful to the American delegation for Eering a very sound basis for discussing this 3. E/PC/T/C.IV/PV/3 subject and for its inclusion in the Charter in such a way that these commodity arrangements, which have so far only been a matter of agreement between isolated countries, will be made a general feature within the framework of the International Trade Organisation. In fact, the Cuban experience shows that the reasons put forward by Mr. wilcox in his statement, which constitutes the basis for the inclusion of these commodity arrangements within the general framework of the International Trade Organisation Charter, are not only true, but in some cases it is not only a fact that the production is so inelastic as to make it necessary to establish certain particular or special ways of control, but also due to the fact that it is not very easy for the farmers to shift from the line of production which they are accustomed to carrying on. We know from experience that sometimes a reduction in prices not only does not bring a reduction in production, but as a matter of fact stimulates production, because the farmers try to make up by a larger volume of production the decrease in income resulting from the fall in prices. Therefore, we feel it is very important that commodity arrangements be made a general feature of our work, and be extended to many other products. Since 1937 Cuba has Participated in the International Sugar Agreement, signed in this same City of London, and even if we, speaking frankly, are perhaps not too satisfied with the working of the agreement with regard to price level, we nevertheless consider that in the long run it may be that for us stability is more important than taking advantage of certain high prices, as we had done in the past. We are, therefore, very much in agreement with the general purpose of these commodity arrangements, and as a 4. A5 E/PC/T/C.IV/PV/3 matter of fact -e have been in the forefront, if I may say so, in promoting this kind of arrangement in the commodities in which we are most interested. I wish to say also that we agree with the statement of the Canadian delegation that we should not wait for surpluses to develop or begin to develop, but that we should agree on the principles and establish the necessary machinery for dealing with these surpluses then there is a reasonably probability that they will develops I am inclined to think that present circumstances provide us a very good opportunity and that we have sufficient time before us to enable us to agree on the principles, establish the machinery, and use these commodity arrange- ments not only as a corrective measure, but as a preventive measure for avoiding the development of this lack of equilibrium between supply and demand for certain products. While agreeing on that, at first sight we are not inclined to think that there is any real need for haste in establishing a separate body, separate from the organisation we are now trying to frame; because we do not think that the time it will take to get agreement on this International Trade Organisation will extend further than maybe a three or four year period, and we have that time ahead of us to deal with this situation. The last point I rant to refer to is the emphasis laid by the Canadian delegation on the question of the flexibility of these agreements. We consider that to be a very important point. and we think that unless the agreements are sufficiently flexible they will not attain the objective which we are seeking. In our view, the way to achieve flexibility in the working of the agreements is 5. E/PC/T/C.IV/PV/3 not by way of making the principles governing these agreements, as put forward in the suggested Charter, more ample than they are already. We think that they are sufficiently ample to/give scope for flexibility, and the question of the flexible working of each particular agreement we view as a matter of organisation to be established between the International Trade Oraanisation as a whole and its Commodity Committee. In this we think lies the real means to achieve the high degree of flexibility for each agreement which we consider necessary. Finally, so far as this general discussion has gone we believe that every point which has been raised by any one of the delegations is more or less capable of being fitted into the framework of Chapter Vl of the suggested Charter. I do not mean by that that the Charter will not be changed or that the agenda will not be changed. We have accepted the agenda in a preliminary way, but I think any other point that may be raised could probably be fitted into the Charter, even if it meant making the necessary additions to an Article or group of Articles. I desire to finish by saying that the Cuban delegation is prepared, given the opportunity and if it is in order, to move that Chapter VI of the suggested Charter be adopted as the basis for the work of our Committee. MR. O. ORMSER (France) (speaking in French: interpretation): Mr. Chairman, I should like to state very briefly the views of the French delegation on the problems which have been submitted to this Committee. They arise from two considerations which have been stated in the Plenary Committee by the head of the French delegation, Monsieur 6. E/PC/T/C.IV/PV/3 Herve Alphand. In the first place, France has declared herself in full agreement with all the fundamental points of the American proposals concerning trade and employment. The general agreement given lest May by my country naturally extends to Chapter V of these proposals, because the French Government considers that the question of inter-governmental agreements on basic products constitutes one of the essential points of the proposals. A certain stability must indeed be maintained in the production, trade and consumption of basic products, If not, as Mr. Wilcox has pointed out, the task of establishing international commerce on a multilateral basis will be rendered more difficult and the attainment of full employment in countries producing raw materials as well as in importing countries will be relegated to the future. It is impossible to envisage general economic prosper- ity if the mass of human beings who are engaged in the manufacture of basic products has to be content with a low standard of living. The experience of the last forty years would prove that the natural play of economic forces alone would not suffice to re-establish quickly, and in acceptable conditions, the necessary equilibrium in respect of a series of basic products. On this point, the French Delegation finds itself in agreement with the analysis given on Saturday by the American Delegation, and according to which the inflexibility of the demand for, and the supply of, certain basic products prevents a satisfactory adjust- ment of production and consumption, We therefore think it necessary to take measures to alleviate the difficulties which may arise. In the second place, M. Alphand stated in the Plenary 7. E/PC/T/C .IV/PV/3 Committee that my country, less than any other, could think of isolating itself from the rest of the world since we must import a very great number of basic products which are converted by our industry and consumed by our people. As an importer of basic products France will look favourably on every proposal which will facilitate, as in the past, the free and regular acquisition of these products under reasonable conditions. Although we are first and foremost an importing and consuming country, we fully appreciate the gravity of the problems which may arise in producer countries and more particularly in those whose economic life is founded chiefly on the sale of a single basic product or of a small number of such products. All the more so since French overseas territories and territories and states associated with the French Union come into the latter category. My Government is naturally concerned with all their rightful interests. Our opinion is, therefore, determined both by the situation in France and by that of the territories and states associated with the French Union, so that our position has a number of points in common with that set forth by the delegate of the Netherlands. The interests that the French Delegation must take into account may be varied; they are all, however, perfectly consistent with the general effort towards maximum economic activity. Thus, it is because our country is the trustee of these diversified interests that the French delegation believes it is able to examine with the greatest possible objectivity the proposals which may be submitted by this Committee to the Preparatory Committee. E/PC/T/C.IV/PV/3 I wish to add no more today, except to offer a few general thoughts and ideas in relation to these proposals. The proposals foresee, briefly, two things. First, Rules of Procedure, and then certain fundamental principles which might govern future agreements, and the measures which might allow for eventual agreement between Govern- ments presuppose the following stages: The realization of the existence of the possiblity of diffic lties arising; an invitation by the organisation for a study group to be set up; the report of such a study group; the convening of a conference; intergovernmental agree- ment . Such procedure is logical. One might ask one's self if it might not seem rather slow, and whether the difficulties to be solved might not become greater and greater before agreement can finally be reached. The proposals foresee also certain principles which might regulate these agreements. They foresee on the one hand introductory conditions which have to be fulfilled. To my mind, such conditions could be the subject of profound and prolonged discussion. I have in mind partic- ularly the idea of burdensome surpluses. On the other hand, they do no more than just allude to regulations on production, trade or prices in the case of an agreement being reached. We are convinced. that the discussions of this Committee will allow us to formulate these ideas more precisely. The French delegation believes that the means of action cannot be the same for all commodities. It does believe, however, that past experience has shown certain points. It has shown, for instance, that it might be dangerous and contradictory to invoke relative insufficiency of natural resources in order to justify certain actions of governments, and to suppress and exhaust natural resources 9. E/PC/T/C .IV/ PV/ 3 without replacing, them, as has been done in the past, in order to maintain the level of prices. The complex problem of buffer stocks which has been mentioned by the United Kingdom representative must necessarily occupy a great deal of our attention, as will the many means through which we might obtain greater consumption of surplus commodities, and very effort must be made to ensure equitable treatment as between producer and consumer, for/here we must think of the lives of many people. MR. M.K. BALA (Czechoslovakia): Mr. Chairman, the Czecho- slovakian delegation agrees with the views which the United -States delegation express in their suggested Charter concerning intergovernmental commodity arrange- ments on a multilateral basis. Their Charter emphasises that special difficulties may arise in this sphere which are completely different from the situation in other spheres. We also agree with the suggested Charter put forward by the Government of the United States of Brazil, in so far as they state that a disequilibrium of consumption and production of commodities has and injurious effect which the free working of the forces of supply and demand is unlikely to remove, and difficulties which may arise from this and other repercussions may jeopardise the effect of the general policy of economic expansion. In addition, we should like to emphasise that it is necessary to make arrangements, not only for commodities those production creates burden some surpluses, but that in the same way, or even more so, we must try to find a solution in respect of commodities in short supply. The suggested Charter should guarantee for all States access 10. E./PC/T/C.IV/PV/3 to the natural resources of the world in such a way that they could take part in economic expansion. Not only should producers be considered, but also consumers, and for this reason. If a commodity is in short supply it is necessary in international commodity agreements to secure an equitable allocation of that commodity, and also to stabilise prices at a reasonable level. If there is a burdensome surplus of a commodity, we suggest that difficulties arising from this cause should be solved by higher consumption, and not by curtailment of production, in order to implement the principles of full employment. We are fully aware that in maintaining stabilised prices in the production of commodities we shall also maintain the consumption of consumer goods, and thus raise the standard of living. We should definitely like to find a way which would prevent the fluctuation of prices endangering the production of commodities. 11. E/PC/T/C.IV/PV/3 The Czechoslovak Delegation at the F.A.O. Conference in Copenhagen approved the principal ideas of Sir John Boyd-Orr's Plan for the establishment of a World Food Board which should have a similar aim in the field of food and agriculture. We recommend that the work in this Commission should be coordinated with the work of the F.A.O. Committee of the World Food Board which has been called for the 28th October in Washington. We therefore agree with the views put forward by the British delegate that it is not satis- factory to make ad hoc arrangements only when difficulties arise but that it is necessary to prevent them in time by international economic arrangements. We therefore recommend that a solution should be found on an international multilateral basis in the field of commodities and particularly in the field of food and agriculture in a permanent organisa- tion, which would consider not only questions of allocations of production and consumption but also of financial help to the states which without this help cannot fully take part in the policy of economic expansion and therefore cannot raise the standard of their people in a satisfactory way. MR MELANDER (Norway): Mr Chairman, the Norwegian Delegation agree in general with the United States proposals relating to the International Commodity Arrangements as set out in Chapter 6 of the suggested Charter. We would emphasise, however, that these special provisions relating to primary commodities should be regarded as exceptions from the proposed rules relating to general commercial policy as outlined in Chapter 4 of the suggested Charter. It seems to us that if we go too far in the way of creating special Commodity Arrangements this could undermine the basic principles for the expansion of international trade at which we are aiming, One should therefore, in our opinion, be careful only to include a commodity within the scope of the proposed Commodity Arrangement 12. E/PC/T/C.IV/PV/3 system in very special circumstances. Fourther, we would like to emphasise those points of the United States proposal which lay down that the Commodity Arrangements aim at assisting one or more primary producing countries in a transitional period and under circumstances where the normal play of competitive forces cannot reasonably correct the necessary adjustments in production consumption. Secondly, we stress that the proposals of the United States, as far as we understand them, relate to commodities of which there has developed or is developing a burdensome surplus. Finally, there may be some points of the U.S. proposal which seem a bit doubtful to us. Thus we should be inclined to think that the structure of international organisations could be simplified by leaving it to the International Trade Organisation itself to administer such Inter-governmental Commodity arrangements instead of creating special Commodity councils . Such a procedure would in our opinion be likely to make for better co-ordination, and we also think that such a procedure would make it clearer that the administration of the combined sets of rules relating to commercial policy would include not only the general principles outlined in Chapter 4 of the U.S. proposal but also these provisions contained in Chapter 6. Some delegations have referred to the possibility of creating buffer stocks of some commodities and other delegations have also referred to the proposed World Food Board which the Food and agriculturee Organisation discussed at its Conference in Copenhagen in September last. We have not yet had the time to study the proposals of this kind which, so far aswe can see, go very much farther than the U.S. proposals as contained in the suggested Charter, and we are therefore not in a 13. E/PC/T/C.IV/PV/3 position at this stage to express any opinion on these Points. MR CHANG (China): Mr Chairman, the valuable opinions expressed by the representatives of various delegations who spoke before me have touched, I think, nearly all the fundamental phases of the question on hand. I shall therefore limit my remarks to a fear points which the Chinese delegation deems fit to add after hearing the statements of other delegations. The Chinese delegation considers the provisions set forth in Charter 4 of the American suggested Charter are in general suitable for the basis of discussion of this Committee. Although somewhat limited in scope, they do provide for the setting up of a workable machinery for achieving solutions relating to the difficulties relevant to most of the primary commodities, including the chief items of Chinese; export, which are suffering heavily as a result of the post-war maladjustments. The proposal by some of the delegations that the scene of the future commodity organs shall be widened so as to include more measures is agreeable to the Chinese delegation, If the concrete measures which are yet to be discussed are proved tractable and workable. It is certainly desirable that more shall be done to tackle the difficulties which all countries are experiencing now. China, whose items of export mainly consist of agricultural products and some specific miners, products, and whose export trade is seriously crippled at present, will certainly co- operpate with other nations to solve the difficulties arising in respect of the primary commodities. There is another point the Chinese delegation would like to make clear. Modern scientific invention has made it possible to substitute some important primary commodities with synthetic products, and consequently the market prices and production of these 14. E/PC/T/C.IV/PV/3 commodities are very much affected. The Chinese delegation thinks therefore that when these commodities are being studied their substitutes should be considered as well and, whenever technically possible, they should be studied together as one category rather than separately as two distinct items. For example, the question of silk can hardly be dealt with satisfactorily if it is separate from the question of rayon. These are the few remarks I have to make at this time. THE CHAIRMAN: I think the Committee would probably agree that it would be suitable that at some point (and I am rather inclined to suggest now) we should invite the representative of the Food and Agriculture Organisation to make any remarks he wishes to make to us. The Rules of Procedure do provide that the representatives of the Inter-governmental Agencies should attend our Committees and (I paraphrase) speak on matters within their competence. There have been several references during this general debate to the F. A.O., and, if there is any contribution which the representative of the F.A.C. would like to make, I think now might be a suitable moment to invite him to do so. DR. S.L. LOUWES (Special Adviser to the Director-General of the F.A.O.): Mr Chairman, as the subject under discussion is closely related to the work which the Food and Agriculture Organisation of United Nations has undertaken, I will gladly follow your invitation to make a short statement. The real reason why the late President Roosevelt took the initiative in regard to F.A.O. was to create a weapon in the war against want in the midst of plenty. This want in the midst of plenty not only prevents a reasonable level of nutrition of the people of the earth but is, at the same time; one of the most Important causes of the recurrent economic crises. 15. E/PC/T/C.IV/PV/3 The initiative of President Roosevelt led first to the Conference in Hot Springs, where 44 states decide.to create F.A..O; and then to the work of the Interim Com- mission, and through it to the Conference of Quebec, where the Charter of F.A.C. was signed. The first thing F.A.O. did after its birth was to prepare a general world food survey. The intention was not only to get an insight into the present position but in, the first place to get an estimate of what would be needed if the world was to reach an accept- able level of nutrition. A conference during the food crisis of the Spring, held in Washington, led on the one side to the creation of the Internationai Emergency Food Council, charged with allocations during the time of shortage, but at the same time tht meeting, where 29 nations were represented, charged the Director-General of F.A.C. with making proposals for a long-term agricultural and food policy before its next Conference. These long-term proposals were discussed at the F.A.C. Conference in September of this year in Copenhagen, where 46 nations adopted the following resolution: "The Conference approves the Report of its Commission on the proposals for a World Food Board and accepts the general objectives of the proposals, namely, (a) developing and organising production, distribution and utilisation of the basic foods to provide diets on a health standard for the peoples of all countries; (b) stabilising agriculture prices at levels fair to producers and consumers alike; and, considering that international machinery is necessary to achieve these objectives, resolves to establish the Preparatory Commission to consider further the proposals and submit recommendations regarding the necessary machinery." This resolution is divided into two parts, both of which have a bearing on the discussions of this Conference and one 16. E/PC/T/C.IV/PV/3 has a special bearing on the Discussion in this committee . As part of its World Food Survey, F.A.O. made a World Food Balance Sheet on the basis of an acceptable level of nutrition for 1960. This study showed that, given an increase of 25 per cent in world population, increases in agricultural production ranging from 12 per cent to 163 per cent will be needed. 12 per cent is for sugar and 163 per cent is for fruits and vegetables. To take two other items, wheat will demand an increasee of 46 per cent and milk an increase of 100 per cent. These figures also indicate the lines on which F.A.O. believes that the problem of unemployment has to be tackled - not by restricting production but by improving consumption. The need for better food is very great, but everyrbody agrees that there are tremenlous difficulties to be conquered before the goal can be reached. One of the factors necessary to make the realisation of these ideals possible is industrialisation of the so-called undeveloped countries - one of the, items or the agenda of this Conference. The second part of the Copenhagen resolution, which was accepted by 46 nations, including all the nations here represented, was that the goal of better nutrition could not be reached by starving the farmers. Therefore the resolution asked for agriculture prices "fair to producers and consumers alike" . The fact that 70 per cent of the world's population is made up of farmers, millions of whom are in a permanent state of malnutrition, forbids immediately every attempt to solve the problem through low prices of farm products. Or the contrary, one might say that if the problem of fair prices for farm products were solved, the whole problem of malnutrition, and unemployment would case to be the main danger for mankind. The second part of the resolution, in (b), charged a speciall Committee to study the possibility of international 17. E/PC/T/C.IV/PV/33 machinery to achieve this. In all the discussions, from Hot Springs onwards, commodity agreements have been on the agenda as one of the means towards solving the problem. In Copenhagen much attention was given to a World Food Board which would play a leading role in this matter and which formed part of a plan, formed by the Director-General of F.A.O. This is the point so far reached by F.A.O., and we now have to wait for the results of the Preparatory Commission which will meet in Washington next Monday. One indisputable fact results from all this, and that is that F.A.O., for the whole of its work, is very much interested in these questions, and it has to play an important role in this matter if it is to fulfil the wishes of its members. The result cannot be stated before the next Conference of F.A.O. has taken a decision on the point. This next Conference will meet when the results of the work of the Preparatory Commission are known. In Chapter 5 of the proposals which form the basis of discussion here there is a special paragraph on commodity studies. Part of the work of F.A.O. has been such a study in relation to agricultural products. F.A.O. may therefore be regarded as a permanent study group for agricultural commodities. I believe that it would be a violation of the decisions of the nations members of F.A.O. if for agricultural products special study groups outside F.A.O. were created. The discussion at this Conference and at the Conference in Washington will give the answer to the question as to which is the best way to bring recommendations for special commodities into operation. I have tried to make clear that In the field of agricultural products a lot of work has already been done by F.A.O. and that the terms of reference of F.A.O. give the organisation the duty of taking not only a lively interest in this matter but also an active part in 18. E/PC/T/C.IV/PV/3 its practical solution. I should also like to underline what has already been said by several speakers - that the need for organisations like the commodity councils may arise much sooner than many people think. It may be, therefore, of the utmost importance not only to work as quickly as possible but, as the I.T.O. is not yet in being and the necessity of co-operation in this matter between F. A.O. and I.T.O. is a foregone conclusion, to find a temporary way to achieve this. Thank you very much. THE CHAIRMAN: Would any delegation like to comment shortly on any particular point that has been brought up during our general debate before we leave it? MR BEYLEVELD ( South Africa) Mr Chairman, the representative of Holland raised a question as to what are primary products, and the representative of Norway referred to the same problem in a sense when he said that this should be a restricted field. Now it seems to me that we can either work to prepare the rules for this section or the assumption that the objective would be to provided a set of rules which could, be applied for any and every primary Commodity, without ever defining primary commodities - and if we were to work against such an indefinite background every member of this Committee would probably have certain specific commodities in mind and each one would to a considerable extent consider the basic rules in relation to those particular commodities - or, on the other hand we can attempt to define primary products and to consider the rules in relation to such a restricted field. I think it would be of assistance ts all of us if we had some indication as to the scope of the field to which it is intended that this particular section of the proposed Charter should apply. Then, finally, I would like also to stress the point raised by the delegate from, China in connection with the 19. E/PC/T/C.IV/PV/3 position of synthetic products as against natural products. There are a number of these: there is artificial and natural rubber, and there are various artificial fibres in addition to natural fibres. MR BROADLEY (U.K.): There was one other point, if I might refer to it. At the meeting on Saturday, I think it was the representative of Holland who referred to the commodity arrangements which are already in existence, some of which have been attended by no small measure of success; and he felt that it would be useful if those who had been con- cerned in the working of those arrangements could come and tell this Committee something about the way in which they had worked, because it would be helpful to us in the consideration of the problem 20

GATT Library

zy989bv9351

Verbatim Report of the Third Meeting of the Sub-Committee of Committee II on Quantitative Restrictions and Exchange Control : Held in Room 230, Church House, Westminster, S.W. 1. on Wednesday, 13 November 1946 at 3.0 p.m

United Nations Economic and Social Council, November 13, 1946

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

13/11/1946

official documents

E/PC/T/C.II/QR/PV/3 and E/PC/T/C.II/QR/PV/1-3

https://exhibits.stanford.edu/gatt/catalog/zy989bv9351

zy989bv9351_90220022.xml

GATT_157

.1. E/PC/T/C. II/QR/PV/3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the THIRD MEETING of the SUB-COMMITTEE of COMMITTEE II on QUANTITATIVE RESTRICTIONS AND EXCHANGE CONTROL held in Room 230, Church House, Westminster, S.W. 1. on Wednesday, 13th November, 1946 at 3.0 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. 2 E/PC/T/C. II/QR/PV/3 THE CHAIRMAN: You have in front of you, I understand, the revised drafts for Articles 20 and 22 prepared by our Rapporteur. These deal with balance of payments exceptions and also exceptions from the rules on non-discrimination. Would you like to, say anything at this point? THE RAPPORTEUR (Mr Meade): May I say one word, Mr Chairman? Perhaps I might just tryto outline the way in which, as Rapporteur, I have attempted to square the circle and to give a documnent which, with a from littIe compromise, but not a great deal,/certain delegations, one might get an almost agreed draft. The way I have tried to do it is this. You will see that I start with Article 20, and might we take them Article by Article, because I think that would be simplest? THE CHAIRMAN: Yes. THE RAPPORTEUR+: As far as Article 20 is concerned, paragraphs 1 and 2 are practically the same as the United Kingdom draft. There is almost no change. In paragraph 1, at the end of the first sentence, I have put in the phrase, "and as a step towards the restoration of equilibrium on a sound and lasting basis," because there are some delegations, and I think in particular the French, who would like a pointer there to the fact that while they are carrying out a reconstruction of their economies certain countries will find it necessary, on balance of pay- ments grounds, to restrict imports of certain inessential goods; but the whole measure will in fact be a step towards a more lasting equili- brium of their balance of payments. Paragraph 2 refers to the guiding principles, which are I think almost word for word the United Kingdom draft. Paragraph 2, from (a) to (c), is really a new paragraph, in which I have attempted to square the circle, and perhaps I could explain the way in which I have tried to do it. Certain delegations, in par- ticular the United States - and in this I think they were supported by the Observer from the Fund - are very anxious that there should be at least consultation between the members imposing restrictions and the international organizations in order to see as soon as possible whether there are alternative methods open for dealing with the situation. It is 2. A. 3 E/PC/T/C. II/QR/PV/3 not proposed, I think, that the international organizations, certainly not proposed in my draft and I hope not held by any delegations, should have the power of foreing a member to adopt an alternative an alternative which it does not wish to adopt, but that it should have the opportunity of genorally discussing the matter with, the country in ,question. Now, that point I have tried to meet in paragraph 3 (a) and 3 (c). Paragraph 3 (a) says that a country which is imposing restrictions for the first time should consult before it does so; it is not committed by that consultation not to impose restrictions if they are necessary on balance of payments grounds or to achieve any alternative. It simply says that it will consult before doing so.Article 3 (c) says that a country which is already imposing import restrictions agrees to take part in such consultations if invited to do so by the international organ- izations. Now, therre is another point, Mr Chairman, which I have tried to meet to the same extent in paragraph 3 (b), which is the point raised mainly I thindek by the Australian delegation, though I think other dele- gations have a similar point in mind, namely, if a country wishes to obtain some certainty in its action and wishes to impose restrictions with the certainty that the cannot be challenged, then they may at their own initimative - it is not "must" but "may" - go to the organ- ization in advance and get approval for the restrictions which they are going to put on, and in so far as they get approval then they cannot subsequently be challenged Paragraph 3 (d) is almost exactly I think the United United Kingdom draft for the chllenging of these restrictions and the sanctioning of members, after consultation, in case the organization find that they have been applied inappropriately or in a way which causes unnecessary demage to the commercial interests of other members. B. fols. 3. B1 E/PC/T/C. II/QR/PV/3 Now, 3(e) is a very important clause from the Rapporteur's point of view is of trying to get agreement. 3(e) says two things. 3(e)(i), really,/looking back to my 3(b), which says that you cannot be challenged if you have got the previous agreement of the Organisation; and 3(e) (ii) is a pointer which says that you cannot be challenged merely because if you gave up your domestic policies for industrial development or for the reconstruction of your economy or for full employment or for nutritional policies or things of this kind which may cause a peculiarly large demand for imports of a particular kind, and that that does in fact put you in anticipated balance of payments difficulties, the Organisation cannot recommend sanctions against you on the grounds that your restrictions were not necessary because if you gave up these policies you could import as much as you would want to import. Paragraph 4 reinforces that by saying that assuming you really are in balance of payments difficulties and are imposing restrictions justifiably, you can select your imports in a way which will promote your internal policies; namely, a country which has an industrial development or reconstruction programme can allow machinery, let us say, and if that uses up its foreign resources so that it has not enough also to let in luxury consumption goods it can select luxury consumption goods as the goods which it will restrict; but again it is added, and I think rightly, that the member will do all it can to avoid unnecessary damage to the commercial interest of other members and will accept an invita- tion to consult on this. Paragraphs 5 and 6 are, I think, word for word the same as the United Kingdom draft, and I am not aware of their having been challenged. I have therefore put there in as they stand. That is broadly speaking the line of attack. I think, Mr Chairman, it is now open to find out whether it obtains any measure of agreement or not. THE CHAIRMAN: I think we are grateful to the Rapporteur and might express our thanks in advance of the criticism which we may have of his work. Does anybody wish to comment on these draft articles? MR GUNTER (USA): I think this draft article represents a very excellent job of reconciling the different views, and I think it goes a long way towards getting us together on an agreed article. I would like some discussion, though, on the first two paragraphs, particularly the second, in that I wonder if it is 4. B2 E/PC/T/C . II/QR/PV/3 really necessary or desirable to have the second paragraph, in view of the consultation provisions and so forth; in other words, I am questioning the feasibility of setting up criteria as a means of judging when a country is in balance of payments difficulties. I think there has been a great deal of discussion already, particularly in the debate in the full Committee, as to whether it is actually possible to set up principles that are not to be subject to misuse. THE CHAIRMAN: You mean paragraph 2 of Article 20? Mr GUNTER (USA): Yes. In other words, what I meant to be saying was this: that this Article beyond paragraph 2 sets up a system of consultation and review so that countries do not violate their privilege of imposing quantitative restrictions for balance of payments reasons. What I am suggesting is that, in view of that procedure, I think it is probably undesirable to attempt to set out principles determining when a country is in balance of payments difficulties. I am talking in particular about paragraph 2(a), (b) and (c). THE CHAIRMAN: Are they criteria for indicating when a country is in balance of payments difficulties? MR GUNTER (USA): Well, I think that is in effect what they are. THE RAPPORTEUR: Might I explain what was in my mind in keeping both paragraphs 2 and 3? What was in my mind was that the possible Challenge under Article 3(d) would essentially be a challenge that the member was imposing restrictions in a way which was not compatible with the guiding principles of paragraph 2. MR GUNTER (USA): That is right. THE RAPPORTEUR: The consultation in 3(a) and 3(c) in particular would be consulta- tion about whether there were alternative means of doing it; therefore in the scheme I have tried to put before the Committee both are essential. The consultation is primarily as to whether there are alternative ways of meeting the situation. The challenge under 3(d) is whether the thing is necessary assuming there is not an alternative means under the guiding principles of 2. MR GUNTER (USA): Mr Chairman, I understand quite clearly the point that Mr Meade is making, and it is precisely the effect of paragraph 2 on the complaint procedure, and what I am suggesting is that type of thing which happens with 5 B3 E/PC/T/C. II/QR/PV/3 IMF where the IMF approves or disapproves of exchange controls on a case by case basis: in other words, they build up a sort of case law over a period of time; they do not attempt to set forth criteria or principles which determine when exchange controls are necessary; and what I am suggesting is something similar to that. THE CHAIRMAN: Presumably complaints would be the exception? MR GUNTER (USA): That is right. THE CHAIRMAN: Is it not desirable, in order to avoid complaints, that a country should be aware of principles which would, if adhered to, in effect protect it against the possibility of complaints? MR GUNTER (USA): I think that would come out quite clearly in the consultation procedure. THE CHAIRMAN: But there may not even be consultation. Presumably you do not want consultation if what is done by the country is in order - if the circumstances require action and the action is of a kind which is not unnecessarily harmful of other countries' interests? ME GUNTER (USA): I think in most cases there will be consultation. As a matter of fact, I was going to propose, in connection with paragraph 3(c), that there should be a general review within a specified tine of existing restrictions or restrictions in force at the time the Organisation begins operations; in other words, the Organisation would be in effect instructed to carry out a review of every consultation between countries maintaining restrictions at the time the Organisation begins. I think that type of thing is acceptable, and I think even without that the Organisation to carry out its duties would want to consult with the members that were maintaining restrictions. I do not see how otherwise it would carry out its functions. MR SHACKLE (U.K.): May I ask what advantage the United States delegate sees in the particular method which he is now suggesting as distinct from the one which is embodied in our own draft? It seems to me that in Article 20 of the United States draft we have in paragraph 3 something which is not very widely removed from the sort of criteria which we are attempting to lay down in paragraph 2 of this draft. I should like to be a little more enlightened as to why it would be an advantage to drop these criteria - what we gain by so doing. 6 B4. E/PC/T/C . II/QR/PV/3 MR GUNTER (USA): Well, the criteria that we inserted in the draft charter are criteria that really entirely relate to balance of payments disequilibrium, taking into account the right to impose restrictions also when there is a contemplated deficit. This paragraph, as the United Kingdom delegation has drafted it, is a much broader thing than that, bringing in the concept of safe reserves and principles along that line which might very well in effect give countries quite a free hand to impose restrictions merely for the purpose of building up reserves and would result in the contraction of world trade; and we do not want the Organisation tied down in allowing that type of restrictions for that purpose. Do you understand what I am getting at? MR SHALCKLE (U.K.): It is rather a question of degree, is it not? You talk about light deficits and very light monetary reserves, and I do not see any essential difference really. MR GUNTER (USA): Under your wording you can have either a deficit or you can simply impose restrictions to build up safe reserves. Who is going to say what safe reserves are? MR PHILLIPS (Australia): On the other hand, under the United States draft you could impose restrictions even though your serves were increasing. Mr CLARKE (U.K.): I think the answer to the U.S. delegation is that the same people would say whether a member attained adequate monetary reserves in the U.S. draft charter. MR GUNTER (USA): It is true that that provision is in there, but during the course of this conference we have come increasingly to doubt the feasibility of criteria to meet the situation. MR CLARKE (U.K.): Could I ask, through you, Mr Chairman, whether what the U.S. delegation really wants in this paragraph 2 is just something to read as follows: "Members may impose or maintain import restrictions if the ITO agrees that they should do so"? That literally, surely, is what you want, is it not? MR GUNTER (USA): We are not suggesting that paragraph 3 should be substantially altered. MR CLARKE (U.K. ): In paragraph 2 you want to delete the words standing there now and substitute "Members may impose or maintain import restrictions with the permission or approval of the ITO" - is not that the position? 7 B5 E/PC/T/C. II/QR/PV/3 THE CHAIRMAN: Is it not rather that they will merely stop at reserves? "Members may impose or maintain import restrictions in so far as they are necessary to safeguard their balance of payments and monetary reserves", relying on the consultation and complaint machinery in paragraph 3 to provide a check on action which is taken for that purpose and to leave the organisation in the event of such consultation and complaint free to determine the principles upon which they would judge whether the action being taken was in fact necessary for those purposes. Is that it? MR GUNTER (USA): That is quite right, and it is perfectly possible to work in some wording relating to monetary reserves which eliminates the danger of restrictions purely for the purposes of building up reserves as long as any member considers its reserves unsafe. Do not think, though, that I am suggesting at all what the U.K. delegate thinks I am suggesting. MR CLARKE (U.K.): I am sorry if I misunderstood your position. THE CHAIRMAN: Would anybody else care to comment on this suggestion, that is, that the types of principles embodied in paragraph 2 should not be stated beyond the general purpose for which import restrictions could be imposed, leaving it to the Organisationas a result of the proceedings, consultation and complaint, to determine whether the action was in fact necessary for those purposes? MR LOKANATHAN (India): Mr Chairman, I think paragraph 2 is not really leaving the door open too much. On the other hand, it might be interpreted as really imposing certain restrictions before a country qualifies for quantitative controls. For instance, in specifics in 2(a), 2(b) and 2(c) the circumstances in which a country is entitled or would be entitled to use import restrictions, and therefore the criteria are not those which would give too much freedom. On the other hand, I think that the criteria that are specified here are those which limit rather than expand. That is the way in which I interpreted it. That is number one. The question of the tests - that there should be mere balance of payments difficulties or whether there should be the preventing of monetary positions falling below the level of safety - is I think a very important question, and I certainly think some discussion is possible on this. 8 01 E/PC/T/C. II/QR/PV/ 3 My own view is that it is better to have this liberal interpret- ation to provide for both sets of circumstances, to prevent the decline in monetary reserve and also to stop a serious decline, and, alongside that, to prevent the reserves from falling below the level of safety. Of course, that exactly is the level of safety will be a matter for consideration, but I think that should be open to consultation and argument with the Internation- al Monetary Fund. Therefore, it/seems to me that there is not as much danger as the United States delegate thinks, because the whole object of this provision is to provide for cases where a country is likely to be adversely affected, not merely by current balance of payments problems, but by the lessening of reserves, which would preclude that country from getting as much imports as it wants in the future. That is a most important point, it seems to me. There are, however, one or two questions I should like to put, because it seems to me that some matters require clarifica- tion. For instance, with regard to the last line of 2(a), "or to avoid the need for drawing unduly upon special credits to protect their reserves", what exactly is meant by "special credits"? I do not know whrether borrowing from the Monetary Fund would be regarded as a special credit? I hope not. It may be all right so far as special credits which a country has already secured are concerned. We may exclude them from the category, but what about credits which a country may require in the future? These are questions on which I should like some light to be thrown. Another thing I would like to know is, how do you expand imports by imposing import restrictions? That is with regard to 2(b) . To me it is not very clear, and I should like some clarification of that. THE CHAIRMAN: It says "if necessary reducing restrictions". 9. OM 02 E/PC/ T/C II/QR/PV/3 THE RAPPORTEUR.: 2(b) was meant to be a rule, as I understand it, not for imposing restrictions, but for taking them off. MR. LOKANATHAN (India): That is all right, but if you first road Articel 2 it says "Members may impose or maintain import resritct- ions", excpet that they undertake to observe the following principles in administering them, namely, administring those import restrictions. THE RAPPORTEUR: It is a question of what intensity to maintain them at. You have to maintain them at a lesser intensity. THE CHAIRMAN: "administering" is the wrong word. I think that is that essential point the Indian delegate advances. It is true it says "but they undertake to observe the follwoing principles in administering them", but it is assumed that the import restrict- ions remain unchanged; you merely vary your administration of the same set of restrictions. What is contemplated in 2(b) is that the restrictions themselves will be varied. THE RAPPORETUR: "to observe ete following principles i n their use of them"? THE CHAIRMA: Yes, something like that. MR. LOKANATHAN (India): Then there is another point. In the United States draft I think we had transition period, and I find that in Article 20 as now proposed there is no provision for any transition period. Does it men we are to have no transition period so far as this Artsicles is concerned? THE RAPPORTEUR: My attempt there was to deal with the transition period in Draft Articel 22, the idea being that with a transition- al period or not the general balance of payments criteria would be the same, but the really relevant/thing in the transition period, which is particularly concerned with whether currencies are convertible or not, is whether you can discriminate, and therefore I have dealt with the transitional period rather on the lines of the previous U.K. draft, but I have put all the questions of 10. OM C3 E/PC/T/C. II/QR/PV/3 discrimination together into a single Article 22, so we shall come to the transitional period when we come to Article 22. MR. LOKANATHAN (India): According to you the transitional period is relevant only so far as discriminatory provisions are concern- ed? THE RAPPORTEUR: Otherwise the same, yes. MR. CLARKE (United Kingdom): I wonder if I could refer to the point made by the delegate of India on the last sentence of 2(a)? The point there is partly a question of drawing on the I.M.F. We do not think that a country should be required to draw to the limit of its/quota before it can take any action at all in import restrictions. There is also, of course, from our United Kingdom point of view, the question of the United States and Canadian loans, which we wish to use steadily over a period and not immediately. THE RAPPORTEUR: May I ask the delegate of the United Kingdom whether I am not right in believing that the word "unduly" has great force? MR. CLARKE (United Kingdom): It is very important, yes. THE RAPPORTEUR: It is not, as I understood it, that you have not got to draw on them at all, but you have not to use them all up in a fortnight. MR. LOKANATHAN (India): There is another question in relation to that. Supposing a country which has inconvertible currency is making arrangements for liquidation of balances, and then annually a certain amount becomes due, I take it that undue drawings would also be covered under this provision? MR. CLARKE (United Kingdom): If I might answer that, I think that in the particular case to which the Indian delegate refers it would turn upon the arrangements which were made between the two countries - in this particular case, the United Kingdom and India - as to the rate at which these balances could be drawn 11. 1 E /PC/T/C.II/QR/PV/3 down. MR. LOKANATHAN (India): Yes , but the further question is, what would be the amount that could be drawn in a year? Supposing the normal balance of payments is not adequate unless you draw upon that, then we could qualify it? MR. CLARKE (United Kindgom): Certainly. THE CHAIRMAN: Has the United Kingdom anything further to add to this? MR. CLARKE (United Kingdom): I would rather hear the views of some of the other delegates. MR. BARADUC (France) (Interpretation): Mr. Chairman, I should like in the first place to associate myself with what you have said and with what the United States delegate has said. I should like to thank our Rapporteur forthe work he has done during the night, since we parted at a late hour yesterday. I know it is easy to criticize, and probably it will take us more time to criticize this text than it has taken the Rapporteur to draw it up. However, I think it is difficult for us to form a final opinion, but we should like to submit a few remarks. As a whole we prefer Para. 2 as it is submitted in the draft of the Rapporteur to the proposal made by the United States delegate. I must say that I do not see quite clearly what this proposal is, and maybe it would facilitate our task if it was submitted in writing. I do not think it can be summarised in simple form, as Mr. Clarke has tried to do it a few moments ago. As far as Para. 2 is concerned I should like to ask - and I apologise because the French delegation is always talking about reconstruction plans - I should like to ask if it is possible to add to the first sentence in para. 2, after the words "monetary reserves", a phrase worded as follows "and to complete the reconstruction and development programmes which they have undertaken"., or words to that effect? I shall perhaps have to make some other 12 . C5 E/PC/T/C. II/QR/PV/ 3 comments in the course of the discussion of Article 20. THE RAPPORTEUR: I do not know whether as Rapporteur I could make one comment on the suggestion, Mr. Chairman? THE CHAIRMAN: Yes. THE RAPPORTEUR: I have as Rapporteur attempted in three places to meet the suggestion which the French delegate raises. First, the last phrase in the first sentence of all, "and as a stop towards the restoration of equilibrium on a sound and lasting basis", the idea being there that if you have to restrict in order to carry out a plan which in the end is going to give you a more lasting solution of your balance of payments position, that is an admirable objective to have in mind; and then in 3(c) (ii) and in paragraph 4 I have tried to make every possible reference to it. I would appeal that it should not be put in here, because my experience as Rapporteur tells no that every time you put that in there are several other things, that have to go in as well , and I cannot help feeling that para. 2, which is just laying down the same general criterion which covers everything, should not be made a criterion which has special reference to one particular problem. I think that otherwise there will be much more added to paragraph 2 and it, will become unwieldy. MR. BARADUC (France) (Interpretation): Mr. Chairman, I recognise that the Rapporteur has to a large degree taken into account the numerous suggestions made by the French delegation in that respect. I submitted this proposal hoping that the Committee would agree, but if serious difficulties seem to be involved maybe I shall not insist. MR. PHILLIPS (Australia) I should like to support the retention of para. 2 of Article 20. I think it is important that members should have as clear an idea as possible, when they impose restrictions, whether they are likely to be regarded by the Organization as justifiable. I think it would also be helpful E/ PC/T/ C .I I/ QR/ PV/ 3 to the Organization to have some general principles at least laid down to guide it in considering complaints that are put forward. I think I might possibly refer there to the proposals for an International Conference on Trade and Employment which were made by the United States. There it was envisaged that restrictions to safeguard the balance of payments should be operative under conditions and procedures to be agreed upon, and these conditions and procedures should set forth criteria and requirements in the light of which balance of payments restrictions might be imposed. I think that is that the Rapport- eur has done and what the United States did themselves in the draft Charter. I think it would be a pity to drop them. On the point raised by the Indian delegate about the transitional period, which was answered to some extent by the Rapporteur, I have just wondered whether it could be worth considering putting somewhere in para. 3(c), or somewhere in connection with that, a provision on the lines of that in Article 14, Sec. 5 of the Fund Agreement; that is, an indica- tion to the Organization that it should be perhaps a little more flexible during the transition period than it is after- wards. You remember the section in the Fund Agreement, which says that in its relations with members the Fund shall recognise that the post-war transitional period will be one of change and adjustment, and in making decisions on requests which are presented by any member it shall give the member the benefit of any reasonable doubt. I am not putting that forward very strongly, but I think it is perhaps worth consideration. There are a couple of points on para. 3, Mr. Chairman. Would you like me to deal with those now? THE CHAIRMAN: I think so. MR. PHILLIPS (Australia) : Para. 3(a) of Article 20 seems to me to provide for prior consultation in all cases before restrictions are imposed. I would like to see that modified in the sense 14. E/PC/T/C .II/QR/PV/3 perhaps of consultation, if practicable, before imposing such restrictions. I think there might be circumstances in which it would be very difficult at least to enter into consultation before applying the restrictions, and in some cases also there might be the possibility that while you were consulting, before the consultations had finished, there might be sudden need to impose restrictions. Possibly that/should be provided for, too. I just suggest some modification there. MR. CLARKE (UK.) May I say a word at this stage on para. 2? I think we should make quite clear from the point of view of the United Kingdom delegation that our desire in this section is to make the imposition of Q .R. on balance of payments grounds rather difficult. We are a country which, as a result of the war, is faced with acute balance of payments difficulties over a period of time, but nevertheless the solution of our balance of payments problem depends upon an expansion of our exports, and, therefore, upon the very moderate use of Q.R. under these provisions by other countries. we therefore in principle prefer a basis of this kind, which we have set out here, which does follow the proposals of the United States draft Charter in principle, rather than some more liberal phrase. 15. D. 1 E/PC/T/C . I I/QR/PV/3 We feel that just to make a declaration of principle that members may impose import restrictions in so far is they are necessary to safeguard their balance of payments and monetary reserves does present a pretty impossible problem for countries who are in balance of payments diffi- culties and also for the I.T.O. itself. If countries had no guidinng principle on which to work against which the I. T. O. could match their decisions and judge complaints accordingly, those countries would, all over the world, be adopting, widely divergent policies in this connection and the I. T. O. would be snowed under with a series of complaints and cases to decide, in which it would be extremely difficult for it to get any guiding principles at all. Indeed, the I.T.O. itself would ultimate- ly have to come back to the principles of something, of this kind in order to guide its administrative decisions arising out of the application of quantitative restrictions by those various countries. We do not feel that the provision consultation which is set up in paragraph 3 is at all adequate to deal with this situation. Whatever the result of such consultation may be, clearly the international organizations cannot be empowered to force members to adopt one sort of remedial measure rather than another, and that particular power was pretty explicitly taken away from the Fund in the Fund Agreement, and we do not see how it could possibly be given to I.T.O. The imiplication of saying that the con- sultative process is to some extent a substitute for the criteria is indeed to say that the decisions I. T. O. gives on whether a country is behaying rightly in imposing import restrictions depend. on whether in the consultative processes it is adopting: measures which the Fund and the I.T.O. think fit; and we should regard this as rather a dangerous principle to go in. We believe, therefore, that the only practical way of dealing with this thing, both to secure that countries which are in balance of payments difficulties can manage their affairs, to protect their financial position, and also to ensure that countries whose position is improving can rapidly increase their volume of imports accordingly, is to have criteria of this kind which lay down pretty 16. D. 2 E/PC/T/C.II/QR/PV3 reasonable directions which countries could undertake to follow, and which the I. T. O. could take into account in deciding whether the restrictions are being applied properly or not. MR LOKANATHAN (India): On the question of the transitional period, I think that we have a real difficulty which has not been met by the answer of the U.K. delegate, if I may say so. The Australian delegate raised a very important point, which I also raised, but I think he made it clearer. As far as the transitional period is concerned there are two aspects to it: One is the greater freedom in respect of the use if quantitative restric- tions and control, that is to say, whether discriminatory or non- discriminatory and so on. During thes transitional period a curtain amount of discriminatory use is permitted. That is one; but the other aspect is equally important, namely, the conditions under which the use of quantitative control will be permitted. In our judgment that should be most elastic, and there should be no considerations at all relating to that; that is to say, paragraphs 2 (a), (b) and (c) should not apply to the transitional period. I think that in regard to the transitional period I.T.O. is not doing anything at all, but the I.M. F. has already entirely recognized the principle, and I cannot see how this organization, where we are trying to go a little further than was done by the I.M.F., should not do the same; for instance, if France, or India, or any other country, wants to use import restrictions during the trasitional period, I cannot see why we should be bound by paragraphs 2 (a), (b) and (c). My point is that that should be absolutely without any question. I think on that we are very firm. It is not merely India' s point of view; I think it is the point of view represented by other countries, including Brazil, which brought out a memorandum on the subject. I think we feel that as far as the transitional period is concerned it is not a question of discriminatory use of quantitative control; it is a question of conditions under which quantitative control is to be applied, and I say that there should be no conditions at all imposed. That is most important for us. I therefore think that in so 17. D. 3 E/PC/T/C.II/QR/PV/3 far as the draft does not provide for this it should be amended record- ingly. Now I want to ask another question in regard to 2 (c); I quite understand what it is, but I should like to know what is the appropriate- ness of it or the necessity for it and what exactly is the special implication of paragraph 2 (c). Now here the question of transition is important and as a general rule I accept it, but during the transitional period I do not see why I should accept that; therefore I would also like to have the meaning of it to see it in relation to the transitional period. MR CLARKE (UK): Mr Chairman, may I say something on that? THE RAPPORTEUR: This is a point taken from the United Kingdom draft, Mr Chairman. MR CLARKE (UK): First of all, on the transitional period, we agree that there are two quite distinct propositions in the transitional period: one is the use of discrimination and the other is the question of the use of these restrictions at all. We take the view that the discrimin- ation one is the only relevant one in the transitional period, and we would like the sub-Committee, Sir, to consider what the implications would be of another decision upon that. So far as we can see, indeed, on the proposal of the Indian delegate as he put it just now, it would in fact mean that members would be able to impost quantitative restrictions as they pleased during the transitional period, whether for safeguarding their balance of payments or not. MR LOKANATHAN (India): May I interpose to say that I think every delegate represented at this Conference takes the view that the limited exchange resources during the transitional period should be used for the purpose of getting such imports as we want. As I say, I think that has general approval. MR CLARKE (UK): Yes, I agree with that; but the Indian delegate did not limit the exchange resources available to a country, because that implies that it is in balance of payments difficulties. MR LOKANATHAN (India): No, quite apart from that, during the transitional period. We want the restrictions on improrts with a view to using 18. D.4 E/PC/T/C. II/QR/PV/3 whatever other resources we have. THE RAPPORTEUR. Mr Chairman, may I say this, that as Rapporteur I have put in paragraph 4 into this Article, which came out of my head and not out of anybody else's draft. I thought it entirely covered the points which the Indian delegate has raised, because he is saying I think, if I understand him aright, that during the transitional period a country should be free to use its exchange resources to import that type of commodity which it wants to import and not to squander ther on the type of commodity it does not want to import. If I understand that aright, that implies that there are not the exchange resources available to import, without restriction, both types of commodity. MR LOKANATHAN (India): No, there is an inadequacy. THE RAPPORTEUR: Yes; and if under the draft I have put it forward that there is an inadequacy of exchange resources to import all types of goods, then restrictions should be imposed, because under the terms of paragraph 2 (a) they can certainly be imposed in order to prevent the serious decline in the monetary reserves, which would obviously mean that there would be a serious decline in monetary reserves if there were not enough imports of a certain article, and you did import that article, and under paragraph 4, which is the point which is specially put in to meet the point which the delegate of India has raised, that could be done selectively by chooising the type of commodity which was required; and I would add, Mr Chairman, that this I, as Rapporteur, have suggested not only for the transitional period, but so long as there is such a problem, namely, some internal policy which means that there are notforeign exchange resources for every type of import. MR LOKANATHAN (India): Mr Chairman, I think the Rapporteur' s statement on paragraph 4 is very helpful and that we appreciate fully the intention; but I want to explain my point in regard to the transitional period. What we say is that as far as that transitional period, is concerned, the question as to whether there is a limited exchange or whether it qualifies under (a), (b), (c) and so on, should not be brought in. Every country to-day 19. D.5 E/PC/T/C. II/QR/PV/3 is suffering from transitional diffiulties; that fact has got to be recognized; and therefore provision should be made, that by December, 1949, these restrictions would be allowed, just as in the words of the United States draft Charter, Article 20, paragraph 2: "Any Member which considers such action necessary to restore equilibrium in its balance of international payments shall be entitled to impose or maintain quantitative import restrictions under paragraph 1 of this Article until December 31st, 1949. " That sort of general position should be allowed for. But I think the fundamental fact is that the countries which are now fuffering from those difficulties should be helped in that way. Everybody knows they are suffering, and we think therefore that some recognition should be given, without those countries having to satisfy various tests. That is the main point. MR. CLARKE (UK): I do not think that, as a practical question, there is really a lot in it between us and the Indian delegation on this question. If the exchange resources available to India or any other country are limited, surely when one says that they are limited, it means that if they did spend more than that it would drive their reserves below the safety level; and therefore India would automatically qualify under this paragraph 2 (a). Then there is anotherr side to it which I would like to emphasize in this connection, and that is, that we attach great importance to 2 (b), which is the obligation upon members to increase their imports and to reduce these restrictions as quickly as possible or as quickly as they can and as their financial position improves. Now, we regard that as very constructive during the transitional period, because if the countries which recover first increase their imports that helps along all countries which are more hard hit and so contributes to the final situation when the transitional period is at an end. The Indian delegate asked a question on paragraph 2 (c). Now the practical point there is that import restrictions can have an extremely damaging effect upon established trade between two or many countries, and the purpose here is to provide that countries shall take token quantities of imports, even 20. D. 6 E/PC/T/C. II/QR/PV/3 ten per cent. on a base period or something of that sort, in order to keep established trade connections alive. That is the idea of the thing, and the same idea was in the United States draft Charter, and it seemed to us useful that, however difficult a country's position war, it should continue to take a trickle of established imports. MR. BARADUC (France) (interpretation): Mr Chairman, the French Delegation shares in some degree the concern of the Indian delegate; but it seems to us that what Mr Clarke has just said, and what was very clearly set forth in the British draft, which forms the basis of the Rapporteur's draft, is quite reasonable. MR LOKANATHAN (India): As a matter of fact, just as a point of explanation, it is not so much in the Indian point of view as in the general point of view, which I feel arises out of the whole discussion we have had on the question of quantitative control of imports and so on, and it is not a thing in which India is very vitally concerned, or so vitally concerned, that she should fight for it; but I think that it is a very important point for most of the countries which are not yet represented at these conferences. MR BARADUC (France) (Interpretation): I think that this text is very flexible; and, of course, it is the duty of each country to try to achieve equilibrium as soon as possible. It seems to me that this intention is very clearly set forth in the Rapporteur s draft, and no- body would question the principle that all of us should do everything to restore equilibrium and to achieve fully the objectives of the Charter. THE CHAlRMAN: Is there any further discussion on paragraph 2? MR GUNTER (USA): Mr Chairman, I wish to refer back for a moment to the General question of whether there should be an article 2 as it is now drafted. I cannot agree with Mr Clarke, that these principles are quite as stringent as he suggests. Moreover, I do not understand his remarks as to the dangers of the international organization developing over a period of time criteria which would conflict with domestic policies. I would refer him to paragraph 3 (e), which I think is quite clear on the point, and 21. D. 7 E/PC/T/C. I I/QR/PV/3 I do not understand his concern with that. The French delegate suggested it might be helpful if we presented some wording; and I should like to try to do that tomorrow, if that is agreeable. MR CLARKE (UK): I would like to say, as a matter of explanation, that I was not referring to the interference of the I.T.O. with domestic policies. I was saying that alternative remedies within the field of international action, such as a choice between import restrictions and exchange depreciation, and the dangers, as I see it, of elevating the consul- tative process to a very high level---- MR GUNTER (USA): I think this question really relates almost entirely to the complaint procedure and not to consultation. MR CLARKE (UK): Yes, complaint procedure, but where decisions are taken by the I.T.O., whether a country is behaving unfairly or not. MR GUNTER (USA): Yes, that is right; and that is where you would develop your case law. THE RAPPORTEUR: May I make one suggestion. As regards my draft, which I did very hurriedly in the late hours of last night, I omitted one thing in paragraph 3 (d) which I meant to put in, and I think it would help to clear this issue, because, as I understand it, there would be no obligation on the part of the United States delegate to what I intended to do. I am referring to the tenth line from the and of 3 (d) which begins, "The provisions of this Article or Articles 21 and 22." What I had intended to write in there was, "The provisions of paragraph 2 of this Article or of Articles 21 or 22": in other words, the complaint is whether you need import restrictions for balance of payments reasons, and this does not depend upon whether there are criteria in paragraph 2 or not. You cannot do it, because you have chosen a means of admitting the need by import restrictions rather than, say, by exchange depreciation, or some alternative means. Would the sub-Committee agree that I should insert some such words in paragraph 2 of this Article to show what this issue is? MR GUNEER (USA): I would like to reserve that until we see what paragraph 2 is. 22. D. 8 E/P/C/T/C. II/QR/PV/3 THE RAPPORTEUR: May I appeal to the Delegate from the United States? We know that paragraph 2 deals with the permission to impose import restrictions because your balance of payments is wrong, and whether it is left to the Fund to say whether your balance of payments is wrong, or whether there are criteria, largely it is a question of whether your balance of payments position needs help; and the question is whether the complaints procedure should apply only to the question of whether you really needed to do something to safeguard your balance of payments, or whether it should apply differently. E fols. 23. E1 E/PC/T/C .II/QR/PV/3 MR GUNTER: I agree with the principle of what you are saying entirely, but I an not sure that that is the way to accomplish it. THE RAPPORTEUR: In principle, if paragraph 2 gave you the right answer about whether your balance of payments is wrong or not, then the delegate for U.S. would agree to paragraph 2 going in here? I just want to get that point clear, because I think it is an essential point. THE CHAIRMAN: The real issue here, however, is the question of whether the freedom of the Organisation to make a judgment is limited by principles stated in the charter or whether it is free to judge that the import restrictions were or were not necessary completely on principles which it will presumably evolve itself. MR GUNTER (USA): Relating altogether to balance of payments? THE CHAIRMAN: Yes. That seems to me to be quite a critical issue, since it means that it very greatly reduces the certainty which a country can have when it makes a decision itself to impose quantitative restrictions to safeguard its balance of payments, if you have provisions such as you have in 2 ----- MR GUNTER (USA): I do not agree that it makes a lot of difference, because if you do have consultation then it will be quite clear whether the International Organisation thinks you are in balance of payments difficulties. So you cannot agree that the question of certainty or uncertainty comes into it a great deal. MR PHILLIPS (Australia): There is one further point I wanted to make, but I would also like to say that we would resist very strongly any suggestion that the Organisation should have no guiding principles of any kind written into the Charter. As you know, we have pressed throughout for the criteria to be more specific, not less, and that loads up to the further point I wanted to make. We have suggested in the general discussions that there should be objective criteria on balance of payments grounds. Other delegates have opposed that principle partly on the ground that they would be too restrictive; that if a country had objective criteria laid down for it then it would be unable to get the approval of the Organisation for restrictions unless it could satisfy the criteria. A possible way of overcoming that 24. E2 E/PC/T/C. II/QR/PV/3 difference has occurred to me, and that is that objective criteria should be laid down for those countries which want them but not for all countries necessarily; and the way I would suggest for consideration to get that point would be to add a new clause to paragraph 3(c) - that is the paragraph which lays down the circumstances in which the Organisation cannot uphold a com- plaint. I suggest that a third provision be added there, that the Organisa- tion rny recommend the withdrawal or modification of restrictions - some- thing along these lines - which are imposed by a member whose monetary reserves have fallen below the agreed level or are estimated to fall below that level within the year; and then lay down that the agreed level means a level approved in consultation between n individual member and the Organisation, with the addition of the Monetary Fund probably in the consultations; so that any member who wished to have those objective criteria could enter into consultation with the Organisation, and if it was able to negotiate what it regarded as a satisfactory bargin it would have the objective criteria. Other members who did not wish to depend on objective criteria and preferred to rely on the complaint procedure which is incorporated in this draft need not go into consultation and need not fix objective criteria. THE CHAIRMAN: Is there any further discussion of paragraph 2 of this Article? MR BARADUC (France)(Interpretation): Could we have in writing the proposal which was just made by the Australian delegate for adding a subparagraph? MR PHILLIPS (Australia): I think in might perhaps be typed out from the rather carelessly drafted proposal I have here. THE CHAIRMAN: If there is no further discussion on 2 I presume we must leave it until we see the alternative which the U.S. delegate has offered to provide us with. Is there any discussion of paragraph 3? The Australian delegate I think suggested the modification of 3(a) would qualify the requirements of prior consultation by the inclusion of the words "so far as practicable". MR PHILLIPS (Australia): Something like that; and provision to make clear that if conditions became acute restrictions could be imposed even while the consultations were proceeding. THE RAPPOTEUR: If one had the first point one would notneed the second. 25. E3 E/PC/T/C. II/QR/PV/3 It is not meant to beg the question one way or the other but it is purely as a drafting point. MR CLARKE (UK): We have two or three points on this Article. We find some difficulty with it for practical rather than for philosophical reasons. The first pfractical dificulty is, of course, that as soon as you start consulting before you are going to do a thing of this kind you raise all these questions of which we have heard quite a lot in oteher committees about forestealeling movements of imports to the countray awhich has applied for con- sultation. That seems to us to be a serious practical difficulty. It might to some extent be met by some explicit provision that these consultations should be of aa aconfidentil nature, but it is rather a difficult one. The second point that we have is on the question of time generally; the question, that is to sa y, whether one would in fact, when confronted with a difficult balance of payments situation as it was developing after making up one's kind what restrictions one wanted, then have time to consult. The loss of export income can move very fast indeed in primary producing and in other countries, and even a month or two months delay in taking stop action to safeguard one's reserves may make one's position much worse than it need be. What we should suggest to meet that is, I think, something a little stronger than the provision for sort of emergency action, and that is to delete the word "consult" in the sixth line and substitue "initiate" consultation; that is to say, before the member puts on the import restrictions it must start the process of consulting. The third point we have on this is that the purpose of this paragraph as we see it is to make sure that before a member puts on import restrictions it should also adequately consider with the international organisations concerned other possiblee reemedial measures such as exchange depreciation, exchange restrictions, special grants from the Fund, special loans from the Bank, and all this kind of thing. We feel that the need for such consultation is a real one but we feel that this does not necessarily apply to any restrictions, and if a country is impesing very mild restrictions - the sort of thing which would reduce its imports by 5 per cent or something - the alternativmee remedial asures do not really enter into it; so we should propose that in the fifth line again to say "to give 26. E4 E/PC/T/C. II/QR/PV/3 active consideration to the need for substantial restrictions". This would really correspond to the provisions under the IMF Agreement which permit a country on its ownbat, without any consideration at all, to do a 10 per cent exchange depreciation, and we feel this is rather a complicated machinery to set in motion where only a small quantity of restrictions is at stake; and, of course, when the members put on such restrictions you still have all the consultative process continuing under Article 3(c). We should really in this fix it to try to prevent a member from putting on stringent import restrictions without examining the other possibilities but to enable a member to put on quite soft restrictions and then rely upon the consultative process in 3(c). MR GUNTER (USA): Mr Chairman, I think there is some merit in the idea that there may arise emergency situations where the consultation procedure might be too slow. I would suggest, however, that that is unusual rather than the usual situation; and also I would suggest that while a country is formulating what steps it is going to take to meet a possible balance of payments problem it can at the same time be carrying on and should be carrying on the con- sultations with the international organisations. I am inclined to think that the U.K. delegate over-emphasises the dangers in that situation. I would suggest also that where a country is imposing mild restrictions the consultation process is not likely to be a very long one, and again there is not likely to be a problem; and I do not think we would have much objection to inserting the word substantial", but I would like to suggest that the consultation process would not probably be long in that case. I was wondering also, though, if we should not include in this paragraph consultation where a member is considering a substantial intensification of existing restrictions which are really very nearly the same as imposing new restrictions. In other words, you may very well be in the situation where a number of countries are maintaining just a few restrictions and under this they could intensity greatly without the prior consultation, and I think it sight be desirable in most situations, since they are so similar to the imposition of new restrictions, to have the consultation operate there also. MR PHILLIPS (Australia): I think if we are going to tighten up this consultation 27. E5 E/PC/T/C.II/QR/PV/3 procedure too much it might be better to return to the draft charter, which only requires the consultation within thirty days after the imposition of new restrictions. I think there are a lot of difficulties in prior con- sultation of the kind that Mr Clarke suggested and if it is going to cause difficulties I think it right be better to wipe that out altogether. MR GUNTER (USA): I think both Mr Clarke and I suggested that there were not any great problems that exist and that there were many advantages to the prior consultation, so that, if the full possibilities of the position are explored before restrictions are imposed, once a country has taken a certain step it might be politically difficult to to retrace steps if they are convinced by the International organisation that they should do something else. THE CHAIRMAN: Would you feel a strong objection to the "initiate consultation" suggestion of Mr Clarke? That would presumably ensure that consultation would take place before hand except in cases where there were real difficulties associated with that process, but even in those cases it would be necessary to initiate consultation. MR LUTHRINGER (IMF): I would like to make a few comments on this proposal, Mr Chairman, since it represents, I think, so largely an attempt by the Rapporteur to take into account some of the views which the Fund has suggested on this matter. To begin with, it does not seem to me very clear that there has been proper appreciation of the time sequence contemplated here; that is, I think it is clearly the intent of this provision that consultations be at a very early stage. That is reflected by the language which indicates that they would be at such an early stage that the member would not be expected to disclose which particular measure it was contemplating using. Secondly, I think that this 3(a) as it stands, unless it is amended as the U.S. has suggested to include substantial intensification or increases in existing measures, is a measure which would apply so far as most members are concerned in the main in the post-transition period. As it is now drafted it refers to countries not imposing restrictions under this Article, which would certainly look forward to a situation in which some few countries may not find it necessary to impose these restrictions during the transition period. As the transition period ends for many of them, of course, they may find these restrictions unnecessary, and you would then be dealing with a situation in which a country was seeking to re-impose restrictions having once relaxed them or removed them. 28. UM F1 E/PC/ T/C .II/QR/ PV/ 3 So that again I do not see the appropriateness of regarding this largely from the way it would operate when most countries are going to be under the transition period. I think that it is certainly true that most of the balance of payments conditions which would be involved in this type of situation are ones that develop rather slowly over a period of time, rather than burst all of a sudden on to the scene, so I do feel that in a great many instances there would be a reasonable possibility for consultations at a very early date. I think also it should be kept in mind that although the analogy of these restrictions to change in exchange rate under the Fund has been made, it seems to me that the far more appropriate analogy in this instance is the imposition of restrictions on current payments. There is nothing in the Articles of Agreement which says that a country, once having, assumed the obligations of Article 8, can impose small or minimal or temporary exchange measures while it is getting specific approval from the Fund for those restrictions. I think the clear and implicit assumption in the case of the Fund is that the Fund will be likely to do what is needed in a situation of this kind. Even so far as exchange rate changes are concerned (which I regard as perhaps a more difficult question to deal with than the question of whether a country needed certain types of exchange restrictions) it is clearly necessary for the Fund to express its opinion in two days. So that another assumption which I would question is that these consultation would range over 30 days or 60 days, or anything of that sort. It seems to me that they could properly take place in a much shorter time than that. Now of course it may be, as regards the specific question which has been raised, that it is possible to have a situation in which a country has to move very rapidly indeed to protect its reserve position, through some sudden increase of imports. I think it is perhaps 29. F2 E/PC/T/ C. I I/QR/ PV/ 3 possible to provide for a drafting change which would provide for action in a serious emergency, without making changes in here which I think would very basically change the nature of the provision, contemplated here from one which it is presumed would be well in advance to one in which you would get the consultation just about the time that the member has already made up its mind and wants to impose restrictions at once. THE CHAIRMAN: Is there anything further to add to this? You do not think the suggestion Mr. Clarke made would be acceptable to you? Mr. Clarke suggested we might substitute "initiate consultation" for "consult". MR. GUNTER (United States): No. I would much prefer the type of alteration suggested by the Fund, which I had advocated earlier. I thought of making some provision for some drafting change to take care of emergencies. THE CHAIRMAN: There was also the suggestion made by the Rapporteur, that this might be extended to cover substantial increases in restrictions, since they would be of the nature of new restrictions. MR. CLARKE (U.K.): I would like to make a point on that, Mr. Chairman. I think there is some substance in the argument on that, but I am afraid from a practical administrative point of view, as far as the United Kingdom is concerned, it is a thing you cannot do. If you are operating an import programme you have to be able to make variations from day to day, and one can never get a sufficiently stable position to permit consultations on the basis of that position. I am afraid that is administrat- ively impossible from our point of view. I think the essential point is really covered in (c) - consultation whenever the I.T.O. or anybody else requests it. MR. GUNTER (United States): But the type of variation you are talking about I believe is just small variations.. I/suggested substantial 30. F3 E/ PC/ T/C .II/QR/PV/ 3 intensification. MR. CLARKE (United Kingdom): This does turn a bit on words, you know and I can see quite a clear distinction between a nation imposing restrictions from an administrative point of view and a/nation that is already working a system of restrictions and tightening those up. That is a mouch more flexible process, and in the nature of the criteria from (a) to (c) a nation is working on a knife-edge of difficulty in its balance of payments and reserve position, and you have to take this action. THE RAPPORTEUR: It seems to me the Rapporteur had better have alternative drafts for 3(a) as well as for 2, Mr. Chairman. THE CHAIRMAN: Yes. MR. CLARKE (United Kingdom): I would like to ask one other question. That is, to ask the Rapporteur to consult the observer of the Fund aws to whether this is right as between the Fund and the I.T.O. It seems to me some question arises, when you say "consult with the Organization/as to the nature of its/balance of payments difficulties." MR LUTHRINGER (I.M. F.): I am sorry; I do not think I understood your point. MR. CLARKE (United Kingdom): Well, a great many of these corrective and remedial measurees are matters purely of the Fund, and one wants to get this drafted in a way which does not compel a member country to expose all the intimacies of its financial position except to the Fund. MR. LUTHRINGER (I.M.F.): Yes, I appreciate that point, that the two organizations will be different kinds of organizations and may no have to deal with the same types of security or secrecy situation but I do not know that this language would preclude, as part of the general consultations, particular confidential conversations that might be one phase of it, which would take place solely between the Fund and the member. I mean, we had that in mind. I 31. F4 E/ PC/T/ C.II/ QR/ PV/3 I thought this language that the Rapporteur has used would cover it. If not, maybe it could be spelled out more clearly. That of course is one of the reasons for putting in there about not disclosing in advance. The emphasis on the consultation here I would urge is not an attempt to dictate to the member which course it pursues, but is simply to assure that all these aspects of the matter have been considered by a government before making a firm decision in the matter. Again, I would point out the substantiation of what I say - and I think everyone here clearly understands it: that the Fund cannot order anybody to change its exchange rate. Changes in exchange rate are made on the proposal of a member. Of course, the Fund has broad consultative powers to discuss it with a member, but I do not see why that particular point could not be handled in that way. THE CHAIRMAN: Thank you. Are there any other matters arising out of para. 3 ? THE RAPPORTEUR: May I suggest that on 3(a) I should do two drafts, one of which would say that any member which imposes substantial new restrictions or substantially intensifies the old restrictions, shall, before doing so, consult with the Organization, etc., and the other of which would say that any member which is not imposing restrictions, but is considering imposing substantial new restrictions, shall -- well, the exact words have got to be thought out; "shall as far as practicable before imposing restrictions", or "shall before imposing restrictions initiate consultation". It is the two points - whether it is new and old, and whether it is "as far as practicable" or not. THE CHAIRMAN: Except on your first alternative, to meet the United States position would you provide that if they are new restrictions then consultation is required, irrespective of whether the restriction is a small one or not. 32. F5 E/PC/T/C .II/QR/PV/3 MR. GUNTER (United States) : Do you agree with my point on that, that consultations in such a case will not be a burden? MR. CLARKE (United Kingdom): No, we are looking ahead in this. We do not know that the situation is going to be, but at the same time you might just as well have as much trouble with consulta- tion over a little one as over a big one. THE CHAIRMAN: Yes. Can we pass on to 3(b)? Any comment on 3(b)? MR. GUNTER (United States): On 3(b) there is one point I wanted to raise, which I think the Rapporteur has at least partially taken into account. When the Organization sanctions the imposition of restrictions a member is/later precluded from making a complaint within the framework of the permission that the I.T.O. has given. It had occurred to me that there was a problem of time entered into it there; that the I.T.O., in approving the imposition of restrictions, obviously cannot approve the imposition of the restrictions for an indefinite period, and it is a matter that would have to come up for review, and I was just wondering if it would not be desirable to insert some time limit for approval and also give the I.T.O. the right to review. THE RAPPORTEUR: The intention of my draft - which is not so good on this point, I know - is that the Organization could be free, (in agreement with the member, of course, because this is really an agreement between the member and the Organization) to lay down whatever conditions it thought fit, some of which would probably relate to duration and some of which would/relate to extent of restriction. That is my intention. If I could draft it to meet that I wonder if that would meet the point of the United States delegate? MR. GUNTER (United States): Yes. THE CHAIRMAN: Anything else on (b)? MR. LOKANATHAN (India): I think between the Organization and the particular member some agreement may be reached, but what we 33. F6 E/PC/ T/C .II/QR/PV/3 are concerned with is to know how the other members are affected by it, and if other members are affected, the mere fact that the Organization, without consulting those members affected, had approved it earlier, should not be a bar to consideration of the matter again. THE RAPPORTEUR: Could that point be met by putting into (b) that the Organization should consult the members most affected? MR. LOKANATHAN (India): "Most likely to be affected". MR. CLARKE (United Kingdom): I think it would be rather difficult. Supposing the United Kingdom went to the Organization and said it wanted to put on import restrictions, cutting its imports by 10 per cent., it would be very difficult to find out which the members were who were most likely to be affected by such a proposition. MR. LOKANATHAN (India): But let us look at it in the other way. Supposing country A has gone to the Organization and got this, and then the United Kingdom finds it is very badly hit, merely because the Organization has approved it should not be precluded from consideration. THE RAPPORTEUR: I think I was asleep a little while ago, Mr. Chairman. The sensible way of carrying out the draft would be as follows: under 3(b) the Organization would really only be laying down, on balance of payments grounds, in consultation with the Fund, what was the sort of extent and duration of the total over-all restriction, upon which the member could not be/challenged. That is to say, one might take the form that if your total imports were reduced by 5 per cent. below their previous levelfor each of the next two years, you cannot be challenged, but that would not say anything about the particular goods which you would restrict. That, under my 4, would be free to your choice, to the choice of the country doing it, but under 2(b) you could still be challenged by another country on the 34. E/PC/T/C.II/QR/PV/3 grounds that you were unnecessarily damaging its commercial interests. (e)(i) would say you could not be challenged on what the Organization had sanctioned under (b), but if the Organization was sensible it would not sanction the think/in terms of motorcars and potatoes and hairbrushes, and so on; it would sanction it in terms of a given degree of restriction for a given period of time. Therefore, e(i) only says "in so far as the Organization has previously approved it". The Organization would not have approved the cutting down of motorcars; it would have approved a certain restriction of total imports, and a country which was hurt under 3(b) could therefore say "You are unnecessarily damaging my interests by choosing combs rather than toothbrushes". MR. GUNTER (United States): I believe if the paragraph was drafted more on the lines of the first part of your explanation it would cover the points that we have raised. THE RAPPORTEUR: Yes. THE CHAIRMAN: Anything else on this Article? MR. LUTHRINGER (I.M.F.): I think there is a comparatively minor point, but as it occurs in several places I might raise it at this point and that is, to consider substituting "invite to participate". That is, the Organization shall invite the Fund to participate in consultations, rather than bring it into consultation. I think, particularly at this stage of the draft Charter, that would be advisable. I think if the Charter comes out with consultative provisions of this type they would probably be implemented by some agreement between the two organizations. THE RAPPORTEUR: Yes. THE CHAIRMAN: Anything else on (b)? Then can we pass to (c)? MR. CLARKE (United Kingdom): I have one minor drafting point on (c), Mr. Chairman, in the fourth line from the bottom: shall 35. E/ PC/ T/ C.I I/QR/ PV/ 3 consult the International Monetary Fund and any other appropriate international specialised agencies and shall pay due regard to the alternative methods". We should prefer to say "in particular in regard to" The point there is 36. G. 1 E/PC/T/C.II/QR/PV/3 The point there is that the words that "the Organisation shall pay due regard to" carry with them some implication that the Organisation shall take account of the result of these consultations in making decisions under 2(d). I do not think it is a point that the Rapporteur would have difficulty in including. THE CHAIRMAN: The substitute wording is what? MR CLARKE (UK): "and any other appropriate specialised agencies, in particular in regard to", and so on. THE CHAIRMAN: "in particular in regard to" in palce of "and shall pay due regard to", which you delete. MR GUNTER (USA): That is quite satisfactory. THE RAPPORTEUR: That is what I meant, Mr Chairman. THE CHAIRMAN: Any other point on sub-paragraph (c)? MR GUNTER (USA): I have one suggestion, and that is that in this paragraph we provide that the Organisation will undertake within some period of time, say a year or two years, to review exist- ing restrictions at the time the Organisation comes into effect. THE CHAIRMAN: Have you any comment on that, Mr Rapporteur? THE RAPPORTEUR: I have no comment. MR CLARKE (UK): We do not object in principle. MR PHILLIPS (Australia): I have no objection, but I was merely wonder- ing why they should lay it down that the Organisation should review existing restrictions, because it might not be convenient for the Organisation to review every case within a year or two years. I think in principle, however, that it is probably desirable. THE CHAIRMAN: What do you feel about that? MR GUNTER (USA.): I do not see that that is at all unusual in a Charter of this sort, to say that an international Organisation shall do something. For example, you have the same thing in the IMF Articles and Agreement. It does not actually command the Organisation to take any action on it; it just tells them to review it, and then quite possibly in the process of organising over a period of time they will not be able to do a whole 37. G. 2 E/PC/T/C .II/QR/PV/3 lot of that, but it is really a suggestion to get the work started earlier. THE CHAIRMAN : Is there anything also on sub-paragraph (c)? Anything, on sub-paragraph (d)? Sub-paragraph (c)? Sub-paragraph (e) is the suggested third sub-paragraph which was suggested by the Australian Delegate and has been typed now and circulated. MR PHILLIPS (Australia): The wording is a bit rough, if I may say so. THE CHAIRMAN: Yes. Has the Observer for the International Monetary Fund anything to say? MR LUTHRINGER (IMF): I am sorry, I did not get the question, Mr Chairman. THE CHAIRMAN: Would you like to comment on the suggested addition? Did you see the addition? MR CLARKE (UK): Would the Australien Delegation interpret it as mean- ing that they would only apply for quantitative restrictions if this criterion was adopted, or would they regard this as a minimum, as it were? MR PHILLIPS (Australia): A. minimum only. THE CHAIRMAN: This is only one of the conditions in which thd Organisation could recommend withdrawal or modification of the restrictions. Those conditions in regard to the application of restrictions would be as set out in the previous clause, but this would be one condition in which the Organisation could not rule against any country applying it. MR CLARKE (UK): We see no objection to this. MR GUNTER (USA.): My first reaction is this, Mr Chairman - we have no objection to it in principle - that I would like to think about it. THE RAPPORTEUR: I take it the Rapporteur in his midnight work tonight will be able to put in a clause. THE CHAIRMAN: In square brackets MR LOKANATHAN (India): I should like to ask the Australian Delegate whether this is a sort of emergency, or whether he thinks it does not 38. G 3 E/PC/T/C. II/QR/PV/3 cover all the existing provisions of the draft. That is to say, what is the special reason for any deficieney in monetary reserves, and why do you want a special provision for that, because there is, I believe, ample provision in the draft if a member country could show that emergency conditions require immediate action, and you can go to that, so that this seems to be a case in between the provisions in this draft that we are considering, and the emergency provisions there. Therefore I want to know what the special significance is of this one year limit which is to be found in this draft. MR PHILLIPS (Australia): If I have understood the Indian Delegate cor- rectly, Mr Chairman, that is an example of the bad drafting of this clause, but I interpreted that to mean that it should not fall below that level from now to within a year of the imposition of the res- trictions; that is to say, it deppends upon the forecast of how, your reserves are going to move over the next year. If your forecast is that your reserves at the end of the year will be below this agreed level, then you are entitled to impose restrictions. MR LOKANATHAN (India): Do not you think you have some remedy under the existing provisions? MR PHILLIPS (Australia : Yes, we have some. MR LOKANATHAN (India): Remedial rmeasures provided in this draft are inadequate. THE CHAIRMAN: It is not a question of remedial measures being inadequate; the remedial measures set out provide for the member Government to take certain action, but they also provide for complaint on the part of other countries. Now, the purpose of this clause is to indicate that a complaint cannot be made and sustained against a country if its monetary reserves have fallen below the level agreed previously between that country and the ITO, to be, so to speak, a danger point, or if the estimates of the probable fall within the next year indicate that it will fall below that level. It is a further reservation of the freedom of the Organisation to rule against a country which has taken this action. 39. G.4 E/PC/T/C.II/QR/PV/3 THE RAPPORTEUR: There is one point I should like to raise as Rapporteur to make sure I have get the sense right. I think that my draft re- quires a little redrafting in any case, and xxxx this will intensify it. I presume it is not the intention of the Australien Delegate that this would except a country from a review of the way in which the restrictions were being carried out in so far as unnecessary damage, to other people was concerned, but only as to the general extent of whether they can take place? MR PHILLIPS (Australia): Yes. THE RAPPORTEUR: If I redraft paragraph 3(b) on the lines suggested by the Indian Delegate and met the point which he raised earlier, it could be worked in here too, because clearly if 3(b) refers only to the gener- sub- al extent and duration, one can re-word/paragraph (c) so as to limit it to that. THE CHAIRMAN: Is there anything else on sub-paragraph (c)? MR CLARKE (UK): The second sentence of (ii) , Mr Chairman, seems to us possibly a little misleading. I do not know whether the Rapporteur would like to say something about that. THE CHAIRMAN: In what/respect it is misleading? MR CLARKE (UK): Well, it is difficult to see precisely what members are agreeing to. THE RAPPORTEUR: The wording, of the remarks made by the delegate from the United Kingdom may suggest the fact that we exchanged a word on this sentence before lunch, and if it did make that suggestion it would be a revelation of the truths may I positively take up the point? I think this is badly drafted, because let me put it in terms of my own country, of employment policy, and not in terms of reconstruction and development policy. This either means something or it means nothing. THE CHAIRMAN: I think there will be general agreement with that remark. THE RAPPORTEUR: If you are able to carry out this domestic employment policy as far as possible in such a way as to restore equilibrium to your balance of payments, you might be able to give up the employment policy, because this is a very good way probably of deflating and not importing 40. G.5 E/PC/T/C .II/QR/PV/3 so much what I want to say there is this: "Members agree, however, in carrying, out such domestic policy to pay due regard to the need to restore lasting equilibrium" - that is about the right emphasis. They are carrying out these policies, and they should do that, having due regard all the time to the need, and so on, and I think that that would cover all the cases. It is a small point, but I think the thing is rather meaningless at present. THE CHAIRMAN: Is there anything else on that subparagraph? If not, we pass to paragraph 4. Is there, anything on paragraph 4. We pass to paragraph 5. We pass to paragraph 6. MR LUTHRINGER (IMF): Mr Chairman, I have a comment on paragraph 5. It seems to me that it is put in at way that might have some ob- jection from the point of view of the Fund, that is, that the I.T.O. shall inform the Fund of the existence of this disequilibrium, which I suspect, in view of the closeness with which the Fund will be following the balance of payments situation of Members, would mean that the Fund may very well be the first to be informed about it. Therefore, I would like to suggest that that be re-written to read somewhat as follows: "If there is persistent and widespread application of quantitative import restrictions under this Article, indicating the existence of an apparent disequilibrium which is restricting international trade, the Organization shall seek consultation with the Fund": and then go on with the rest of the Article. THE CHAIRMAN: An additional change which might improve it further would be to add, after the words, "If there is persistent and wide- spread application of quantitative import restrictions under this Article," the words, "which is restricting international trade," though I do not think it makes a great deal of difference. MR CLARKE (UK): The proposed amendment by the Fund observer would leave out, "at the request of three or more members"? MR LUTHRINIGER (IMF): Yes, quite. THE RAPPORTEUR: I did not quite catch the end of the suggestion. I 41. G.7 E/PC/T/C.II/QR/PV/3 have get as far as, "If there is persistent and widespread application of quantitative import restrictions under this Article, indicating the existence of an apparent disequilibrium which is restricting international trade"---- MR LUTHRINGER (DMF): "the Organization shall seek consultation with the Fund." MR BARADUC (France):Without any request? MR LUTHRINGER (IMF): Yes, I think this clearly poses general widespread use of the restrictions apparently to the point where there is serious restriction of international trade, but I do not quite see the pertinence of having, action here on the initiative of three members rather than by the Organization itself. MR CLARKE (UK): We would agree with that. THE CHAIRMAN: Is that agreed? (Agreed). Is there anything further on paragraph 6? If not we turn to draft Article 22. MR CLARKE (UK): I should like, on draft Article 20, to say that if paragraph 2 were radically changed we would naturally have to reserve our position on the whole Article. THE CHAIRMAN: Yes, quite so. We leave that Article, then, the position being that the Rapporteur is to prepare an alternative draft for paragrah 2 and for paragraphs 3 (a). THE RAPPORTEUR: May I put it slightly differently, Mr Chairman? The Rappor- tour will await an alternative draft of paragraph 2 expressing the views of the United States delegation, and will prepare an alternative draft of 3 (a) THE CHAIRMAN: There were two drafts to be prepared of 3 (a). THE RAPPORTEUR: Yes, I meant two drafts of 3 (a). The Rapporteur is not preparing an alternative draft of 2; the Rapporteur is awaiting a United States draft of paragraph 2, and will prepare two versions of 3 (a). THE CHAIRMAN: Yes. MR BARADUC (France) (Interpretation): Will the results of the Rapporteur and of the United States delegation again be submitted to this sub-Committee? THE CHAIRMAN: Yes. We come now to draft Article 22. Would you care to comment 42. G. 7 E/PC/T/C. II/QR/PV/3 upon that, Mr Rapporteur? THE RAPPORTEUR: Mr Chairman, I think it is fairly simple as far as the work of the Rapporteur is concerned. This goes into the form of Article 22 of the U.S.draft Charter. The two points about the Fund are put into paragraph 1, the second point about the Fund, however, having the working which was in the U.K. paper, and on which the U.S.delegation, I think, expressed approval at our last meeting. Paragraphs, 2 (a), (b) and (c) are points which are taken primarily in the drafting from the U.K.draft, but I am not sure of the exact comparison with the U.S.A. draft charter, so I am afraid that sub-paragraph (d) is the sub-paragraph on which we stuck, which is the Australian draft, and which I have put in square brackets, the idea being, I believe, that it will be examined among all the escape clauses in due course. There is only one small point that I came up against in drafting which presented just a little difficulty, and that was in the United Kingdom draft, paragraph 2 (b). Where I have put in the word "Member" they had the world "country"; and I was not quite certain whether the United Kingdom meant countries which were Members or all countries, but if it was countries rather than members there would be a slight difficulty in drafting, because on the suggestion of the French delegate, I adopted the proposal that the period should end with the transitional period of the country in question under the next subparagraph (c), but as only Members would be under subparagraph (c) this would apply only to Members, unless one had another date for non-Members. This is a small draft in point to which I draw the Attention of the sub-Committee. H. fols. 43. H1 E/PC/T/C. II/QR/PV/3 MR CLARKE (UK): Perhaps I should say at once that the U.K. intention was "members". THE RAPPORTEUR: Then I think the square bracket should be removed. MR BRONZ (USA): Mr Chairman, with respect to 2(a), we have a point in the nature of tightening up the provision. We recognise that source lossening of the provision from the language of the suggested charter is required, particularly in view of the considerations raised by the Czechoslovakian delegate, but to give unlimited and permanent authority to use balances of inconvertible currencies whenever they night have been accumulated night open the way, for example, for future difficulties, and I night therefore suggest language along those lines which would not involve too much of a change. This is in sub-paragraph (a) under 2. "...balances of inconvertible currencies for buying imports provided that (1) such balances were accumulated up to December 31, 1948, or (2) such balances resulted from payments after December 31, 1948, for current transactions"; and the concluding sentence do not believe is day change from the existing one. As' I have it, it is, "arrangements which a member may make for the conduct of trade which may result in the accumulation of inconvertible currencies shall be subject to discontinuance or modification in the event of the Organisation finding that they are contrary to the purposes of the Organisa- tion." I believe that is the same language as the Rapporteur has in there now, but the principal point would be that inconvertible currencies accumulated after the end of 1948 might only be available if they were accumulated for current transactions but not if they involved some sort of capital movement. THE CHAIRMAN: Is there any comment on that? MR LOKANATHAN (India): I want to bring up one point for clarification. It is put in this way, "restrictions to enable members to use balances of inconvertible currencies for buying imports". So far as the accumulated balances of India are concerned, we foresce twopossibilities. One is that a certain portion will become convertible from time to time; and as regards the certain portion which is not quite convertible, the point is whether the privilege and the right here given under 3(a) will begin to operate in such circumstances. What I mean is that supposing we enter into an arrangement 44. H2 E/PC/T/C.II/QR/PV/3 With a country with whom we have inconvertible balances and we have a period of funding and each year a certain amount is being released, as far as other portions are concerned which are not released and which are not convertible I believe we should have the right to use the right given under 2(d). I want to know whether the draft as it is no would cover that case. THE RAPPORTEUR: as drafted I think they would be. You submit 2(a) would apply if the currency was available for certain uses but was not convertible? It would not apply if the currency was not available for any use or if available for use was available for all uses; then it would be convertible. THE CHAIRMAN: Is there anything else on that? MR LUTHRINGER (IMF): I would like to suggest for the consideration of the Committee as to whether it might not be appropriate to insert after seeking consultation with the IMF" in this paragraph "in the event of the Organisation, after seeking consultation with the Monetary Fund, finding that they are contrary to the purposes of the Organisation".: I do not that with suggest that that is the correct language, and I do not suggest/any idea of specific approval by the Fund of these particular restrictions, but I would merely point out that I think a good many of these things are going to have their counterpart in the exchange control field, and I have no doubt that the Fund will be confronted with many situations in which members will request the right to discriminatory controls or rates or something of the sort to implement a bilateral agreement or arrangement with a country or countries that have inconvertible currencies; and I think since in this field there will be a great deal of overlap because of members using one device or the other, there might be some room for consultation. MR CLARKE (U.K.): I think we would agree with the principal point made by the Fund Observer on this, but we would like to see the American draft before us in writing before deciding which we like of the two. I think there are advantages in having a pretty complete provision for review and consultation with the Fund on the country's trading arrangements for inconvertible currencies. There was a second point made in the U.S. delegate's statement which slightly amended our last sentence here, and that may weaken the 45. H3 E/PC/T/C.II/QR/PV/3 position because it is not always the case that where you are trading with a country with an inconvertible currency transactions are carried on in that currency. They may in our own case be carried out in sterling both ways. MR BRONZ (USA): The thought I had in mind was to strengthen it in another direction, because it as conceivable you might have a trade arrangement with a country having a convertible currency which involved the authorization of inconvertible balances of some other countries' currencies; but I recognise the problem you raise and we may need some more drafting. MR CLARKE (U.K.): This is a very technical question. THE RAPPORTEUR: What I should like to suggest is this. The Rapporteur has a frightful job. If the delegates of the U.K. and U.S.A. could agree a text, it would be of the greatest help to the Rapporteur. MR BRONZ (USA): In consultation with the Fund! THE CHAIRMAN: That is to be taken as read. Is there anything on paragraph 1? anything on 2(a)? 2(b)? MR CLARKE (U.K.): On 2(b), this was a point which we put in our draft originally. We originally put it in with a cut-off date of December 31, 1949, and we were inclined to the opinion that it should still be a cut-off date of 1949. We think the condition of countries after December 31, 1949 - war shattered countries - should be looked at after any inconvertible currency arrangements. MR BARADUC (France)(Interpretation): Why that date? MR CLARKE (U.K.): The point is that if you take it as it is drafted here it becomes practically the same as the case (a) of inconvertible currencies., MR BARADUC (France) (Interpretation): Do you wish to delete subparagraph (b) completely? MR CLARKE (U.K.): No, we wish to substitute for the press at provisions provisions that this sub-paragraph shall cease to operate at December 31, 1949. MR BARADUC (France) (Interpretation): And you think that after this date of 31 December 1949 the stipulations of sub-paragraph (a) will be applied? MR CLARKE (U.K.): I think they would be applicable, yes. This is a rather broader idea. It permits countries which are themselves in difficulties in their balance of payments to buy from countries whose economies have been disrupted by war whether or not those countries have convertible currencies. 46. H4 E/PC/T/C. II/QR/PV/3 The purpose is really to give further assistance to countries which have taken their reconstruction far enough to have convertible currencies and give them a little further assistance. Other countries can discriminate in their favour in certain cases if they are countries which are reconstruct- ing after the war. MR PHILLIPS (Australia): Does that assume that the transitional period for these countries will be the same under the Organisation as under the Fund? I am asking for clarification. MR CLARKE (U.K.): It depends how the transitional period is set out. MR PHILLIPS (Australia): You were assuming that countries in that position would have inconvertible currencies for the remainder of that transitional period? MR CLARKE (U.K.): Not all countries whose economies had been disrupted by war. MR PHILLIPS (Australia): I am not sure l have got that. MR CLARKE (U.K.): Perhaps we could take the transitional period one next and then come back to the other. THE CHAIRMAN: Let us look at paragraph 2(c). This sets out two alternatives. One is that members shall withdraw discriminatory restrictions maintained or imposed as soon as possible and in any event not later than one of these two dates, unless this period is extended in the case of any particular Member of the Organization after consultation with the Fund; or not later than six months after they have accepted the obligations of Article 8 of the International Monetary Fund. MR CLARKE (U.K.): We put in our proposal ,on the basis of 31 December 1949 and we stick to that. MR BARADUC (France) (Interpretation): Mr Chairman, I do not see how it is possible to compel a member of the Monetary Fund not to apply any discriminatory measure as long as the Monetary Fund has not stated that it is in a position to comply with all the obligations of Article 8. MR LOKANATHAN (India): Mr Chairman, on this question I think it is better to give greater freedom, and I should not like personally the date 31st December 1949. The request of the Monetary Fund clearly provided for a transition period where two dates are given. One is not later than three 47. H5 E /PC/T/C. II /QR/PV/3 years after the date on which the Fund begins operations; and then there is also the other thing: five years after the date on which the Fund begins operations and in each year thereafter any member still retaining any restrictions inconsistent with Article 8, etc., shall consult the Fund as to their future retention. It seems to me that the idea of the Fund is that the period of transition is likely to be prolonged, and I believe, judging from current conditions in various countries, from 31 December 1949 would be a rigid date, whereas if you said six months after the countries have accepted the obligations, I think that would be a much more useful date. That would be much more useful from the point of view of the countries which are affected by this, and therefore I would prefer the second alternative given, "six months after the countries have accepted the obligations of Article 8 of the Monetary Fund"; So that each member country will have the opportunity in consultation with the Fund to know when the transition period will come to an end. I think that is very important for devastated countries and for various other countries. May I at this stage also add that so far as (b) is concerned I do not mind 31st December 1949, because that refers to quite a different set of circumstances. That is where a country is giving help to the devastated countries and they want certain relaxations there. That case is entirely different from this, and therefore, while I am in favour of a specific date in regard to 2(b), I certainly think the second alternative is preferable in the case of 2(c). MR GUNTER (USA): We are inclined to favour the U.K. alternative - that is the first one. It is perfectly true that that draft would set a date beyond which discriminatory restrictions could not be used, and in that sense it is a limitation on the transitional period in the Fund, but I would like to point out that I believe the point of the French delegate and the point of the Indian delegate are not by this draft by virtue of the fact that it provides for extensions in case of need, and secondly it does not limit the use of quantitative restrictions of a non-discriminatory sort. THE CHAIRMAN: Well, it would appear that it is not very likely that we will resolve this difficulty at this stage. 48. H6 E/PC/T/C .II/QR/PV/3 MR BARADUC (France) (Interpretation): Could we ask for the opinion of the representative of the monetary Fund in this matter? MR LUTHRINGER (IMF): I think I have already indicated the general view of the Fund in this matter in the general statement which I made before Committee II. As I understand it, it is a question here of whether countries shall have any limitation on their right to use these discriminatory quantitative restrictions so long as they are under Article 14 of the Monetary Fund. This draft, of course, I think makes it specific that the right could be extended by the International Trade Organisation, so that frankly, as I see it, it is pretty much a question here of what members think they are willing to undertake in this regard, that is, whether they think that the situation as to the transition period has changed since Article 14 was adopted at Bretton Woods; but I do not see any particular difficulties in the way of co-ordination between the Fund and ITO policy. I think it reduces pretty much to that basis. THE RAPPORTEUR: As Rapporteur, is it desirable that I should put in alternative dates for the cut off in (b) and preserve the alternative dates in (c)? THE CHAIRMAN: I think it is quite clear that the alternative dates in (c) must be preserved. 49. E/PC/T/ C. II/QR/PV/ 3 It was not entirely clear that the same date was necessary in (b) as in (c) . The Indian delegate indicated that he believed that the second alternative as the desirable one for (c) but that he thought a fixed date would be acceptable for (b), but as I understand it you have to preserve the alternatives in both (b) and (c). MR. LOKANATHAN (India): Also in this connection I would draw the attention of the United States delicate to the United States proposals. There it is clearly stated that we should provide for the full application of non-discrimination in the use of such restrictions after the transitional period, and so far as the transitional period itself is concerned, it says "should provide for the determination of the transitional period for the purpose of sub-paragraph (b) by procedure analagous to that contained in Article 14 of the International Monetary Fund. Therefore, I think that structure is much better than the new draft. MR. BARADUC (France) (Interpretation): Mr.Chairman, I really wish to insist upon the necessity of not including any date. We do not even know at which date the Monetary Fund will take up its activities, and therefore why should be determine or fix a date here. If, even at Bretton Wods, after very long discussion, very flexible formulae were adopted, I do not think we should go beyond the Bretton Woods agreement. If we were going to do that, many governments would have to reconsider their acceptance of the Charter. MR. CLARKE (United Kingdom): Just one thing on this, Mr. Chairman. I think. that we should not regard our proposal here as being counter to the provisions of the I.M. F. Agreement. It seems to us that the provision that we have here for prolongation after December 31st 1949 by the Organization after consultation with the Fund automatically looks after this position, because if a 50. E/PC/TC.II/ QR/ PV/ 3 member is still in the transitional period under I.M.F. it would be very difficult for the Fund to advise the Organization in this respect that the member should abandon discrimination. MR. LUTHRINGER (I.M.F.): I think that is true, Mr. Chairman. That is, I think this is a some hat different proposition from the one contained in the original American proposals, which, as I understand it, at least, would have provided for an exception only in some general clause later on in the Charter, so it does not seem to me that this particular proposal could have effected or would be likely to effect as substantial a change in Article 14 as the original American proposal would have done. That is, under this situation, as I understand it, you would have this consultation. If the consultation was of such a nature that the I.T.O. consulted with the Fund, and the Fund said "Well, we have not found that under our interpretation of Article 14 there is any reason to make representations to a country that is ready to come out from under 14 and assume 8", I suppose theoretically the I.T.O. could say "That is what you think, but we think otherwise" , but I wonder if that is very likely? THE CHAIRMAN: It seems to me as if we shall have to leave the two alternatives. THE RAPPORTEUR: Might I make one remark? I have omitted by mistake another sub-paragraph which is in the American draft Charter, namely, a sub paragraph of Article 22 about prohibitions or restrictions imposed under sub-paragraph 2(a)(i) or 2(d) of Article 19. There is no point of substance there, I think. It was pure inadvertence, and I do not think there is any drafting problem. I shall put it in the next draft. THE CHAIRMAN: Is there any comment or discussion on d in square bracket? MR. GUNTER (United States): Mr. Chairman, did you not suggest we were leaving this for discussion at a later point? Whatever you say I do not care, but that was what I thought. THE CHAIRMAN: I think we have some obligation to leave it until then, since in discussion elsewhere some delegations have expressed the view that it can only be judged against the adequacy of other escape clauses, so perhaps we can defer that. Is it your wish that we proceed now to the consideration of Article 3? Following discussion as to the date of the next meeting, the Committee rose at 5.55 p.m. 52. E/PC/T/C.II/Q.R./PV/3

GATT Library

qb365wv5935

Verbatim Report of the Third Plenary Meeting held at Church House, Westminster, S.W.l. Thursday, 17th 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/PV/3 and E/PC/T/PV/1-4

https://exhibits.stanford.edu/gatt/catalog/qb365wv5935

qb365wv5935_90210003.xml

GATT_157

E/PC/T/PV/3 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON THE TRADE AND EMPLOYMENT, Verbatim Report of the THIRD PLENARY MEETING held at Church House, Westminster, S.W.I. Thursday, 17th October, 1946. Chairman: M.M. SUETANS (Belgium). (From the shorthand notes of W.B. GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, London, S.W.I) 1 E/PC/T/PV/3 THE CHAIRMAN: Gentlemen, the meeting is open. I call upon the Delegate of China. MR WUNSZ KING (China): 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 -important 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 made during the war. As we look beyond this conference room, we see everywhere serious economic dislocation and maladjustment due to the war - 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 seing satisfactory; normal demands shifted; trends if 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 bottleneaks 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 apd 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 2. E/PC/T/PV/3. was swept by waves of depression, every country, either voluntarily or involuntarily, had to adept 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 ancharage on which the system of international trade had been been since the early days of the last century. Upon the wreckage of a free and multilateral exchange of goods , everyone sought to take refuge in the formation of execusive trading areas, or autarchy, which sowed the seeds of economic rivalry, and, in a large measure, precipitated the second world war . We now set ourtraelves to ensure tl'.at this post-war world should enjoy the fruits of our victory and should not suffer again the malaise of poverty amog plenty. We seek to expand and not to restrict the tremendous power we possess to produce goods, the consumption of which by all peopIes is the material foundation of prosperity., I am happy to say that our latours augur well, because, firstly, whereas the belated and spasmodic attempts made after 1910 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 road outline of ways and means to a achieves; 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 thee is integral plan for setting up all the international machinery necessary for dealing with the problems of post -war world economy. 3. E/PC/T/PV/3. 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 cortagion of world depression. It is equally obvious that no international action can be effective unless it is implemented by the individual cuntries 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 governmentt attaches great importance to the proposals which are now before us, the more so as special atten- tion will, as we understand it, be given to the conditions prevailing in those countries whose industry is still in its early stages of development, as well as tc the abnornal 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 in- ternal economy. Within the general framework of limitations on the grant of subsidies, allowance should be made for special difficulties arising out disparity between internal and external price structure and for the time necessary to make the necessary adjustments. It is also important that the principle 4. E/PC/T/PV/3. of such limitations should equally apply to manufactured goods. In the consideration of special problems inherent in the market- ing 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 these relatively undeveloped countries, and that, at the same time, we also feel impressed by the statement made by a number of delegates that some reasonalble protection is a legitimate instrument of development. Although cur 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 acccmplish by our deli erations in the field of commercial policies, which, in turn, will be shaped in the light of a general economic policy in regard to co-orlination 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 trace, as well as other economic activities, but we have also the support of a growing body of opinion that the primary objecctive 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 Conference a success. ''(Applause) 5. E/PC/T/PV/3 THE CHAIRMAN: I thank the Chinese Delegate for his statement, and I call upon the Delegate of Cuba. H.E.MR. ALBERTO INOCENTE ALVAREZ (speaking in Spanish - translated):- 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 organisation government by regulations allowing for varying positions and economic requirements of the various countries of the world. Cuba can state it this meeting with satisfaction that her previous history shows clequently 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 amonst the lowest in the world; 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 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 her 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 he considers it is necessary to arriv at the full employment of her agricultural resources and the substional and progressive development of her internal supplies. She further considers that the regime of her commercial relations with he chief and nearest neighbour, although not necessarily unchangeable, has for nearly half a century represented the basis on which her present economic 6. E/PC/T/PV/3 structure has been built. For this reason she considers it essential that any change in or abandenment of stuc relationships should be accompanied by reasonable precautions, so that any system which takes its place shouId be in a position to render possible the attainment of the aims contemplated in the proposed Charter throgh effective measures taken to this end. In order that he new commercial regime that we are now trying to set up may be in a position to maet 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 of setting on foot their internal industrial development and of obtaining for the people a higher standard of life and employment. Without pretending to enter at this moment into detailed consideration of the modifications necessary for reading the goals already referred to, we should like to set out briefly the general principles which should be intro- duced 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 achievement of complete employment 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 adequate 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 develop- ment or are single commodity producers, it is, essential, in order to arrive at complete employment, that different varieties of agriculturaal and industrial employment be envisaged, for which and adequate methods of protection must be introduced for the creation and development of agricultural and industrial under- takings. . These trwo first points are consistent with the position which has repeatedly been taken up by Cub a in international conferences when she was represented, such as, amongst others, those of Not Springs, Chapultepee and Caracas. 7. E/PC/T/PV/3. 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 exerci; by any one of them of i ts right to bring it to an end; and (b) That in order to attain and enjoy tariffs analogous to the preferential ones Me,ber. States must show that they have a monotary system and real wage scales together with working conditions and social protection for the workmen 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 intergovernmental 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 restricted by quantitative measures, by high protective tariffs or other trade barriers. (b) A reasonable and just price level must be in operation, proportionate to those countries which are in a position te. maintain efficient production by imports allowing the upkeep of the purchasing power of its people, as importers and consumers, to a level sufficient to maintains a worthy standard of living. This rill be achieved primarily on a basis of warking conditions giving the working people freedom from economic, want and provide agriculture wit adequate returns to meet its requirements and maintain an increasing rhythm of production.: This price level should, however, render it possible that consumer countries obtain the products that they require to import at a reasonable cost and in regular and stable conditions. By 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 8. E/PC/T/PV/3 life through good technical, agricultural and industrial processes. (c) That the Councils which are to be set up for the adminstration of each international convention should come into being indepenadently of the International Commercial Organisation after the said Organisation has recommended the ratification of the convention under discussion, without prejudice to similar Councils maintaining close relationships both advisory and consultative with the Organisation. Similarly the voting system adopted by the Councils should lead to a just balance between interests of the producing and consuming countries. 9. E/PC/T/PV/3 I thank the Delegate of Cuba, and call upon the Norwegian Delegate. H.E. M. ERIK COLBAY (Norway): Mr President, hardly any country is more inter- ested in the freedom of international 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. Althogh outside 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, Norway will co-operate whole-heartedly in the task before our Committee. We understands that - as it was I belive pointed out in the introductory spech of the President of the Board of Trade - we cannot all of us obtain everything 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 to-day enter into any details, but there arc certain guiding principles which we find it right to submit at once. Traditionally Norway adheres to the cost Favoured Nations clause and we consider that it should be one of the main duties of our Committee to work out such proposals as would establish the cost Favoured Nations clause as a guiding principle in all international trade. The lost Favoured Nations clause should be applied unconditionally and not only in tariff questions, but to the whole network of rules governing international trade. Between the two graet wars the quota system was given very wide applica- tion. We consider that it would be in the interest of all of us to get away from this system. We realise that both with regard to the application of the cost Favoured Nations clause and with regard to the quota system certain particular situations may require special consideration. But such exceptional measureses as might be decided upon should not be allowed to go further than very strictly necessary. 10. E/PC/T/PV/3 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 load to the re- establishment of multilateral trade which we consider an essential condition for development of the economic life of all countries. We believe, howerver, that these principles for international trade cannot be maintained unless the countries of the world, and perhaps particularly the highly industrialised countries, do in fact pursue an economic policy which makes it possible to achieve and maintain high and stable levols 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, Mr President, the Norwegian Delegation promises to do its best to further the purposes of our Committee. We new enter upon the detailed discussions of the manifold aspects of the problems before us, and we would like to express our appreciation of the preparatory work done by the United States in the White Paper submitted to us, containing a draft of a full Charter of an Intornational Trade and Employment Organisation. We feel that the paper will be of great help to the Committee in its coming work. There are points in it to which we agree; others of which we need further explanation; and perhaps some on which we entertain doubts. But. the paper as a whole will certainly prove a valuable contribution to our documentation. THE CHAIRMAN I than Ambassador Colban for his statement, and call upon the Delegate of France. 11. E/PC/T/PV/3. MR ALPHAND (France): The French Delegation wishes in the first place to welcome the initiative taken by the United States Government, whose proposals will be used as a basis for the work of this Preparatory Committee. The suggestions which are being Proposed to us appear as the culmination of a lng series of efforts which began long before the war in America itself and for which I think the first man responsible was Mr Cordell Hull. We finad the forerunners of the White Back as well in the commercial agreements which the United States have concluded in the last fifteen years with nest nations of the world, as in the economic provisions of the Atlantic Charter, and its famous Article VII in the Lend-Lense Agreement, for which the great genius of President Roosevelt was responsible he who, during the climax of this war, already thought of such solution to the most difficult problems of these times. Thus, in its inspiration if not in its implementation the policy followed in this sphere by the American Government is ever a great one. if it is examined, one can say that it pursued its vagaries in the most diabolical manner. As far as we are concerned we do not think that is the case. We think that the principal but tresses on which this monument will be erected are an increase in the standard of living and full employment, in the lowering of customs barriers, multi- lateral exchanges, and the principles of non-discrimination which are necessary both for security and world presperity. It is true - and the honourable Delegate for the United States Mr Wilcox observed this morning himself- that the United States, while their preaching was excellent, have not ever set up a good example. It is true that the maintenance of a tariff, often of a prohibitive nature, at the American frentiers has contributed for a great part., after the last war, to the contagion of prices which has affected all nations, including the United States 12. E/PC/T/PV/3. herself. The proposals with which we are faced today; the splendid educative effort undertaken by the American Administration with the American people, the feelings of Congress, enable us to hope that this time the United States realise that their immediate economic interests, and their political interests in a more remote manner, demand their active participation through concrete acts in the development of international, commerce. But I am not one of those who imagines that only selfish motives are at the root of the suggestions which are to be presented to us; and. that it is only to guarantee a setter position her tremendous capacity for exansion that America proposes to the world a system which may put in a position of inferiority a certain number of countries in any international competition. Far to the entrary, I admire the noble views of the authors of this document, and I think that Mr Willcon spoke with utter sincerity when he sail that his country is trying to work but a charter and. set up an organisation which will apply with equal l justice to all nations of the world. If that is really the ease, may I briefly say what, in my spinion, are the necessary conditions for the discharge of this task which is confronting us. In an official document, the Dealaration of the 8th May 1946, signed by Mr Byrnes and Mr Leon Blum, the Govrnment of the. French Republic and the Government of the United States recorded the fact that they were in complete agreement as to the general principles which they wish to follow, with a view to suppressing the hindrances to international trade, and with a view to the expansion of exchanges which are indispensable to the prosperity of the world and to the setting up of lasting peace. These principles are exactly these which are stated in the proposals submitted to our committee . The French Constituent 13. E/PC/T/PV/3. Assembly has signed the agreement, just concluded and this attitude corresponds both to the political ideal and to the interests of my country. Just as in the sphere of internal policy no-one (would think of disputing the fact that our ideal is that of democracy, so in foreign policy we hase our diplomay on the principles of collective security and international organisation, the principles with which we are attached by all our French traditions as closely and as actively as possible. Moreover, the French Government and the French people do know that France, if she wants to lïve and expand, her prosperity and develop her needs, must be in a position to rel on international commerce. Economic isolationism is a luxury which we cannot afford, and when we declare our support for the development of exchanges between peoples, we do not express a personal choice; we merely record a self- evident truth, a fact which we must face just as all the Governments of France will have to face them, whatever their political shade or their leanings may be. France depends on foreign sources for over one-third of her coal, for the whole of the oil she needs, for 90 per cent of non-ferrous metals, for 96 per cent of cotton, for 83 per cent wool, for 67 per cent of fats, and for 54 per cent of wood pulp consumed under normal conditions by her industries; but she does not possess the coal that would enable her -- as was the case with Hitler and past Germany -- to replace the raw-materials by synthetic products. She must therefore buy abroad, and for that she must sell abroad. This necessity for exports is more imperative to us than it was before the war, given the fact that other seuroes of foreign income are in process of disappearing owing to progressive liquidation of French capital 14. E/PC/T/PV/3. invested abroad. As the goods which France needs are in most cases produced by countries to which she does not export in a sufficient quantity, France must normally prefer a system of exchanges and multilateral payments to the method of hilateral compensation. In order to sell the products, she tries to market them everywhehr, and consequently endevours to alleviate the present hindrabces to commerce . Lastly, we do know that economic discrimination between nations would lead to the formation of hostile blees and to the setting up of different price level which would be different according to blecs, which would be contrary both to our political ideal and to our economic principles. Having made this official statement, I now want to call the attention of the Committee to one point, which has of course been widely expressed in the work of American experts, and which is as follows: An international organisation of economic relations implies, amongst all the nations which participate, a relative equivalence of their several productive conditions. As Mr Lean Blum said last March to Mr Clayton, this equivalent is the basic condition of ecquality. Now, this equivalent does not exist today between nations of the world -- far from it; and may I here mention the case of my country, which is taken to that of many nations in Europe. France did not take part with all her forces, with all her strength, in the war except at the beginning and at the end but she suffered from the war more than if she had gone throughed from beginning to end. I am not thinking only if looting and systematic devastation carried on by the enemy. I am not thinking only of material destruction which our country has known at the hand of this 15. E/PC/T/PV/3. enemy, and, as we, have understood, even at the hand of our friends. I am also thinking of the general weal and tear on our producing machinery which for five years has never ben maintains or rennewed, and which has now fallen gradually into a wretched state of depletion. May I here well -for a moment on this point. There is a kind of counterpart for war, that is the discipline of work which it imposes on a whole people and the concentration of effort towards scientific and technical progress, which has today become one if the essential conditions of victory. In the United States one must say, in Canada, and in many other countries of the Western Hemisphere, the war has consideraly increased' productive capacity, but the weight .of taxation in spite of the huge debts incurred, in spite of the vast generosity which was expressed in the shape cf help to other Allies -- in spite of all this, these countries have increased their national wealth and their national income. In France, on the contrary, the war has resulted in impeverishment and loss of substance. Everything was depreciated -- wealth, income. productive capacity and (and. this is an essential point often lost sight of) these blews have fallen upon a nation which had not yet recovered from her victory in the first world war -- a victory in which she had given an effort probably far beyond her strength, and which had resulted to her in a loss of a great part of her foreign assets, in devaluation of her currency, that is to say the consequence of the reconstruction of devastated areas, for which she had to pay, the maintenance and increase of her military expenses as the spirit of revenge was revived in NaZi Germany. Consequently, it is a nation twice ruined in the course of these 30 years of war which had to meet not only the expenses of a material reconstruction, but aIso those which she could not avoid of her re-equipment and the modernisation of her productive machinery. France realises fully the task that lies before her. She knows that she; needs several years, hard difficult years, to carry out an under- taking of this scope. She is now preparing her plan. for reconstruct- ion and modernisation which within a few weeks will be submitted to her Government. Thus, some may have said that this old country (which she is) suffered to a large extent the characteristics of a new country. Speaking on her behalf and on the behalf of the overseas territories which are associated. with her, I must say that we feel in the greatest sympathy with the thesis which is presented here by othor nations whose young industry wishes to be re-equipped before competing successfully with the great nations on the world market. Who, therefore, would question that, with a view to realising the relative equivalency in the condition of production which 1 referred to a little while ago, we must envisage exceptional measures and that an intermendiary period is necessary to ensure the progressive recovery and the balance of payments and the imple- mentation of measures which will enable French agriculture and industry to compete fearlessly with the outside world. This intermediary period is envisaged, gentlemen, in the proposals which are submitted to us. We may, however, have to present a few remarks and amendments on the wording which has been adopted by the American experts. Throughout this initial period, it is not possible for the French Government to accept the abolish- ment of a quantitative control of imports -- a control which is indispens- ible to ensure the equilibrium of the balance of payments, despite the loans granted. May +I here recall the Franco-American Declaration of the 26th May, 1946, to which have referred already, which sums up perfectly the needs of France as they have been recognised by our American friends: "The French Government",. it says, declares that they must exert a control of imports in the form of an import programme, but this control will be 17. E/PC/T/PV/3 E/PC/T/PV/3. exerted only as long as is necessary to safeguard the equilibrium of the balance of payments and ensure the methodical realisation of the plan of reconstruction and modernisation. The granting by the French Government of import licences within the limits of this programme will be carried out without discrimination between thu foreign sources of supplies as soon as France will possss or will bo in a position to acquire an amount of free currency that wll no longer compel her to buy only within the frame of bilateral agreements on the commercial and financial plane". This text seems perfectly clear to me. We only ask that tho future wording of the Charter take into account the necessary measures which were imposed upon my country owing to the consequences of two wars and also owing to her geographical position, -- a war in which my country has suffered no doubt more than any other here represented. We believe that during this period the most favoured nations must both facilitate the exports of countries which are in a situation like ourselves, and also accept a limit to their imports. We hope that this will be one of the capital advantages of the future Charter. I should like, gentlemen, in closing to say how much France wishes to see that the organisation which we are planning here extends to the rest of the world. We cannot conceive of any future security, neitlher can we conceive of a prosperity for each of us without the participation of all the great economic powers; it seems to us that such a goal can be reached. There does not exist, in our opinion, any necessary connection between the form of the productive regime and the internal exchanges in one nation, on the one hand, and on her foreign economic policy, on the other. The United States may very well continue to follow the principle, the more orthodox principle, of private initiative. France and other European countries may turn towards planned economy. The, USSR may uphold and maintain the Marxist ideals of collectivism without our having to refuse to be in favour of a policy of international organisation based on liberty and equality. If France considers that she cannot without serious danger be isolated from the rest of the world, she also believes that the peace and welfare of the peoples of the world roquire that the world 18. E/PC/T/PV/3 should be one -- situated as she is between East and West -- hostile to blocs; she cannot but agree to any attempt which, on the universal plane, tends to create a real solidarity between nations. THE CHAIRMAN: I thank M. Alphand for his statement, and I call upon the chief Delegate for India. MR R.K. NEHRU, I.C.S. (India): Yesterday, Sir, 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 more general aspects of this question (and I presume at this stage we can only meke a very general statement), I have very little further to say. Since we are meeting in a Plenary Session, however -- and it is only right that the larger public whose interests we claim to represent should know how our minds are work- ing -- I would like, with your permission, Sir, to respect 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 them, 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 attention on major problems of trade and tariff policy. Our own approach to this problem is very different, and, as you will sec from the document which we have placed before the Committee, on many points the disagreement between our experts 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 concern- ed, the importance of their work in draming attention to some of these problems is fully recognised. We have listened with great interest to the observations made by the leaders of the various Delegations. The leader of the American Delegation 19. E/PC/T/PV/3 referred to the need for cultivating a spirit of co-operation in matters affectingg trade and employment. On this point, Sir, 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 very sphere of activity. We are firmly convinced that the true interest of our country, as indeed of very other country, lies in thu furtherance 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 United Nations Organisation in particular, the attitude of our Govrnment 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. There is, however, the important point to which I referred yesterday, namely, that this Committee should not 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. Tho kind of co-operation to which we in India attach importance is a relationship based on respect for the principle of equal rights and self--determination of peoples. I might add, Sir, that this principle is clearly laid down in the United Nations Charter and, so long as India is a member of the United Nations Organisation, it will be the endeavour of our representatives to see that this principle does not remain a pious aspiration, but is actually applied in practice. In the economic sphere -- or, more specifically, the sphere of trade and employment with which we are concerned, this would mean that no scheme of co-operation which fails to meet the essential requirements of the less developed nations whose interests, I might add, are the interests of perhaps more than three-quarters of the world's population) or which shows undue bias in favour 20. E/PC/T/PV/3 of a particular country or group of countries, is likely to be accepted by India as a scheme of genuine and fruitful co-operation. We are glad to see that this Committee has been advised, in drafting the Agenda, to take into account the special. conditions prevailing in primary producing countries and countries which are industrially backward. . But we are not sure that the needs of such countries, especially in the matter- of a suitable commercial policy, are fully understood, and as our Own country falls in the group of the less developed economies we feel that our position should be clearly explained. The problem which -faces our . country, as I pointed out yesterday, is not: an exceptional. one, and the views we are putt-ing forward are no doubt shared by other nations in a similar economic position. I have in mind particularly the nations. of Asia and; Africa, many of which are India's immediate neighbours in whose prosperity and welfare we are deeply interested. In other parts of the world also there are countries in the same, position, which are :faced with the same pro- blems and confronted by the same difficulties. Many these countries are not represented here today, but I am sure that my fellow delegates will agree with me that- their interests should not be overlooked. So far as India is.-concerned, the Committee will be interested to know that a conference of unofficial representatives of the various nations of Asia is expected to meet in Delhi early next year, and. among the problems of common interest to all Asians which. will be discussed at this conference will be economic and trade problems. .Athough this conference has been sponsored by an unofficial agency, I have not the slightest doubt personally that the views expressed by our fellow Asians will have a considerable influence on the Government of India's future policy I have mentioned this, Sir, in order to emphasise that,. althugh our primary con- cern is naturally the welfare of our own country, we do not wish to take a. narrow view or to seek any special advantage which is exclusively 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 effecting the, genuine interests of the highly industrial- ised economies, It is because of our conviction that the interests: of the two groups are, not irreconcilable that we have come to this meeting determ- ined to play a constructive part in devising measures for the promotion of genuine international. co-operation. 21. E/PC/T./PV/3. If I may revert to our own problem, Sir, the position in India is that, in spite of our large resources, both in men and in material and the traditional skill and other qualities of our people, the purohasing power and standard of living of the average Indian remains among the lowest in the world. Efforts have been made in the past, from time to time, to deal with this problem, but there has been no fundamental or far-reaching change in this respect. It is to this problem, Sir, of the removal of poverty and other evils which have resulted in social stagnation that our Government and people are now addressing themselves. We do not consiler this to be an insoluble problem, but it is our conviction based on long experience, that if substantial and rapid progress is to be achieved, an intensive and, planned development of the Indian economy is essential. Unless the country's resources are developed to the maximum extent there is little hope of our being able to tackle the problem successfully, for the needs of our vast population, which is still expanding, grow from day to day. We must increase production and achieve a better balance between industry and agriculture, which means that we must adopt a policy of industrialisation and the modernisation of our methods of production. There are other considerations also which are vitally important frm our point of view: first, progress must be rapid, for the problems which face us in are of an urgent character; secondly, the fruits of economic progress must be shared equitably among the people We attach the greatest importance to this objective, for it is not for the sake of enriching a few that we are adoping these measures of industrial development, but for raising the standard of living and the real income of the common man; the third point is that we consider it vitally important that our resources, which are not unlimited, should be used. in the best interests of the community 22. E/PC/T/PV/3 as a whole. From every point of view, we consider that it is essential that the nation's economic development should not be left wholly to the operations of private enterprise and unchecked competition, weather internal or external, as seems to be implied by some of these proposals, but that a real effort should be made by the State to plan or to regulate or to direct economic activity in the larger interests of the community. All this, Sir, has a definite bearing on our attitude to the American proposals These propocals lay lown certain objectives with regard to the maintenance of employment at high and stable levels. This is the central part of the scheme, for in the absence of agreement on an employment policy, there appears to be little chance of an acceptable trade convention being worked out We do not unfortunately findi in this statement of objectives any real understanding of the problem which confronts the less developed. countries. Without going into much detail, I would point out that any trade convention which fails to recognize the effective development of a country's resources, and the expansion of the real income of the people, as one of its primary objectives, cannot inspire much enthusiasm in a country which is still not fully developed Our problem, Sir, is not primarily one of the maintenance, of full employment, but of a change in the character of employment, and of a greater diversification of employment, and we consider it essential that the full development of a country's reasources with a view to raising standlards of living and real income shall be laid down as one of the primary: Objectives of the International Trade Organization. - Furthermores, as I pointed out yesterday, we feel that the Organisation should be specifically charged with the duty of assisting the governments concerned in the attainment of this objective by all suitable and effective 23. E/PC/T/PV/3. measures, including measures designed to facilitate access to capital and other goods needed for the full development of the national economy. 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 emplyment or development policy. If our economic objectives are sound -- and there seems to be general agreement that the rapid eoonomic development of 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, an' which will yield' maximum results at minimum cost to all the interests concerned Among these interests in may scheme of international co-operational which is accepted 'by us, we would give a high place to other members of the organisation Our whole approach to this question of trace regulation is a practical approach and we feel that it is wrong to take a doctrinaire view of the soundness or otherwise of specific trade measures. Trade from our point of view (and I am glad, Sir, that this point is recognized by the American. representative and other Delegates) is not an end in itself, out 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, cut 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 regilation on grounds which are not applicable to Indian conditions make full and effective use of them for the purpose of building up our economy. 24. E/PC/T/PV/3 THE CHAIRMAN (Speaking in French: interpretation): I thank the delegate of India, and I call upon the first delegate of Lobanon. MR. GEORGE HAKIM (Lebanon): Mr. Chairman, 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 thoir 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 efficacy of international co-operation in economic matters will be judged. It will also be the task of this Committee to draw up the Charter of the organization .which is to implement these principles of international economic policy. In our deliberations,. therefore, we should never lose sight of the basic principles which guide all international economic co-operation as thcy 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: "Tho peoples of tho United Nations (are) datermined.... to promote social progress and better standards of life in larger freedom AND FOR THESE ENDS to employ international machinery for the promotion of the economic and social advancement of all peoples." Article 55 reads:- ".With a vic-- to the creation of conditions of stability and well being which are necessary for peaceful and. friendly relations among: nations based on respect for the principle of equal rights and self-determination, of peoples, the United Nations shall promoto:- (a) Higher standards of living, full employment, and conditions of economic and social progress and development; . (b) solutions of international economic, social, health. and releted problems and international cultural and educational co-oporation; and 25 E/PC/T/PV/3 (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 lass advanced countries. Economic progress is to be promated for all peoples. The United Nations have a special responsibility for those of their members who are still living under back- ward economic conditions. In order to achieve this aim of raising the standards of life of all the peoples of the world, it is not enough to provide for the full employment of men and of material resources. Such full employment is certainly necessary to maintain a high standard of life in the advanced countries , but full employment in the less developed countries will not in itself raise the standard of life of their populations. What is more important than full employment is the achievement of the most productive employment of men and resources. It is through tho best and most productive utilisation of economic. resources that we can produce the greatest quantity of goods for the satisfaction of the needs of the populations. In fact, this is the meaning and significant of economy in the utilisation of resources. Economy means the utilisation of resources in such a way as to produce the maximum possible quantity of goods for the satisfaction of human 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 only the clearly that we can have full employment without necessarily satisfying the needs of 26. E/PC/T/PV/3 consumers. In the last analysis, therefore, the problem, of productive employment is more important than the problem of full employment. In the less developed countries it can hardly be claimed that the most productive employment of men and material resources is achieved. The methods of production in those countries are still generally primitive and not conducive to full productivity. For this reason, in these countries the standard of living of the population is still very low. Furthermore the structure of production in many arcas is such that that resources are not fully expleited. Experience shors that agriculture alone will not lead to the most productive use of human and material resources. Agricultural production has not generally been able to produce by itself a high standard- of living for peoples who engage in it. Manufacture and industry is necessary if we are to raise the standard of life of the loss developed territories, It is not an accident that the standard of living is higher where industrialisation is greater, nor is it an accident that, as history shers, standards of living have only risen' considerably since the industrial revolution, though 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 industrialisation of these countries to the extent that their huma 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 those countries, but will also further the development of world economy and the growth of production in the more advanced countries. E/PC/T/PV/3 It is always worth while to repeat that hte world is one. Poverty anywhere is a meance 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 industrialisation in the less advanced countries we must recognise that tariff f protection is, in the words of the Australian delegate, the legitimate instrument of national policy. It is true 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 industrialisation 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 grewth of industry and the rise of the standard of living of the people - it is bound to increase the international trade of the loss developed countris. 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 those countries will grow with industrialisation, their participa- tion in world trade will be greater. One might be inclined to think that tariff protection cf industry would reduce international trade temporarily, but even that is not true. when protection is practised by the less developed countries, for these countries will need capital goods from the old industrialised 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. E/PC/T/PV/3 Not only tariff protection, but also tariff prefor- ences 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 tho 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 aIl 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 industrialised 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 others products, no harm to world trade will result. On the contrary, regional trade will develop and trade with other countries will, in the long run, be increased. If the system is nationally operated it will develop industry in the regions here it is applied and will ultim- ately load to an increase in international trade as at result of the rise in the region of the standard of living of the people and their grenter demands for the products of other regions. We should, therefore, not limit ourselves to the maintenance of existing preferences, nor set an arbitrary E/PC/T/PV/3 date after which no preferences will be allowed. It will be wiser to examine any proposed system of preferences on its own morits, so as to determine whether it is prejudicial, or, on the contrary, benneficial to world production and world trade. In conclusion, Mr. Chairman, the Lobanese delegation stand for the policy of the fullest possible encouragement to be given to the less industrialised 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 initime political, economic and cultural ties. They also happon to be the only delegation from tho 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 theroughy. all the measures that may be taken to encourage and promote tho 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 anothor and live together in friendship, peace and prosperity. (Applause). THE CHAIRMAN (Speaking in French: interpretation): It is now too late to begin another statement, and we still have to hear statements made by the Netherlands, New Zealand, the Union of South Africa, and, last but not least, the United Kingdom. Tomorrow morning we shall meet at 10,30 sharp, and I ask all delegates to be here in time. I believe that this session will end about mid-day. The chiefs of delegations will then meet, after this plenary session, and meetings of the sub-committees are contempliated to take place in the afternoon. 30. E/PC/T/PV/3 Mr. Wyndham White wishes to say a few words. THE EXECUTIVE SECRETARY (Mr. Wyndham White) : I thought it might be helpful to delegates to have tonight an outline of the plans for tho meetings of the Committes tomorrow afternoon. In order to meet theo desire --hich has been expressed by several delegations that more than t.-ro of thc Committees should not meet at the same time, I would like to suggest the following arrangements for the initial meetings of the Committees tommorrow afternoon:- That Committee I, the Committee on Employment, Economic Activity and Industrial Development, should meet at 2.30; that Committee 2, on General Commercial Policy, and Committee 4, on Intergovernmental Commodity Arrangements, should meet at 3,45; that Committee 3, on Bestrictivo Business Practices, and Committee 5, on Administration and Organization, should meet at 5 o'clock. I expect that tho meetings of these Committees tomorrow will be short and should not take longer than three-quarters of an hour at the outside. I think, therefore, that the spacing of the meetin-s which I have suggested will be adequate. I would also add that the meeting of heads of delegations will not take place in this room, but in the General Committee Room, Room 143. If these arrangements are satisfactory to delegates a notice giving details of the arrangements and the room in rhich moetinU's -ill be held -ill be circulated first thing tomorrow morning. The meeting rose at 6. p.m. 31.

GATT Library

kc286bd2135

Verbatim Report of the Thirteenth Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Saturday, 23 November 1946 at 10.30 a.m

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/C.II/PV/13 and E/PC/T/C.II/PV/13

https://exhibits.stanford.edu/gatt/catalog/kc286bd2135

kc286bd2135_90220017.xml

GATT_157

ON A1 E/PC/T/C.II/PV/13 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatim Report of the THIRTEENTH MEETlNG of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster, S.W.1. on Saturday, 23rd 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. .-1 E/PC/T/C.11/TV/13 THE CHAIRMAN: I think the programme in the Journal shows subsidies, State trading, quota preferences, quantitative restrictions and exchan control in that order. I have been asked, however, whether it would possible for us to take quantitative restrictions and exchange control first. Would there be any objection from delegations to taking that order? I think the delegate for Chile, Mr Hawkins and Mr Shackle are still engaged, but will be here in a few minutes. In view of their absence, I think perhaps it might be as well for us to deal with Article 21 first before 19, since I think we are in that way less like to deal with matters upon which they may wish to touch. I suggest the we proceed as we did yesterday and take the Articles firsat and the report thereon afterwards. Article 20 as submitted by the Drafting Committee is set out on page 29 of the document which you have in front of you, T/19. Is it the wish of the delegates that we read the Articles individually, or would they be satisfied to take them as read? Mr WELANDER (Norway): Mr Chaiman, I think we should take them as road; that would save time, I think. VeryT HE C.HWI.IlkIsthem t gnrally ceptab.l~lee we ie ae h aragraph by paragraph. (The Chairman then called fph:or comment on Article 20, paragra 1e2 ie e being3( ca), n(,,c,) (), .). benr, nootM these parag.raphs were taken as agreed) THE CHCaL Ph 4? Mr HAWKmS(gSA:mal ghCirman,g eI have a sl stion of a drafting charagctder fth rearefgrao this Pe firstLraph. Thctwo lines now4 read: "In giving effect to the restrictions imposed under this Article, a Member may select imports for restriction", .and so forth It seems to me that the intended meaning would be cleareer if that w " to read: g -a Membnegur may igstiish between prodgroucts on the unds f.eantility in asuch a w.py a to en rmote"laeds on. Thee way tho sjva ln wasguageve-adoes nve inuot giiention of the purpose of the selection or even as to thre chacter of it It may eenven m selecting on the ground of source. I think the smallg chane I suggest does not alter the intended meaning 2 E/PC/T/C. II/PV/13 THE CHAIRMAN: Would you give us the words again slowly so that we can write them down? This would involve deleting the words "select imports for restriction." Mr HAWKINS (USA): Yes. THE CHAIRMAN: Replacing them by? MR HAWKINS. (USA): "distinguish between products on the ground of essentiality." THE CHAIRMAN: Would anybody like to comment on the suggested alteration? MR VIDELA (Chile): I would prefer to leave the words as they are, Mr Chairman. MR TUNG (China): I support that. THE CHAIRMAN: You wish to retain the words "select imports for restriction"? MR VIDELA (Chile): Yes. MR TUNG ( China): I support the suggestion of the Chilean delegate. THE CHAIRMAN: I wonder whether it might meet the United States' point, without involving an alteration to those words, if we merely inserted, "on the ground of essentiality." MR HAWKINGS (USA): Yes, I think so. THE CHAIRMAN: Would that be acceptable to the delegates for Chile and for China, if we left "select imports for restrictions" in? MR VIDELA ( Chile): I think we are limiting the freedom of a country to select imports for restriction, and I would therefore prefer to leave the words without any limitation. THE CHAIRMAN: Would any other member of the Committee wish to put forward views on this question? Can we take it we have two alternatives before us: one to leave the words as they are and the other to insert after the word "restriction," the words "on the ground of essentiality"? Can we take it that is the suggested amendment of the United States, and we understand that the delegates of Chile and of China would oppose the inclusion of those words. May I have the views of other delegates, please? MR MELANDER (Norway): Mr Chairnan, I think the suggested amendment is an improvement. I think that it draws attention to the point that one should not apply import restrictions on this ground unless there is a reason for it, namely, that one shall have the opportunity to select goods which are of essential use to the country concerned; so that, as I say, I think the amendment is an improvement to the text. I would therefore 3. E./PC/T/C.II/PV/13 approve it and support it. MR KUNOSI (Czechoslovakia): Mr Chairman, I support the amendment as proposed by the United States delegation. MR LECUYER (France) (Interpretation): France equally supports the amendment. MR TUNG (China): I wish to inquire, if you insert that phrase "on the ground of essentiality, " who is going, to decide whether it is essential or not? THE CHAIRMAN: I think it is clear from the text that the decision would be made by the Government of the country concerned, that is to say, the country which was applying these restrictions would have a clear right to decide by its own standards. what was essential. MR TUNG (China): I would accept your intrepretation if it is clearly under- stood in that way, and I wish to have that put on record. MR VIDELA (Chile): Mr Chairman, I would agree to leave it like this, and I will accept the amendmet proposed by the American delegate THE CHAIRMAN: Thank you. Is there any other comment? I take it it is generally agreed that we accept the United States amendment of the addition of the words "no the ground of essentiality"? That will be on the under- standing that the record makes it clear that it was agreed that the judgment as to what constituted "essentiality" in relation to this paragraph would be a matter for the Government of the country concerned to decide. Is there any further comment on paragrpah 4? I take it paragraph 4 is agreed? (Agreed). Parargaph 5. Any comments? Thereis a note at the end of this Article, on the following page, which explains the reason why the words in square brackets in the third last line of this paragraph have been left in square brackets. The note reads: "The words in square brackets in paragraph 5 are intended to cover the Economic and Social Council of the United Nations as well as the intergovernmental specialized agencies. " I suggest that we might delete the square brackets and leave the note with an asterisk, indicating that Note No.1 refers to this pararaph, or to this particular phrase. Any comment on paragraph 5? I take it paragraph 5 is agreed? (Agreed). That is togetehr with the note (Agreed). Paragraph 6: There is a note 4. E/PC/T/C .II/PV/13 referring to the words in square brackets here, indicating that these words should be retained only if the matter is not adequately covered in the Articles dealing with State Trading organizations. I suggest, in this case, we might leave the words in square brackets, so that the Drafting Committee, when it comes to look at the whole document, can decide whether they are necessay. Any comment on paragraph 6? I take it that paragraph 6 is agreed? (Agreed). Parargraph 7: any comment? I take it paragraph 7 is agreed? (Agreed). Article 21, paragraph 1. Any comment? May I take it that paragraph 1 is agreed? MR TUNG (China): Mr Chairman, are we through with Article 20? THE CHAIRMAN: Unless you wish to raise something. MR TUNG (China): I just want to say that the Chinese delegation have proposed a suggested amendment to Article 20, which was circulated as Document W/29, and I just want to state our position. We want to reserve the right to bring up this amendment again either in the Drafting Committee in New York or at the next session of the Properatory Committee. THE CHAIRMAN: Yes. I should explain that the Sub-Committee did give con- sideration to the amendments proposed by the Chinese deligate, and certain of those amendments, the Sub-Committee felt, were covered in one way or another in these Articles, and the remaining one to which the Chinese delegate referred was listed for consideration at the last meeting of the Sub-Committee. But it was unfortunately not possible for the Chinese delegate to be present at that discussion, and so it was decided that the only thing to do was to leave the matter over, recognizing the right of the Chinese delegate to raise the matter further if he wished. MR TUNG (China): I want to make it clear that the decision come to at the last meeting of the Sub-Committee which I attended was different from this Article 20. I did explain to the Sub-Committee that we wanted to reserve our position to bring up the issue later. I wish it put on record that that includes also amendments to Article 21 and also our additional Article proposed in regard to restrictions to facilitate industrial development. E/PC/T/C. II/PV /13 THE CHAIRMAN: The view of the Chinese delegation is referred to in the report on page 15. That will ensure that there is a record of the views stated and will clearly protect the right of the Chinese delegate to have this considered further. A suggestion has just been made to me which I think would be of assistance in this matter: that is, that before passing to Article 21, if we dealt with the report on Article 20, this would enable any matters not adequately covered in the Article itself, but which may have been dealt with in the report , to be covered. The report on Article 20 begins on page 7 of this document. I suggest we might take that now. MR TUNG (China): Which part is it, Mr Chairman? THE CHAIRMAN: The paragraph that sets out the Chinese point? MR TUNG (China): Yes. THE CHIRMAN: It is the last paragraph of this Section of the Report, page 15. MR TUNG (China): "The use of quantitative restrictions as a means for creating favourable conditions for the industrial development of an economically undeveloped country." Is that what you mean? THE CHAIRMAN: Paragraph 22 is the paragraph I am on. MR TUNG (China): Yes. "It was generally agreed that these proposale to some extent had been met in this Chapter and in the Chapter on Industrial Development." 6 fols. As I understand, the findings of the Joint Body on the draft Charter do not preclude any proposals we may make here. For instance, if my proposal for a new paragraph in this Article could be adopted by this Committee, that would not conflict with the resolutions on the draft Charter of the Joint Body? THE CHAIRMAN: You would wish to add to this that your delegation wishes to reserve its position on this question? MR TUNG (China) . Yes, we want to bring that up later. THE CHAIRMAN : Would the Secretariat see that that is made quite clear in the report - that the Chinese delegation have made a reservation in respect of an additional paragraph to the Article? Could we new turn to Article 20? Article 20. Paragraph 1. (Page 7.) Is there any comment on this paragraph? (Agreed.) Paragraph 2. Are there any comments ? (Agreed.) Paragraph 3. Are there any comments ? (Agreed.) Paragraph 4. Are there any comments ? (Agreed.) Paragraph 5. Are there any comments ? (Agreed.) Paragraph 6. Are there any comments ? (Agreed.) Paragraph 7. Are there any comments? (Agreed.) Paragraph 8. Are there any comments? (Agreed.) Paragraph 9. Are there any comments? (Agreed.) Paragraph 10. Are there any Comments? (Agreed.) Paragraph 11. Are there any comments? (Agreed.) Paragraph 12. Are there any comments? THE RAPPORTEUR: In paragraph 12 I think it would probably be desirable to insert in the third line, after the word "restriction" the words "on the grounds of essentiality", so as to conform with the change that we agreed to in paragraph 4 of the text. THE CHAIRMAN: Is that agreed? MR HELMORE (U.K): could I make an alternative suggestion which would help the Chinese delegation by making clear in this report - if there is no difficulty in doing so - the interpretation which we agreed in respect of this Article? I would suggest, instead of the Rapporteur's suggestion, that we might add, at the end of the paragraph, words like this, "in accordance with its own judgment as to the essentiality of the products concerned". That would come immediately after the word "policies" at the end of the paragraph. That, I think, is precisely the point that the Chinese delegation wanted to make clear. 7 MR TUNG (China): That is agreed. THE CHAIRMAN : Is that all right, Mr Rapporteur? THE RAPPORTEUR : Yes. THE CHAIRMAN: Then is that agreed? . lwxV w(0hlenee: t Wul like odra attMrtionMr hro ta deat made by IL eWings ofimmeittemmeeommf eee6? thc mmntece f Cori!.it ad II I wahenh ve fgerrin_ to pths woul newheneho ad that "a couwoulntry xd easo b1 e ee tqoestie toaanesvaeveorictions as ae proetcetivomcsure under this procedure". ikonat kiMsfint Mer;et o have tah optooin nooMrf > Wcox on record. I was onct present at thmee entig but I found that declaration when readgin the report of the mtieg et isni alson o page 12. I wodull i keaols btexpla inwhy I wanted to kpee eth rdicg a, it wes in the drmpt: mip asgb eause I gheik it is very imp[Ltant to ,giev freedom to the country concerned. HT CHAIRMAN: I thEink that is aequdtely broughta uot, is it not, both in theamendm etn to phras Article aed inn hteinc lusinoof th ep arhes whichM rHemolre hass uggesetd: i"n accoradnecw ith itso wn jugmdent as to the essetniality of teh product ,con- ecnred." Thewo rd "wen" tehre is, of course, referring to the government of the country applying the restrictions. RlVIDELA rCh le): Theesame wording will he repeated be here, thenc THE CHAIRMAN: It is slightly different. It is not positively stated in the Article that the judgment on this matter would lie with the government concerned, although it is clear that that it is the intention. Mr Helmore has suggested that we make that doubly clear by adding, in appropriate in the section of the report, a specific reference to the fact that the judgment in matter this should be the judgement of the government concerned. Would that be agrecable? MR VIDELA (Chile); Yes. THE CHAIRMAN: I take it, then, that this paragraph 12, as amended, will read: "It was generally agreed that a Member miposing restrictions on balance of payments grounds should be permitted to select imports for restriction in such . way as to promote its domestic employment, reconstruction, development or social policies in accoadmnce with its own judgment as to the essentiality of the products concerned Is that agreed? (Agreed.) Paragraph 13. Are there any comments? ( Agreed .) . .~~~~~ E/PC/T/C. II/PV/13 Paragraph 14. I take it paragraph 14 is agreed. Paragraph 15. paragraph 15 agreed Paragraph 16. MR.. TUNG (China): Mr. Chairman, I do not quite understand the last part of the first sentence in Paragraph 16 - "anticipates that its accruing international monotarye resources will be inadequate to finance the needed imports of capital goods unless it imposes regulations in respect of certain classes of consumer goods." Does it imply that a Member is going to enjoy the rights under Article 20 if it imposes regulations on consumer goods, or iss it teo otherway?? THCHAIRMANF: Thatis a quotation frm t the message received from the Joint Committee. I undersabnd that that hasbDeen amended and the text that is included in the draft you have in front of you is incorrect. It should read" that in Article 20 provision should be made to covertMhe poiwtion of a M emberwrho, as a result of its plans for industrial development or reconstruction, anticipates that its accruing international monetary resources iill be inadequate to finance th neededd import ofgoocds, e.g. cpietal goods, for hei carrying out of such plans unless it imposesre.ulagtions restricting the imports of certain classes of goods, e.g., consumer goods." The main difference is that in the revieds version the refrence to capital goods and consumer good ais given only for the purposes of illustration. MR. TUN .(hi na): But underw'hat conditions does a Member get the benefit of the provision under Article 20? THE CHAIRMN.: The latter part of this paag raph explains hwv the Sub-Committeoceonsidered that tec request of the Joint Committee on IndustrialDeevelopment had beon met. It states under Para.. 2(a) of this Article thatap country could apcly quantitative import restrictions o manticipate tec mmiinent threat of a serious decline in its monetary reserves. oMeoverr, it is 9 ESPC/T/C. II/PV/13 there suggested that in interpreting this principle due regard should be had to any commitments or other circumstance which may be affecting a country's need for reserves. It follows that a country which was threatened with a serious decline in its reserves ,and which had heavy enternal payments to meet in the rear; future could protect its external position by import restrictions. MR.. TUNG (China):. But must that Member country impose regulations on consumer goods before it can enjoy the privilege? THE CHAIRMAN: It gives them a right to impose restrictions, for example, on consumer goods, in order to free their foreign exchange resources for the purchase of other goods which they consider more important, for example, capital goods. unless MR . TUING (China) : But it seems to me/ as a Member imposes restrictions on consumer. goods it cannot enjoy the privilege which will be given under Article 20. Is that clear? THE CHAIRMAN: I am afraid I am not understanding. MR. TUNG: (China): If a membebr country does not impose any regulation or consumer goods, that means it is not to be assisted under any provision of Article 20? I do not know whether my question is clear? THE CHAIRMAN : It is not MR. TUNG (China): In Article 20 provision is made to cover the position of a Member. That means, to give it certain freedom or privilege as a result of its plans for industrial development if its monetary reserves are going to be inadequate, and so on, but not unless it imposes regulation of consumer goods . So if it does not make any restriction on consumer goods that shows its monetary reserve is adequate and then it will not enjoy the privileges under Article 20? THE CHAIRMAN: This merely suggests they should be given the right to impose restrictions if they feel it necessary to do so. 10. E/PC/ T/C. II/PV/13 They do not have to put them on any particular class of goods; they can choose the classes of goods on which they want to put the restrictions, quite freely, in accordance with their development or reconstruction policies. Is that clear? MR. TUNG (China): Yes, but I do not quite understand about the word "unlesss". It seems to be a Kind of requirement or condition. THE CHAIRMAN : which is the word you do not understand? MR. TUNG (China): "unless it imposes regulations". THE CHAIRMAN : That merely means that if it did not impose any import restrictions it would not have sufficient foreign exchange resources to buy both its capital goods and consumers goods whiich its nationals would want to buy abroad. MR. TUNG (China): Well, we may have enough resources or me may not, but that has no connection with the imposition of regulations on consumers goods. They may not impose any regulation on consumers goods, but their monetary reserve may in still be/adequate. THE CHAIRMAN : The purpose here is to deal with a country which has not got sufficient international resources because it is following a policy of development or reconstruction internally, The request is, that we should give to these countries the right to impose restrictions on imports so that their development or reconstruction policy would not be prevented by the waste of their international resources on goods which they did not think sufficiently important. MR. TUNG (China): I quite understand the purpose, but the language is not clear to me, because "unless" would mako it seem that it is something required of a Member country. THE CHAIRMAN: It is quiteclear, i think, that it is not intended that a country should be granted freedom to restrict its imports of any classes of good if it has sufficient foreign 11 . E/PC/T/C .II/PV/13 resourcee to pay for all of then. If it has sufficient external resources to pay for all goods that it might wish to import, then it is clear that this would not permit it to impose restrictions . Is that the point? Any other comment on Paragraph 16? I take it Paragraph 16 is agreed. Paragraph 17? Paragraph 17 agreed. Paragraph 18? MR. HELMORE (UK): Mr. Chairman, is the quotation here accurato? Should it not be "A member may select imports for restriction on grounds of essentiality in such a way"? THE CHAIRMAN: To bring this quotation into line with the change made in the draft Article 20 it is neccssary to insert in the quotation after the word " restriction" - "on grounds of essentiality ". Paragraph 18 agreed. Paragraph 19? Any comment? I take it as agreed. Paragraph 20. Any comment? I take it as agreed. Paragraph 21? Paragraph 21 agreed. Paragraph 22? Paragraph 22 agreed. I take it that the Report covering this Article is adopted, subject to the request of the Chinese Delegation that his reservation on the draft amendment submitted by his Delegation is made clear. Shall we take Article 21 new, dealing first with the test? It is page 35 of the Document T/19. Paragraph 1. Any comment? Paragraph 1 is agreed. 12 . F-1 E/PC/T/C. II/PV/13 Paragraph 2 ? Any further. comment on paragraph 2? I take it para - graph 2 is agreed. Paragraph 3? Mr JOHNSEN (New Zealand): Mr Chairman, there is a small point I am wishing to make in connection with paragraph 2 (e) I would sugggest that we add at the end of that paragraph the words: "subject to importation being made within the prescribed period to which the quota relates". It would be very difficult to administer any system of quantitative regulation unless you could have some limitation over the time within which imports could be made. Mr MORTON (Australia): Australia will support that suggestion. Mr HELMORE (UK): Mr Chairman, we are in agreement with the idea underlying the New Zealand proposal. It does, however, occur to us, hearing this for the first time and not having had very long to think about it, that there might conceivably be - though I cannot think how - a quota of this sort laid down which was without period; that is to say, a country might say: We are prepared to license a thousand items, and we will spli t there up, five hundred to this country, two hundred and fifty to that and two hundred and fifty to that. When that thousand has come in, we will think about it again;and a definite period might not be laid down. So that if New Zealand would agree to their amend- ment reading "subject to importation 'being made within any prescribed period to which the quota may relate", that point would be covered. Mr JOHNSEN (New Zealand): I would agree with that, Mr Chairman. THE CHAIRMAN: Is there any comment on this suggestedaddition? We take it then that the suggested amendment which would add to paragraph 2 (e) the words "subject to importation being made within any iln anybeescribed peried to which the quota may relate" is accepted, Mr, KUNOSI (Czechoslovakia): Mr Chairman, I want to raise a question in connection with this Article. The case of Czechoslovakia has been Put forward-repeatedly concerning the fact that a very great part of Czechoslovak foreign trade is with couniriei with inconvertible currencies, and we do not know whether those countries will be Members of the International Monetary Fund. That is the first point. Secondly, their monetary position is such that, even if we can assume F-2 E/PC/T/C . II/PV/13 that the International Monetary Fund will do something for them to help their monetary situation, even then we are afraid that when we have to export to These countries we shall be faced with the problem that we cannot get payment in any Other way than by beying from them, I do not know if this, case is covered in this Article or whether we should put forward some amendment. THE CHAIRMAN: The Subcommittee did consider the points put forward by the Czechoslovakian delegation and dealt with them In Article 22, I would suggest that we leave the point until then, when the Czecho- slovakian delegate can decide whether his points are adequately met. Mr. KUNOSI (Czechoslovakia): Thank you. THE CHAIRMAN: I take it that, with the amendment put forward by the New Zealand and United kingdom delegates, Article 2 is adopted. (Paragraphs 2, 4 and 5 were put to the meeting by the Chairman and adopted. ) could we now turn to the report on this Article 21, on page 16 of the document T/19, Is there any comment on paragraph 1 of this report, I take it paragraph 1 is agreed. Now paragraph 2. There will be some addition to paragraph 2 (e) here to make it conform to the amendment to the Article itself. I presume that precisely the same words could be employed here. Is that .agreed.? Paragraph 2, as amended,is agreed to. Paragraph 3? Paragraph 3 is agree to, Shall we take Article 22, page 38 in the document, This is the Articie which deals with the problem referred to by the delegate for Czechoslovakia, As this is fairly complex, I suggest we tiake iIt sub- paragra ph by sub-paragraph. (Draft Article 22 was put to the Committee sub-paragraph by sub-paragraph and adopted.) 14. E/PC/T/C. II/PV/13 In relation to the point raised by the delegation Czechoslevakia, it is not entirely clear at a glance the precise implications of Draft Article 22 in regard to the problem of non-convertible currencies, but I think the explanation is embodied in more readily understandable terms in the report itself, so that, before we finally leave article 22, could we turn to the report and look that ever, and if the delegate of Czecho- slovakia, and other delegates for that matter, is satisfied, we will take Article 22 as agreed. If not, we will come back to it. Is paragraph 1 agreed? (Agreed). I think that we might ask the Rapporteur to read this Section dealing with non-convertible currencies as it is a matter of considerable complexity and importance. THE RAPPORTEUR : "2. A more difficult problem arises in the treatment of in- convertible currencies" (reading from page 18 of Document E/PC/T/19 down to the words) "this prior approval would be obligatery" (on page 22). THE CHAIRMAN: Are there any comments on that section? MR KUNOSI (Czechoslovakia): .I am sorry to say that I think we will have to think it over and study it. closely .For the time being I will not raise any objection, but I feel, in reading it again, that we will have to think again on this. MR HlLMORE (U.K.): I have one drafting amendment, which I suggest with some hesitation, in this very carefully considered report. It is in paragraph 3 on page 19. Perhaps before I give the amendment I could explain the effect of it. This paragraph is a theorctical and "by way of example" exposition of the problem. I believe it would be better not to convey any implication here that we are talking about any particular members of the Organisation. We have not got on to that point yet; we are simply talking about the problem which confrents a country; so all I want to do in the second line is to read "Country A." and in the third lin' to read "Country B". THE CHAIRMAN: Is that agreeable? (Agreed.) Is there any other comment on this section of the report? I take it, then that this part of the report, down to paragraph 8, is agreed. (Agreed.) Paragraph 9. There scems-to be some verbal correction required there. There should be a letter "s "on "Provision". Are there any comments on this paragraph? (Agreed) 15 Paragraph 10. Is that agreed? (Agreed.) May we look now at Draft Article 23, on page 40 of the document ? Is there any comment on paragraph 1? (Agreed.) Paragraph 2. Any comments? (Agreed.) Paragraph 3. Certain words arc placed in square brackets here to indicate, that in relation to them reference should be made to paragraphs 2 and 3 of the report covering this Article. Is there anything else on this paragraph? (Agreed.) Paragraph 4. Is that agreed? (Agreed.) Paragraph 5. Is that agreed? (Agreed.) Paragraph 6. Is that agreed? (Agreed.) Could we now take the report on Article 23, which commences on page 23 of the document? Paragraph 1 Are there any comments? (Agreed.) I understand the Rapportcur has a suggestion for a new paragraph following paragraph 1. THE RAPPORTEUR: I must confess that I failed to follow the instructions in drafting this report and left out a paragraph. There is no explanation of the second para- graph of the Article. I would suggest, therefore, adding the following paragraph as a new No.2, the old No.2 to become No.3, and so on. It reads:- "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." THE CHAIRMAN : Is it agreed that the paragraph as read by the Rapporteur should be included after paragraph 1 to cover the second paragraph of the Article? (Agreed.) We turn now to the new paragraph 3. Is. there any comment? (Agreed.) Now we have the new paragraph 4. THE RAPPORTEUR: On paragraph 4, on reconsideration of the draft I felt it was not entirely clear on one point, and I would like to suggest adding a sentence at the end of the paragraph, to read as follows: - "Pending this further examination, the Draft Article 23 in the Appendix to this Report has been expressed in a way which implies that Members of the Organisation would, in general, be expected to be Members of the Fund, but that means could be provided for non-members of the Fund to join the Organisation." THE CHAIRMAN: Is it agreed that we add that sentence to paragraph 4? (Agreed.) Now we have the new paragraph 5. Is that agreed? (Agreed.) Any comments on new paragraph 6? (Agreed.) We go now to Article 19, with which we have not yet dealt. We will deal with the Draft Article itself first, on page 25 of the document. Any comments on 16 E/ PC /T /C . II/PV/13 H3/I1 E/PC/T/C. II/PV/13 paragraph 1? Is it agreed? (Agreed) We might take paragraph 2 sub-paragraph by sub-paragraph. Paragraph 2(a). Any comments? THE RAPPORTEUR: In paragraph 2(a)(iii), the next to last word in the second line should be "of" instead of "or". THE CHAIRMAN: Yes. Is there any further comment on 2(a)? (Agreed.) 2(b). any comments? MR TUNG (China): we have a suggested emendment for article 19(2)(b) which was circulated as document C.II/W.63. The suggested amendment reads like this: "Export prohibitions or restrictions on agricultural, mineral or other essential products which are imposed or maintained to safeguard a decent livelihood for the people, to facilitate industrial progress and to stabilize domestic prices so as to achieve a balanced development of national economy". We think the original provision as put in the Report here is insufficient to provide for these requiremernts in relation to the livelihood of the population and industrial progress, and so we should like to have it amended. THE CHAIRMAN: The proposal of the Chinese delegate is dealt with in Paragraph 12 of the Sub-Committee' s Report on this Article. It reads as follows:- "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 deomestic 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 wide agreement in the Sub-Committee that those 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 Sub-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 17 E/ PC/ T/C. II/ PV/13 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 consumer goods . " It .as therefore, I take it, the vier of the Sub-Committee that the substance of the amendment proposed by the Chinese delegate is embodied in the Charter in other places. Is that view acceptable to the Chinese delegate, or would he wish to reserve his position on this? MR. TUNG (China): I just want to say a few words of explanation. I hav read over the draft article of this Joint Body, which is 3(a) which provides that a Member shall only have the right to impose restrictions after long processes of consultation with regard to finance and other matters - about seven processes to be undertaken before any measures could be adopted - and I think if we have to go through that long process of consultation the measure would never be adopted, or at least their effect would be undermined. THE CHAIRMAN: Does any other delegate wish to comment upon this suggestion of the Chinese delegates? I take it then that it is the view of the Committee that if the Chinese delegate wishes to press this point he should do it by reserving his position. The Chinese delegate would wish to reserve his position on this question? MR. TUNG (Phina) : Yes. .THE CHAIRMAN : Anything further on Paragraph 2(b)? I take it 2(b) is agreed. Paragraph 2(c) any comment? Paragraph 2(c) agreed Paragraph 2(d) ? Paragraph 2(d) agreed . Paragraph 2(e). MR. MELANDER (Norway): Mr. Chairman, we are very much in doubt as to the wisdom of introducing an exception on the lines of 2(c) we feel that although thisexcepoption is qualified in many respects it is, after all, doubtful .whether it would not be better to leave it out. In any case, we would not be agreeable 18. E/ PC/T/C . II/PV/13 to going further than the original suggested draft put forward by the United States delegation, and consequently we would like to suggest that the words "or fisherics " should go out in the first line of paragraph 2(c). THE CHAIRMAN : It is suggested we delete the words "or fisheries" in line 1 of paragraph .2(c), and presumably anywhere else where it appears in the Article. MR. MELANDER (Norway): Yes. THE CHAIRMAN: Does anyone wish to comment upon this suggestion from the delegate of Norway? MR. SHACKLE (UK): I think the United Kingdom delegation would desire to see these words retained. It seems to me that the position of fisheries is in a way a special one, in that gluts of fish are very liable to occur, and if, shall we say, the United Kingdom were to do anything with a view to mitigating those gluts of home-caught fish, clearly the arrangement would not be effective if there were not some corresponding arrangement to deal with imports of foreign-caught fish. In order, therefore, to make such arrangements possible, I think it is necessary to keep these words "fisheries". MR. VIDELA (Chile): Mr. Chairman, on this particular point I :remember that I raised the question of whaling products, and also I have made the reservation of two words, agricultural and "fisheries". On this particular point of fisheries I would , like to make it quite clear that although we are not interested in sending fresh fish to Great Britain, we are actually sending the products of whaling. It is a new industry in Chile, and a very prosperous one, involving a great number of factories, a large amount of capital and many workers. I therefore recond the proposal made by the Norwegian delegate. In addition, I have previously made my suggestion for the deletion of the word "agricultural " - both "agricultural" and "fisheries". 19. E/PC/T/C .II/PV/13 THE CHAIRMAN : You want to delete them both? MR. VIDELA (Chile): Yes . That is my old proposal. THE CHAIRMAN : It has a somewhat different effect . MR. VIDELA (Chile): What I mean is, while we are discussing the particular point of fisheries I wish to back the proposal made by the Norwegian delegate . THE CHAIRMAN: You would support the suggested amendment of the Norwegian delegate, but you would presumably prefor the deletion of both words? MR. VIDELA (Chile): Yes. THE CHAIRMAN: Any other comment? MR. TUNG: (China): Mr. Chairman, the Chinese Delegation has also suggested an amendment to (6), which reads: "Import prohibitions or restrictions on specific agricultural, mineral, or manufactured products, imported in any form necessary to the enforcement of governmental measures which operate to regulate production, distribution and consumption of like domestic products, with a view to maintaining a dynamic equilibrium between the diverse economic activities of a nation in the process of industrial- ization". However, I could accept an alternative amendment as suggested by 'the. Chilean delegate, by the deletion of the words " agricultural and " fisheries" at the beginning of this sub-paragraph, but also I should like the deletion of the last three sentences on page 27 of the Report, beginning it with word "Moreover", because we could never agree to any fixed ratio between the imported products and the domestic like products. THE CHAIRMAN -You want to delete from "Moreover" to consultationsn" on page 27? MR. TUNG (China ): Yes. 20. E/PC/T/C.II/PV/13 THE CHAIRMAN: Can We take these amendments in order? The first proposal we have before us is that from the delegate of Norway to the effect that he wishes to delete the words "or fisheries" in the first line of this paragraph. Is there any-other comment on that particular proposed amendment? I think it would be as well if we were able to get a clear indication of views on this. Would those who favour the deletion of the words "or fisheries" indicate by raising their hands? 20 A. J-1 E/PC/T/C . II/PV/13 (There was a show of hands.) In view of the fact that the number is limited, I suggest that we ask those delegates if they desire to press this point or to reserve their position on it and ask the Secretariat to make the necessary changes. Mr MELANDER (Norway): Mr Chairman, I would like to reserve this particular point and to have it included in the note on Article 19. Mr TUNG (China) I wish to be associated with that. THE CHAIRMAN: Gentlemen, we now take the amendment suggested by the Chilean delegate and supported by the Chinese delegate; that is that the words "Agricultural or fisheries" be deleted. Are there any comment on this proposed amendment? Mr SHACKLE (UK): Mr Chairman, I have already I think in the earlier session of this Committee explained the reasons why we consider that this paragraph should be limited to agricultural and fisheries products. Perhaps I might briefly state those reasons again. Our views are that agriculture is special in that its products are liable to frequent and large fluctuations of price and of supply, and also in that agricultural producers are very numerous, often small and unorganised, and that therefore it is frequently necessary for their governments to stop in in order to introduce some organisation into the business. For that reason we think there is a special case for dealing with agriculture in this way, a case which does not exist for manufactured products or minerals. THE CHAIRMAN: Is there any further comment on this? Would the delegate for Chile like to reply? Mr VIDELA (Chile): Mr Chairman, I feel that this has been sufficiently discussed, and I merely want to give this explanation: it says here "One delegate desires" - that will be " some delegates" or "two delegates disire"-" that the words 'agricultural or fisheries' should be removed after the words "Import restrictions on any", at the beginning of 2 (e) ." THE CHAIRMAN: That is in the report. Mr VIDELA (Chile) : Yes, but I would like to have the explanation here as well, Mr Chairman. THE CHAIRMA: Is there any further comment? Would those who favour the deletion of the words " agricultural or fisheries from this J-2 Article please indicate by raising the right hand. (There was a show of hands.) I suggest in the circumstances that the Chilean and Chinese delegates should reserve their position, and we will ask the Secretariat to record that reservation, including the addition of the words the Chilean delegate has mentioned, explaining his reasons for wanting that change made. Now that leaves the amendment suggested by the Chinese delegate in addition to the one put forward by the Chilean delegate supported by the Chinese delegate. Mr VIDELA (Chile): I would like to make a brief explanation; it is that the agreement adopted referring to "fisheries" probably would not be used as a device for restricting the importation of the products of the whaling industry, because I have a note hero from my colleague which says that a whale is not a fish, THE CHAIRMAN: I am not quite sure whether catching whales is not fishing. I think a question of such philosophical subtlety might be left to the Drafting Committee. Mr VIDELA (Chile); The United Kingdom delegate may say something about this; he is also interested in restrictiincg the importation of the products of whaling, Mr SHACKLE (UK): Mr Chairnan, I would like to say this; if the delegate for Chile will look at the Annual Statement on Trade and Navigation of the United Kingdom, he will see there a section which is headed "Whale Fisheries"; ab that if we are inaccurate in this matter, we are inaccurate in good company. THE CHAIRMAN: Could we look now at the amendmegt suggested by the Chinese delegate He suggests the deletion of all words in this paragraph including and after the word "Moreover", on the ground that he would be unwilling to accept for his delegation a fixed relationship between imports and domestic products in the circumstances contemplated by this ArticIe. Is there any comment on this. I should perhaps draw attention to the fact tihat in the relevant section of the report this question of the fixed relationship between imports and domestic production was referred to. On page 4 at the very end of paragraph 6 it is stated that "The view was, however, expressed that such 22. E/PC/T/C.II/PV/13 J-3 E/PC/T/C. II/PV/13 a rule" - that is a rule establishing a fixed relationship between imports and domestic production -- "might weigh unduly on the domestic producers, since the exporters in other countries might be able more readily to find alternative markets". Mr VIDELA (Chile): Mr Chairman, this is the point raised by the Austrlian delegation. THE CHAIRMAN: No; I think the point was raised by the Indian delegate. I take it that the substance of the proposal of the Chinese delegate is in line with that comment embodied in paragraph 6. My attention has been drawn to the fact that paragraph 7 of the report is also. relevant to this question, Paragraph7 reads: "The suggestion was put forward by two Delegations that the exception in the case of agricultur- al products should be widened by permitting, restrictions on imports 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. After discussion there was general agreement that such proposals would extend the scope of the exception to an undesirable degree. Would anybody wish to comment on the proposal of the Chinese delegate? Mr. VAN KLEFFENS: (Netherlands): Mr Chairman, the same sentence has caused us some difficulty as to its wording, and we would like the Draftlng Committee to go into this wording, because as it stands it might cause some difficulties of interpretation. I think the general meaning is acceptable, but the wording leaves something to be desired. THE CHAIRMAN: Will the Secretariat note the request of the Netherlands delegate that the Drafting Committee might examine the wording of this paragraph carefully to ensure that its meaning is adequately expressed. Is there any further comment on the amendment proposed by the Chinese delegate? Will these who favour the amendment indicate by raising the right hand. (There was a show of hands.) In the circumstances I would suggest that the Chinese delegate could meet his point by associating himself with the reservation or the point made by the Indian delegate which is embodied in the report. We could amend the report to make it clear that more than one, delegate was associated with that view. J-5 E/PC/T/C.II/PV/13 Mr TUNG (China): Mr Chairman, I want to make clear my suggestion that these sentences should be deleted. We want these three sentences entirely deleted because we could never agree to any fixed ratio. THE CHAIRMAN: That will be embodied in the report as part of the Chinese delegate's reservations Is there anything else on sub-paragraph (e)? I take it that it is agreed. Now, (f). Is that agreed? I thnik the notes have been covered during the discussion of the various para graphs. Mr SHACKLE (UK): Do we now discuss the report on this? THE CHAIRMAN: Yes, we take the report on Article 19, which commences on page 2 of the document. Paragraph 1 -- is there any comment? We take paragraph 1 as agreed. Paragraph 2 - agreed. Paragraph 3? Paragraph 3 is agreed, Paragraph 4? That is agreed. Paragraph 5? Paragraph 5 is agreed, Paragraph 6. Mr MELANDER (Norway):. Mr Chairman, I would like to have inserted in paragraph 6 - I think the most appropriate place would be a new sentence after the second sentence reading: "There was wide agreement for the view that a clause on these lines was desirable", I think at that point it would be advantageous from my point of view to have inserted that "One delegate" - or, if the Chinese and Chilean dele- gates also agree - "some delegations doubted the advisability of ; introducing an exception on the lines suggested in Article 19 (e), and that in any cas e they"or"ttihat delegaon wgould not aree to the extension of the exception boeygond the riinal suggested Charter, andthat consequently'tohe words r fisheries' should go out." 24 E/PC/T/C.II/PV/13 K1 That is not the exact wording; I have not got the exact wording. It is only meant as an indication to the Secretariat, and I would be glad if the Secretariat would deal with that point. THE CHAIRMAN: I think that the delegate of Norway can take it that the point will be covered and I think the place he has indicated is the right place for its inclusion. I suggest that we leave the precise wording to the Rapporteur. Is that agreeable? MR MELANDER (Norway): Yes. THE CHAIRMAN: Similarly in relation to the extension of the next part of the sentence: It is clear that it would be necessary to amend this, to note that there was more than one delegation who proposed that the exception should not be confined to agricltural and fishery products. Would the reference here which I think is expressed in the words the Chilean delegate himself used, meet your point? MR VIDELA (Chile): Yes. THe CHAIRMAN: Thank you. Are there any further comments on this paragraph? Is paragraph 6 agreed? (Agreed). Paragraph 7. MR TUNG (China): On paragraph 7, which novers the point I raised a moment ago, how do you change that, because originally there were two delegations and now it is more than two. THE CHAIRMAN: "by some deleations" - that might meet it. MR TUNG (China): Yes. THE CHAIRMAN: Instead of specifying two, we could say, "suggestions put forward by some delegations. MR TUNG (China): I would rather see it covered by deleting the last part of this sentence. THE CHAIRMAN: Yes; I think it is clear that we might make reference to this specific Chinese suggestion and that the last three sentences of the paragraph should be deleted. MR VAN KIEFFENS (Netherlands): Mr Chairman, I have only one point on paragraph 7. There is a reservation there. I do not want to press it now, 'but, on the other hand, it says here: "After discussion there was general agreement," and so on. That is a bit strong. I would propose to put in,"after 25. E/PC/T/C. II/PV/13 discussion it was felt." THE CHAIRMAN: Delete "there was general agreement"and insert "it was felt " MR VAN KLEFEENS (Netherlands): Yes. THE CHAIRMAN: Any objection? I think some change is clearly necessary. To say that there was general agreement is an everstatement. Is that agreed? Paragraph II. (Agreed). Paragraph 12. There will, of course, be an incidental amendment to the quotation at the end of this paragraph to bring it into line the precise werding of the message actually received. It is at the top of page 6. The Secretariat will deal with that. Paragraph 13. MR HELMORE (UK): Mr Chairman, think the delegation referred to in the opening sentence of paragraph 13 is not now represented. I wonder if, in those circumstances, we could leave this paragraph for the time being? THE CHAIRMAN: For the time being? MR HELMORE (UK): Yes, until they are represented. THE CHAIRMAN: I see. In the absence of the Indian delegate, from whom this suggested addition originated, I think it is wise for us to accept the suggestion of the delegate for the United Kingdom and defer consideration of paragraph 13 finally and I suggest that we begin our activities this afternom by dealing with this paragraph before we go on with our other work. MR SHACKLE (UK): Before we leave this passage, Mr Chairman, I should like to call attention to a typewritten sheet which I think has been distributed and which is suggested for insertion is paragraph 14 at this point. I am not quite sure whether everybody has the paper, and it might possibly be for the convenience of the Committee if I read it through - it is not long. It roads like this: "The Committee considered the question of the treatment of certain existing preferential arrangements which wore es- tablished under international agreements but not effected by the normal method of a difference in rates of duty. In these special circumstances they recommend that any such arrangement remaining after the negotiations 26 . K3 E/PC/T/C. II/PV/13 contemplated for April 1947 should be dealt with by a provision in a pretecol 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 themember countries concerned desire that a product should be made the subject of such an arreangment, or (b) some other arrangement regarding the matter between the member countries concerned. The Committee afreed further that only a very limited number of commodities fall under this heading and that the countries concerned should establish the facts about them so that this recommendation on the subject couled be taken into account in the forth- coming negetiations. It was further recognized that the concessions, or lack of concessions, in respect of the items concerned would for purpose 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." I think the Committee Committee will recall that at an earlier sessionof this Committee the delegate of Australia raised the case of certain commodities on which a preference has been given, not by way of tariffs, but by way of quotas. The consequence of that is that, while tariff preferences would be negetiable under Article 18, there was no provision in the draft Charter as it then stood for dealing with the position of those preferences accorded by means of quotas . It was agreed that a small sub-committee should go into the matter. That small sub- committee has hold a number of meetings, and this paper is what they suggest should be put into our report in order to deal with the point. I trust that the paper is reasonably self-explanatory. Ihave only one explanation to add in regard to it. It is a statement which I would like to see included in the verbatim record, and it runs as follows: "The United kingdom Delegation understands that the commodities in question for the purpose of this paragraph are beef, mutton, lamb, bacon and processed milk imported into the United Kingdom from Commonwealth and other sources. " Thank you, Mr Chairman 27. E/PC/T/C. II/PV/13 THE CHAIRMAN: Is there any comment on this suggested inclusion in draft Article 19? MR JOHNSEN (New Zealand): I would like to support its inclusion, Mr Chairman. THE CHAIRMAN: I take it then that this is agreed for incorporation in Article 19. Presumably a corresponding paragraph will be required in the draft report. MR SHACKLE (UK): This is intended for the draft report. THE CHAIRMAN : I see That is agreed? (Agreed). MR JOHNSEN (New Zealand): Mr Chairman, I should like to make a statement. We have been concerned this morning with being confronted with a very complex set of documents relating to quantitative regulations and exchange control. The New Zealand delegation have not been able to give adequate study, in the limited time available since the documents were issued, to the proposals, which must be considered in conjunction with those relating to industrial development, end to see how far they cover the proposals on which we made submissions and with the principlse to which we desire to adhere set out in paper numbered E/PC/T/C.II/22, and supporting verbal statements. No doubt other delegations are in the same position. It is undrestood, however, that it is not intended that three should be any commitments at this stage by signifying acceptance or otherwise of the proposals before us. On behalf of New Zealand, therefore, we should like it to be recorded that these proposals are being accepted. purely as a basis for further consideration and discussion. THE CHAIRMAN: That is clear. MR TUNG (China): I join withe the New Zealand delegate in the view he has just expressed THE CHAIRMAN : I suggest the meeting should now adjourn and that we reassemble at three o'clocko. Thank you. (The meeting rose at 1.15 p.m. ) (For vepbatim raport of afternoon session, see Part 2 of E/PC/T/C.II /PV/13 28. L1 E/PC/T/C.II/PV/13 - Part II. The meeting resumed at 3 p.m. THE CHAIRMAN: Before we complete report dealing with Quantitative Restrictions- it is necessary for us to finalise the paragraph 13 of the report covering the subjecet matter of Article 19. Ths is on page 6 of the document. You will remember we deferred this from this morning since I understand that the delegation mainly intersted was absent at that time.. R LO ANATHAN IItdiM): Mr aChairman, I am sorry for myecbseoce this morning; I had an oppointment which required my getting away in good time. One of the delegations referred to at the beginning of paragraph 13 is the Indian delegation, and I should like to take this opportunity of clarifying our position in this matter. Our views on quantitative restrictions are well known. We believe that they are a legitimate form of protection in appropricate circumstances.and under adequate safeguards. We hoped that one of the ways by which we could get satisfaction in respect of this matter was through the chapter on Industrial Development; but having considered that, we felt that the procedure laid down therein was too cumbersome and likely not to afford the facility those countries may need without undue delay or undue stress. Hence a more general exception was sought to be provided for by us by asking for a further amendment amendment of Article 19. Since we made that reservation, however, we have been advised that the matter will be looked into more closely with the vieew of meeting the standpoint of India and other countries, and that the relevant Article in the, chapter on Indusmetrial Development might be amended so as to be more satisfactory to us. Should tha eventuate, Mr Chairman, we should, onIy be too glad to reconsider our reservation here, as our anxiety has been all through to provide for the use of quantitative restrictions under adequate but not excessive or almost impossible safeguards. In other words, we want a provision which would enable a country to have recourse to quantitative restrictions and get the approval of the Organisation with reasonable case and celerity, provided it is in conformity wth criteria laid down by the Organisation, of which, of course, one important consideration would be whether the particular form of quantitative restriction would be less restrictive than alternative forms of protection. 29 M1l E/PC/T/C.II/PV/13 Due notice will of course be given to the Organization, and it should be open to the Organization to accede to this without needless formalities, subject to defined tests, which should be easily applicable. Mr. Chairman, if after examining the provisions contained in the Chapter on industrial development later on we feel that this matter is amply provided for we should not like to press this reservation here, but whether we can take it back or not will depend very much upon the sort of improvement that we hope might be put in when meet again. Subject to these things I wish to say that we approve this paragraph as it is, THE CHAIRMAN: Any further comment on this paragraph? MR. HELMORE (UK): Mr. Chairman, some deleegations here will know that the last words in this paragraph were mainly attributable to the United Kingdom. In the light of what has been said, if the Indian delegation could agree to state their reservation with the reason, if we could insert some such words as " since they thought the procedure laid down in the draft Chapter on Industrial Development needed further examinationn", then I think we could be perfectly content to have our vice rocorded, that we thought the procedure in the Industrial Development Chapter thepr was satisfactory. That would lead, I think, to a Report which would now take the world think there had been a great and irreconcilable row about this point indeed there , wh ich wasnot Wou ld thatsuggestion be acceptable? MNARAANN(KATHT ndia): Yes, that would be all right THE.CHAN: That IRMld be AwouWSome delegations announced that becauses th--y" HELeOEE (M.O: "considered" . MR. LOKANATHAN ( India):. Yes THE CHAIRMAN: 'that the procedure laid down in the draft Chapter on industrial development" -- 30. E/PC/T/C.II/PV/13 MR. HELMORE (UK) Perhaps we night insert a reference there, if I could give it to you in a moment or two - "needed further examination", and then it would go on as in the text. THE CHAIRMAN: It is Article 4, paragraph 3 of the Industrial Development Chapter. MR. HELMORE (UK): It is really 3 (a) and (c), since 3(b) refers to a case where a member has undertaken an obligation. THE CHAIRMAN : It would then read "because they considered thae the procedure laid down in Article 4, paragraph 3 (a) and (c) of the draft Chapter. on industrial development needed further examination, they might propose an addition", etc. In that case, the United Kingdom suggest that the view of the other delegations might be altered to read "Other delegations consideread that the procedure laid down in the draft" - you could leave that sentence pretty much as it stands, could you not? MR. HELMORE (UK): Yes - "that this point was sufficientely met" . THE CHAIRMAN: Then the last sentence would be deleted, MR. LOKANATHAN (India): We wanted to add that it would be further considered further examined, or something of that kind. MR. HELMORE (UK): That comes in the first sentence. May I road the whole paragraph as it would go now? or Some delegations announced that because they thought thate th procedure laid down in the draft Chapter on industrial development" - and then the reference needed further examination, they might propose an addition to Article 19 paragraph 2 to include another exception in the following terms" - and then again the quotation. "Other delegations considered that this point was/sufficiently met in the draft Chapter relating to industrial development". THE CHAIRMAN: I am not quite sure whether that does not require some alteration, the point in this case being, it seems to me, that the delegations referred to considered that the procedure required further examination. I think it would be beetter to 31. E/PC/T/ C.II/PV/13 say "Other delegations considered that the procedure was appropriate" MR. HELMORE (UK): "the procedure in question" THE CHAIRMAN: "the procedure in question was appropiate". Then, of course, the fact that there are two views on this question would quite clearly imply that further examination of that question would be undertaken at the Second Session. Is that acceptable to delegations? MR. LOKANATHAN (India): What about the last sentence? THE CHAIRMAN: The last sentence is deleted - "Other delegations considered that the procedure in question was appropriate". MR . HELMORE (UK): Perhaps we should say "however". THE CHAIRMAN : Yes - "Other delegations, however, considered" . Is that acceptable? Then I take it that Paragraph 13 as amended is agreed. That completes the Report on Quantitative Restrictions. It remains only for us to record our thanks to the Drafting Committee, and particularly to our Rapporteurs, the have done such valuable work indeed in this - even more than usual, I think MR. GUNTER (US):Mr. Chairman, I should like to point out that Mr. Meade, of the United Kingdom delegation, is primarily responsible for this Report, and I consider it a very excellent job. THE CHAIRMAN: Can we pass now to consideration of Subsidies? There are two parts to this Report. Part I deals with the Report of the Sub-Committee on Subsidies on Manufactured Goods. Have we a Rapporteur or Chairman of the Sub-Committee could introduce this? If not, then proceed straight to examine it. Any comment on Part I? Approved. Part II. Anything on the first paragraph of Part II? Then I take it it is agreed. Any comment on the second paragraph? 32. E/PC/T/C . II/PV/13 MR. SHACKLE (UK): There is just one point. It is really a question of clarification. . This Report now before us of the Sub-Committee on Subsidies on Manufactured Goods ends up by saying, in the very last sentence, "In view of these facts no change in Articles 25 of the draft Charter was considered necessary" . Of course, that might refer to one of two things. It might refer either to the draft as it was printed in the original United States Draft Charter, or, on the other hand, it might refer to the somewhat amended version which forms the appendix to paper T/21, the Report of the Drafting Sub-Committee on Sunsidies on Primary Products, which we shall now go on to consider. In that version in the appendix to paper T/21 it will be seen that a complete context is given which would cover both subsidies in general and also, in particular passages, subsidies on S. I .h- . . ha primary products I think eraps need to clcarup hat littl ambigaty I prosu tolast setence of paper No. 20 can b roa as referring to the version inte appendix papo-T21. If so, all is clear. If not,e have an inconsistency 33. N-1l E/PC/T/C. II/PV/1l3 THE CHAIRMAN: Could we leave out the reference to the draft Charter and say Article 25 is embodied in the appendix? Mr SHACKLE (UK): In the appendix to paper 21? It is a separate payer, is not it? THE CHAIRMAN: No change in the draft Article 25 as embodied in or as appended to Document T/21. It will be necessary for the Secretariat in combining the report, of course, to change that particular reference, since it will not appear presumably as document in the combined report; but if we leave it as that, it will make it quite clear to which particular draft we are referring, and the precis drafting can be attended to by the Secretariat. Is that agreeable? Isthereing anything else on that paragraph? I take it that the report of them Subcommittee on Subsidies on manufactcured goods is approved. Again we offer our thanks to the Committee. We passnow to the report the Joing Drafting Subcommittee of Committees II and IV on Subsidies on Primary Products. This was referred to a Joint Committee because of its close association with the work being done on intergovernmentalntterorenal commgemoditygrranents by Committee IV. Part hjI - istre any comment? Mr JOHNSEN (New Zealand): "New Zealand" should be deleted. New Zealand wshat nothnt ette otmi t TMHE CHAIRAN: "New Zealand" is a misprint for "Net"herlands. Delete land" "eElaeNend nt "Netherlands". Wlth thaat memeameniid this Part I agreed to? Part II, paghrraph 1. Is there any comment on paragraph 1? Mr HELMORE (UK)M: r Chairman, may I speak not in may caapcity as United ingdmordelegate but as, Chairmnarof Committee IV, which si-now dead, I think I am rgit ihnsaying that the members o myf Committee would probably have preferred to say "the specal dffificulties referred to in chapter 6" and no"t the special difficultiesw hich make necessary the provisions of chapter 6". THE CHAIRMAN: Yes, this is in the second paragraph; "As concerns primary products"-. The wording you suggest is to delete which make necessary the provisions of" and insert "referred to in"? 34. E/PC/T/C. II/PV/13 Mr HELMORE (UK): Yes. THE CHAIRMAN: I think that is an improvoment. Is that amendment accepted?d?cc-pte? Is thereher aomment on naray apfurt cpghrh 2. T en I satake it aregreph d, graarx r LOKANATHANa ):(an :ic ld l I'htoouikew llkn oeate heforcof the "but" there in the fourth line of pararaph 3. HAIRiMAYAN o feelh at it is incorrectly used? rM LOKANATHAN (India:) I donmot qui efollow, I supopse it refers to teh elimnaiiton of the export susidiebs, and only to the limitaitno of the latter - not the elimination of the letter. THE CHARIMAN: I take tsy hto be the meaning, qiute clearly, tsht the Atiycle does look towards the early eiminaltion of export subsidies. but, on the other hand, only to the limtaition of genearl subsidies. Is that clear? Is therea nythign else on paragraph 3? That is agree.d Paragraph 4? Perhaps'w e ou hgt to tak tehe suggested cahgnes one at a time. (The Chairman called for comment sub-paragraph by sub-paragraph or 4 (a) to (j) There being no comment, these were taken as adopted.) We take now the actual text of the Article. Paragraph 1? Mr SHACKLE (UK): Mr Chairman, I am sorry at this late stage to make a suggestion which is, I think, to some degree a small suggestion of substance. I do not wish to provoke a discussion on the point. I Interim merely suggest that it be noted for consideration by the/Drafting or Committee/at a later stage. The suggestion would consist in adding after the words "such product" in the 5th line the words "or of closely competitive products". What I have in mind there is; for example, the case of synthetic and natural products which are liable to be closely competitive, As I say, I would be content if that were held over for consideration either by the Interim Drafting ocmmittee or At whatever later stage may be appropriate. I should like just to mention it now. I will repeat my suggestion, which is that after the words "such pro iuct in line 5 there might be added the words "or of closely competitive products". 35. N-3 E /PC/T/C.II/PV/13 THE CHAIRMAN: Isit agreed 'that we invite the Drafting Committed and the Second Session of this Committee to consider the Possible inclusion of those words in the fifth line of this Article following the words "such product'?, It is not proposed to include the words at this stage, but merely to record them with a request that the Drafting Commttee, and, if necessary, the Session, consider this proposal. Is that agreeble? Mr VIDELA (Chile): I should prefer to keep the present drafting. THE CHAIRMAN: It is not proposed to alter the draft. Mr VIDELA (Chile): Not to alter the draft? THE CHAIRMAN: No - merely to note this suggestion for consideration next year. Mr VIDELA (Chile): With my reservation, Mr Chairman, becasuse this practical part was not my responsibility; it was another member of the Chilean delegation. O1 E/PC/T/C. II/PV/13 THE CHAIRMAN: It is agreed then to note that suggestion for later con- sideration, recording also the comment of the Chilean delegate, that he is not in a position to judge whether that request should be made. Is there anything else on paragraph 1? Is that agreed? (Agreed). Paragraph 2. MR LOKANATHAN (India):Mr Chairman, on page 8, line 5, it says "but in any event not later than three years from the day on which this Charter enters into force " I think, , Sir, the Indian delegation feel that three years is really to long a period, especially taking into account the fact that it be another two years or eighteen months before Charter comes into force, and if, as is obvicleously clear, export subsidies are likely to inflict greater injury upon other countriese, there is no justification for giving such a long period; and we feel that one year will be as long as is warranted by the circumstances. Therefore, I should like either to move to move that amendment or, if that is not necessary, at least to make that point for future con- sideration. THE CHAIRMAN : What specific period had you in mind? MR LOKAMATHAN (India): I would say, "but in any event not later. than one year from the day on which this Charterr comes into force." That in itself means somewhere about 1949 or 1950, and therefore that is quite a long period. THE CHAIRMAN: The Indian delegate has suggested that the word "three" in the fifth line be amended to read "one," so that members would be required to give effect to this provision not later than one year from the date on which ther Chafter enters into force. Any comment on this amendment? MR HAWKINS (USA) :Mr Chairman, I cannot say definitely that that woulde be acceptable from the point of view of the United States, but I think it would; but I just have not ge the information to reach a decision upon it. My own legislation is involved in this Article, and it also involves a modi- fication of the United States Statute. Now there is a question of how long is allowed to do that and that is therefore of some consequence, to us. I recognize, however, that one year from the time the Charter comes into force is putting it still quite a way in advance, and I think that very likely we can accept it, I should prefer, however, to leave it over for further consideration at the Drafting Committee stage. 37. O2 E/PC/T/C.II/PV/13 THE CHAIRMAN: Is there any other comment i[pm this?othr coracnn t? : UNG (ChMr C, the Ccinese hairghmiannina)alrea: gpr[potoppo h-rrsose reservation on th is dpoint, an I widsh to rea that out: The adoption or maintenance of su similar measures ot promote theo,o;absit production or ectaion rof cempemrt socmmoditiesia corb.iber a Mem-.rctry which hasere suffd froma chronic ae dversbalancpayments [e ofshould be allowed until such ea tim ase its quilibrium inbal thee anpac eof ymnts wilel hav bn actually attained, when the question of such suresmea -- shres- N CMJcxus Ne: EeshEsemo.old li diske toof this particular amend-pose dis;)osarticamenuar aoiind megant suggctede by thwicIdian dle-te beforewwcdeavth ay others, if gyu would noat indg vtin,nti we hlve doe that. TUNG (China): Very well. THAIRhirMCould I havey ther jthegh views anbA oNtios who wish to coment on the suggestion made by thege Indian eelote that we should amend the word "three" in the o fifth line t "one"? ALMEIDA r ABaramzil) M1rirMa, we understand the reasons of the United States delegation about her great difficulties to chance the situation created with the subsidizing oWef cotton. fully agree with the Indian delegate because three yeery longars is a v time for this change. This Charter, and the provisions that the Conference will decideee on, reprsnt s somhances in gtheg leslation of all countries involved. ihn. it eTeeefor, I think the United States, to whom the whole world is owing the services as the forerunner in the field of the organization of economic peace, will make efforts to change that situation in a few months as the Indian delegate heas suggsted. ITHE R MrA N:rAaCAere any other comments on this? ECUYER (FCanmYEa i(netpreraaton): Mr Chairman, I would see no objection, from the French point of view, to the fixing of a lapse of one year instead of three years. I think, nevtheless, that quite a number of countries' legislations would be affected by this and that this would require changes in many regulations. I think, therefore, it would be wise to reserve the matter, in order that it might be regulated . at the time of the next Confer- ence. 38. E/PC/T/C. II/PV/13 THE CHAIRMAN : Could I suggest to the Indian delegate that it is clearly a fairly difficult thing for delegations to make a judgment at this stage as to what the implications of any period would be for them, and if it would meet his point we could add to the report a note that some delegates consider that three years is an unduly long period and that it was agreed that this matter should be examined again in the light of the views to be expressed later by the various delegations on the effect of this on their on legislation, or something of that sort. MR LOKANATHAN (India): That would be quite satisfactory. THE CHAIRMAN: Would that modt the delegate? We suggest that the precise wording should be worked out by the Secretariat. Is there anything clse on paragraph 2? MR LOKANATHAN (India): We have the record-of the American delegate's speech also here, because that will be very useful. THE CHAIRMAN: Yes. MR TUNG (China):Mr Chairman, I had not finished my statement. I want to read this. At the present stage of her economic development China still finds it necessary to rely on agricultural and mineral products to make up the princial items of her export trade. Such special products as wood oil, tea, silk, bristles, tungsten, tin, and so on, have long, enjoyed an acknow- ledged position in the world markets and have for the past few decades given steady employment to large numbers of her working population. In view of the increasing foreign demands for these commodities, the Chinese Government has spared no effort to standardize their quality, to enlarge the capacity and reduce the cost of their production so as to give the world markets a more regular as well as plentiful supply at reasonable prices. To keep up these standards in the future, it will have to adopt or maintain such measures as subsidies or price support which are in- dispensable to its plans for promoting the production or exportation of the aforesaid special commodities. These measures, we need hardly point out, will have the effect not only of safeguarding the employment of a large section of the Chinese population, and of ensuring steady and economical 39. E/PC/T/C. II/PV/13 supplies for the international markets, but also of increasing China' s exchange resources to pay for her much needed imports and thereby serving to bring about her balance of international payments. As such, they are conducive to the achieyement of the main aims of the proposed Inter- national Conference on Trade and, Employment and their application should, therefore, not be limited by any fixed date and should be free of any restraint based on the data of any previous representative period. For these reasons, the Chinese delegation would like to place on record the following two-point reservation on Article 25 of the U. S. Draft Charter: (1) 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 suffrered from a chronic adverse balance of payments should be allowed until such a time as its equilibrium in the balance of payments will have ben actually attained, when the question of such measures may be reconsidered through consultation by the countries concerned (2) The 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. The first point of the reservation applies to paragraph 2 here and the second point of the reservation applies to the following paragragh THE CHAIRMAN: Is there any comment on the first reservation submitted by the Chinese delegation? I shall be glad of the views of the Committee as to whether it is necessary for us to determine the manner in which this reservation wile be recorded, or whether it will be incorporated in any way into the Articles themselves. MR HAWKINS (USA): I think it would be unwise to adopt the amendment. The effect of it would be that a country with an adverse balance of payments could subsidize exports possibly with a view or at least having the effect of, taking trade away from another country which may be in balance of payments difficulties; in other words; it might lead to, or in fact result i ~~~~~~~~4.0._ E/PC/T/C.II/PV/13 a virtual trade war. Therefore, I think the amendment is open to serious objection. MR SHACKLE. (UK): I would like to support the view, expressed by Mr Hawkins, on behalf of the U.K.delegation. THE CHAIRMAN: Are there any delegates who wish to support the reservation made by the Chiese delegate? If not, I would ask whether he would be content that it should be recorded? MR TUNG (China): Yes, I wish it to be recorded. THE CHAIRMAN: Any further comment on paragraph 2? If not, I take it paragraph 2 is agreed? (Agreed). Gentlemen, the interpreters have asked me to request delegates not to begin speaking until they have been called upon by me. That gives then time to make the necessary adjustments. P. fols. 41. P1 E/PC/T/C .II/PV/13 MR JOHNSEN (New Zealand): One point I would like to have made clear in respect of paragraph 3 of Article 25 concerns the returns to producers of primary products. We make a comparison here between the sale of a product for export at a price higher than the price charged for the like product to buyers in the domestic market. I think the comparison there should be with the price paid to producers in the domestic market. I do not know just what was intended by the draftsman of the Article. MR SHACKLE (U.K.): My impression is that the drat Article as submitted for the consideration of this committee did make as its test of what is an export subsidy the relation between the export price and the price charged to domestic buyers, not the price charged to home producers. There is, I think, a particular reason for that, namely, that general subsidies to home producers are permitted under the first paragraph of the Article - subject, of course, to conditions - and that for that reason it was thought that the appropriate test was the price to home buyers, not the price paid to home producers. THE CHAIRMAN: Does that meet the point raised by the delegate for New Zealand? MR JOHNSEN (New Zealand): I do not know that we could accept that, Mr Chairman. We would like to have an opportunity to give further consideration to this. Perhaps it could be noted in the report that this matter would be subject to further consideration. THE CHAIRMAN: HItdMN: We could say: "One delegation raised the question of whether the comparison made in this paragraph should not be between the export price and the price domDOpaid testic producers, but asked for further time to consider this question." If we included words to that effect in the record would that meet your point? R eOHewNSEN (Noealand): Yes; and that we asked that a later opportunetveby be git to us to consider this matter. RTAN:HE M. andAND ".. t a later opportunity be given to the delegation to consider this matter". VIDEL(ChAChile): Mr Chairman, I onlyante em toe inrm- the mConmwete thatw, vhn w started discussions, I put forwmrd an exmplae, and I trusm twat exmplarwa v taenk into consideration by the Sub-Commitete I wsa not there. I said at the tmie the discussion started that the wool produced in the centre of Chile had a different rice from other wool produced by big enterprises in the south of Chile only for export; and I remember that teh Australian deelgate gave a further 42. example, and said that in his view both examples related to domestic subsidies and were not to be considered as relating to export subsidies. Perhaps that explanation will satisfy the New Zealand delegate. THE VICE-CHAIRMAN: I have a small point to raise on something which is not quite clear. Who are the " buyers in the domestic market"? When you sell certain products abroad on the domestic market you mostly find that you have different kinds of buyers, so I would ask: is it sufficiently clear as we have it here? MR SHACKLE (U.K.): Might I suggest that probably the answer to that lies in the word "comparable" - "the comparable price". That surely means the price in a comparable transaction, the price to a domestic buyer for, shall we say, a whole- sale purchase of a similar size to the export sale. I think that probably that is the key to this. THE CHAIRMAN: Is there anything further on this paragraph? May I take it that paragraph 3 is agreed (Agreed.) Paragraph 4. Is there any comment on 4( a )? Is it agreed? (Agreed.) 4(b) . Any comments? (Agreed.) 4(c). Any comments? MR TUNG (China): I have already, made my point of reservation. Shall I read it again? THE CHAIRMAN: You have made your reservation, and that is embodied in the report. Is there any further comment on 4(c)? I take it that is agreed. (Agreed.) Paragraph 5. Is that agreed? (Agreed.) You will recall that in examining the first part of this report an error was noted in the names of the delegations who were on the Sub-Committee Committee. I understand that threre other errors there also, and I think the Comittee can take it that the Secretariat will check the precise composition of this Sub- Committee and will amend Part I to accord with the facts of the case. MR VIDELA (Chile): Mr Chairman, if any of the delegates would like to look up the particular point I referred to a few moments ago, the reference to it is C.II/PV/6, pages 32 and 33; and the Australia delegate was Mr McCarthy. He gave the example of butter on that particular point. THE CHAIRMAN: Would those delegates who are interested in consulting the record. please note the reference: C.II/PV/6. Now, is there anything further on this report? . . . I take it, then, that the Report on Subsidies in relation to Primary Products and the relevant Articles covering subsidies of all kinds is approved. (Agreed.) We must again record our thanks to the Sub-Committee concerned. Is it your wish that we adjourn now for tea? (Agreed.) 43. E/PC/T/C. II/PV/13 After a short adjournment:- THE CHAIRMAN: Report of Sub-Committee on State Trading, Document 22. Part I. Amy comment on Part I? I take it Part I is agreed. Part II. Shall we take these sub-paragraphs in order? The Report states: "The provisions of Article 26 of the Draft Charter were, on the whole deemed acceptable to the Sub-Committee on State Trading, subject to the modifications indicated below." Any comment on Paragraph 1? I take it Paragraph 1 is agreed. Any comment on Paragraph 2? MR. JOHNSEN (New Zealand): Mr Chairman, I think it might be worth while to pick up that appears to be a clerical error in the last line of Paragraph 2. I think the word "effecting" should be "affecting". THE CHAIRMAN: Is that correct, Mr. Shackle? MR. SHACKLE: (UK): Yes, that is right, sir. THE CHAIRMAN: Any other comment on Paragraph 2? I take it Paragraph 2 is agreed. Paragraph 3? Paragraph 3 agreed. Paragraph 4? MR. SHACKLE (UK): In the last line I think the word "that" should be "the". - HAIRMANhaTHAlete "that" in the last line of Paragraph 4 and insertth "e"th "e provisions of Article 3f 0othehart r."Ce Agreed? Any other comment on Paragraph 4? Paragraph 4 agreed. Any comment on Paragraph 5? I take it Paragraph 5 is agreed. Paragraph 6: Any comment on Paragraph 6? I take it that is agreed. Any comment on Paragraph 7? MR. VIDELA (Chile): Mr. Chairman, I have been instructed to ma aka statemenot n Article 27, related with Article 26. wI ill reserve it for article 27. THCE HAMANaI: Any fuherrt mmcoent on Paragraph 7? I take it Paragraph 7 is agreed. 44. E/PC/T/C.II/PV/13 "Expansion of Trade by State Monopolies of Individual Products". "The principle underlying Article 27 of the Draft Charter, being the counterpart of paragraph1of Article 18 of that Charter, was considered I generally acceptable by the Sub-Committee. The changes which were recommended and which are listed below serve mainly two purposes - first, to provide a more accurate basis for the determination of this 'negotiable margins', and secondly, to take into account the special nature of fiscal monopolies." Can we take those sub-paragraphs one by one? Paragraph 1. MR. MELANDER (Norway): Mr. Chairman, we have a general reservation to make on Article 27. I do not think it would be useful at this stage to go into the details, and I think therefore that the best thing would be to insert a reference here on this page 3, which we are now discussing, to the effect that "One delegation made reservation as to its attitude towards the proposed Article 27", and I would there refer to the statement which our delegation sent to the Secretary of Committee II on the 22nd November. THE CHAIRMAN: Can put that appropriately, do you think, at the end of the section of the Report dealing wih the Expansion of Trade by State Monopolies of Individual Products? MR. MELANDER (Norway): Yes. THE CHAIRMAN could make it Paragraph 7. Do you wish to state the nature of your reservation, or make it quite general? 45. R-l E/PC/T/C.II/PV/13 Mr MELANDER (Norway) : I think I would rather make it quite general. It refers particularly to import monopolies and the price policy; but it is better to leave it as a general reservation, I think. THE CHAIRMAN: We add there, as paragraph 7: "One delegation found it necessary" or wished to reserve its postion generally upon this, Article". Mr MELANDER (Norway): Yes. THE CHAIRMAN: Shall we take these sub-paragraphs one by one, (The Chairman called for comment on paragraphs 1 to 5 paragraph by paragraph. There being no comment, these were taken as adopted.) THE CHAIRMAN: Paragraph 6? Mr SHACKLE (UK): "selling prices", of course, in line 3. THE CHAIRMAN: Yes. That is the last word inside the parenthesis. Is there any comment on paragraph 6, I take it paragraph 6 is agreed. Paragraph 7 would include a general reservation made by the Norwegian delegate. I understanding the delegate for Chile to say he wished to raise a point on this Article? Mr VIDELA (Chile): Yes, Mr Chairma., When the general discussion on this matter was open, I remember that as the Chilean delegate I raised tisu questio of conmmercia locnsdieraitons, and I may refer to .CII/PV/5 page ,38, nad the question I r aise wasd a nswered by Mr Hawkins. The reference is C.II/PV/6, page 7, wher Mre Hawkins said: "The Delegate for Chile enquired w hether an export monopoly could charge different pricesi n different market.> Taht is more or less the obvious answer of a previous question which I have just cmmenrted on. The answer, though, specificlaly would b:; fI this is done for commercial reasons - such, for example, as meetign local competitive condtionsi. We think that entirely consistent with the provision; in other words, I think I am merely aggregi with the proposition as th eChilean Delegat peu ti t." I have been instructed by the Chilean delegatin to omak ethis statement, Mr Chairma:-n The Chilean Delegation fully appreciates the difficulties which the sub-comimttee has had to contend with in triyng to reconcile the points of view expressedb y the different Delegations on the question of State enterprises and State trading. As you so rightly 46. R-2 E/PC/T/C.II/PV/13 said, and I think also Mr Hawkins, this is an entirely new field in which experience has been limited. The subject, however is a very important one, more so today when so many enteprises, especially in small countries, come under that category. As Article 26 now stands, It covers substantially the views expressed by the different Delegations. To us it is quite clear that an enterprise coming under the category of a State enterprise can, for commercial considerations, practise different level of prices in different markets. However, it seems to us that there is an apparent contradiction between what is set out in Article 26 and what is said in Article 27, sub-paragraph b. Here it is said that in the case of an export rmonopoly, the margin etc. etc. This series seems to us to nullify what is set out in Article 26. For exmple, if an export monopoly product is solid in the home market at, say 10, and the maximum margin to cover freight, Insurance, etc. is another 10, the price in the export market would then be 20. But supposing in that for commercial considerations that country has to sell it at 18, then since the maximum margin of 10 is a constant factor, it would appear that the home market price would have been cut to 8, which would not be allowed under sub-paragraph b. We do not, at this stge wish to find words to cover this contingency, as it might involve a lengthy discussion and we are pressed for time. However, the Chilean Degelation would request that this point be brought to the attention of the Interim i Drafting Committee, so that when it meets next January it can further explore it with a view to make it more clear. That is all, Mr Chairman. Mr SHACKLE (UK) Mr Chairman, there is just one comment I would like to make on that point. That is that there is no compulsion, of course, at all to have any export margin; it is merely if one wants to put up something which is equivalent to an export tax; and all this does is that if one does want to put up something equivalent to an export tax, if it happenes to be done by something equivalent to a State export monopoly, then if some other country comes along and wants to negotiate about the level of that margin, it can do so, just in the same way as it would have been allowed to negotiate about an export tax. I think possibly with that explanation the difficulty felt 47. E/PC/T/C. II/PV/13 by the Chilean delegate may to a considerable extent disappear. At least, 1 hope so. THE CHAIRMAN: Does that meet the Chilean delegate's point? Mr VIDELA (Chile): I think so, I must refer this point to my delegation. I thank the United Kingdom delegate for his explanation. THE CHAIRMAN: Is there anything further on this paragraph? The next paragraph deals with "Expansion of Trade by Complete State Monopolies of Import Trade". The report says: "Although Article 28 of the Draft Charter was not discussed to substance, it was decided that it should remain provisionally as appears in the Draft Charter, subject to possible consideration at a later stage.". It is quite possible, Mr Shackle? Mr SHACKLE (UK): We hesitate to make prophecies.That illall.kak ph That s It depehndes on whether te country concernedcomes to dsiscuss the matter. with us or not. THE CHAIRAN: Is there ans y somment on thiSaragraph? Mr KUNOiSI (Czechosilovaka): Mr Charggehhman, if I may st it, I think no har would be ds "0sdode if the woubject to possible con ideration t at a lat stae"twere uldeudted. I. wot it useful Mr SHACKLE (oUK): tI have n objecii.on to that, Sr T CHAIRI- Itis sughagewste tlat e elete all words afterr "OChart" in the th.ird line UNOSI (Czechaoii)slveYks.Ya: fe, IRMHE CHAAN: -sggthdt areeable? iiThere s the pprordii''ovis nally". Is there any comment on that? I takt it hat this paragraph as amended is agr.eeNd to ow we htake te actual draft Articles as embodied in the ap.pendix Articlpae 26, rag.raph 1 Is there any comment? You will notice the squarke brwacets hich were referred to in paragraph 2 of Part II of the report. Is there any comment on this paragraph? I take it that trhis paa 1 is graph agreed. Paragraph 2? Mr TUNG (ChiMna): rm Chairan, referring to the phrase "for Governmental use and not f-or r esale"in paragraph 2, Article 26, I just want to have the following statement recorded: The Chinese Delegation accepts this phrase only with thre undiegstandn tphat suplies for 48 R-4 E/PC/T/C. II/PV/13 "governmental use" include supplies for administrative uses, supplies for public works and all other types of government supplies which are not for re-sale. That is all. Thank you. THE CHAIRMAN: The Chinese view will be recorded. Mr SHACKLE (UK) : I would like to say just this, Sir, that I think that is to some extent paragraph5 of the covering report, the third sentence: "The discussion on this letter point was prompted by the consideration that in some countries purchases of industrial and other equipment of various types"--. I do not know whether the covering report will be taken in the future as interpretative of what the Articles are intended to mean, but that clearly implies a construction of "governmental" which is somewhat like that which the Chinese delegate would wish to see, I think. Mr TUNG (China): Yes, it is in the report there; but I just want to make that note so that there will not be any misunderstanding and at all. THE CHAIRMAN: Thank you. Paragraph 2: any further comment? I take it paragagph 2 is agreed. Paragraph 3 -- any comment? Paragraph 3 is agreed. Article 27 paragraph 1? Mr SHACKLE (UK): The brackets, of course, stand there for the reason which has already been mentioned in the report, that Article 28 is itself there purely provisionally. Consequently, these words which refer to it are similarly provisional. THE CHAIRMAN: My attention has been drawn to the fact that in sub- paragrah (b), the words following the word "after" in the fourth line should commence a new line, since the wording there "after due allowance in either case" refers not only sub-paragraph (b) but also to sub-paragraph (a). 49. S1 E/PC/T/C. II/PV/13 MR SHACKLEE (UK): I think it mght help matters we had some more breaking up in the lines in the following paragraph. The sentence which begins: "Members newly establishing any such monopoly"' is really a separate point, so that, though I would not wish to suggest a seperate numbered paragraph, I think we might have a new line there also. THE CHAIRMAN: Any further comments on this paragraph? I take paragraph agreed? agree(d). Paragrpah 2. Agree(d) Article 28, as you see is in square brackets in accordance with the relevantp paragrpah of the report, to indicate that it is included prorovisionally. I .take it that is agreed. Agreed) That completes our examination of the report of the Sub-Committee on State Trading. Againain, itme..ains only to thank the committee for their very valuable work. You will recall that in view of the actioakn ten arising from the work of the Technical. Sub-Committee iat was necessary to prepare for inclusion in the report for publication a sectioealn goiwing with the work of the Technical Sub-Committee. A draft . draft has been prepared by the Secretariat and has been circulated for discussion. I suggest that we might now deal with that. meIt isP docuntII E/C/T/C. /64. Part I is precisely the same as in the draft of thme Sub-Committes's report itself, and I suggest that we might adopt that without further discussion. (Agreed). Part II is a summary for the purpose of publication for inclusion in the report. Shall we look at Part II? MR SHACKLE (UK): I would like to suggest a small verbal change; it is in the second. sub-paragraph, not the first, the fourth line: "If adequate time had been allowed." I would suggest that it should read:"If more time had been available" THE CHAIRMAN: The suggested amendment is to delete, in the fourth line of the second sub-paragrah, twhe ords "adequate" and allowed" and replace them by "morae" and "available" respectively. So that the sentence would read: " greater degree of unanimity might haveew bn possible if more time had been available, Is that agreed to? (Agreed). Is there any further comment on these two paragrpahs? I take It they are agreed? (Agreed). Article 9. Is 50. S2 E/PC/T/C. II/PV/13 there any comment on Article 9? MR MORTON (Australia): The second part of Article 9 appearing in the Report, Mr Chairman, the first line, roads: "It was a felt that national treatment could not be applieed to the procurement by governmental agencies of supplice for governmental use and not for re-sale" I suggest that the world "national is entirely opposite to what was intended and that the phrase "most-favoured-nation treatment" should be used there rather than the words "national treatment." It has reference to Article 8, which you will remember has been agreed to read: "The provisions of this Article shall not apply to procurement." THE CHAIRMAN.: This sentence is a direct quotation roRO the report of the Sub-Committee itself, the second paragraph of which did begin in precisely that way. THE MORTON (Australia): Article, 8 as agreed to now would permit countries making governmental purchases full freedom to purchase national products, but no country should be entitled to use the most-favoured-nation consideration in regard to governmental purchases. 12 SHACKLE (UK): Mr Chairman, I am not entirely sure that I have grasped the point accurately. But the position as it appears to me is this. Article 8 is not concerned with national treatment. It is concerned only with most-favoured-nation treatment. It is true that it incorporates by reference certain provisions of Article 9 which are concerned with national treatment. When we came to discuss this matter in the Procedures Sub-Committee the point was made that it would be difficult for many countries to agree to a requirement of national treatment as regards governmental procurement of supplies which were not for re-sale, and an amendment was made in one sentence of Article 9 accordingly; a corresponding consequential amendment was made in Article 8 so as to produce correspondence. Then, when we came to deal with this matter in the State Trading Sub-Committee we felt we had to deal with it on the lines which we had already seen when we were considering the State. Trading Sub-Committee is report just now, namely, paragraph 2 of Article 26 in paper T/22, which we have, just read: 51. S3 E/PC/T/C. II/PV/13 "The foregoing provisions of this Article relate to purchases by State enterprises for re-sale." In other words, the principle of equality of treatment of. commercial considerations applies to purchases by State enterprises. for re-sale. It goes on: with respect to purchases by State entcrprises for governmental use and not for re-sale members agree to accord to the commerce of other members fair and quitable treatment, having fulll regard to the relevent circumstances," which is a rather looser phrase I hope that this explanation will have made clear the positione ien which I conceive that matter has been left. MR MORTON (Australia): Do I uderstand that by the words national tratment" yoeu amean "universlity of treatment" and not just treatment on a national basis? MR SHACKLE (UK): No, by national treatment I moent the same sense in which that term is commonly used eim,Mthealr in merci treaties or in - what shall I say? - works about commercial treaties, namely, that it ans the same treatment for a foreign product as is accorded to a national product. MR MORTON .(Australia): I understood that to apply, in which case that sentence iis correct. THE CHAIRMAN: Is there any futhuer comment on article? I tak e.it Article 9 is areeed? (Agreed). MRHAWKINS (USA ): Chairman, this is more or less a point of procedure, but I had understood that the report of the Technical Sub-Committee was adopted as a working docuemnt and that the whole matter was to eb referred to the Drafting Cmomittee. I am wondering why now we are going into these Articles her. e I should have thoguht that the appropriate disposition of the sub- ject would have been to include the first two pargarpahs only, leaving the whole matter for further consideration in the Drafting Committee. The. discussion here, if that was the sense of the decision, was hatt anything done here tends to prejudice or limit the freedom of the Drafting Committee when considering this question. RrRODIGUES (Brazil): Mr Chairman, in the Technical Sub-Committee I hadn occasion to explain--- THE CHAIRMAN: The Dlegate of the United States has raised a point which 52. E/PC/T/C. II/PV/13 is in affect a point of order, and I would like to dispose of that before we go any further. The United States delegate delegate suggested that it was the decision of this. Committee, when it considered theTechnical Sub-Committee's report that the report s be should I approved as a working document only and should be referred to be dealt with by the Drafting Committee in accordance with its terms of reference. T.fols. 53. T1 E/PC/T/C . II/P V/13 He has pointed out that by the inclusion in this report of any form of summary of the work of the Technical Sub-Committee there is a danger that some of the issues involved in those Articles on which there was difference of opinion expressed may be prejudged, and he suggests, in effect, that we should delete the whole of this report in so far as it refers to particuler Articles and merely add, after the first two paragraphs of Part II, an explanation that the Committee considered therefore that the report should be approved as a working document and referred to the Drafting Committee for further examination. Would that be the effect of what you would suggest? MR HAWKINS (USA): Yes. My idea was that you could stop with the first two paragraphs that they would really be self-sufficient, since they explain what the action had been. MR SHACKLE (U.K.): Might I support that suggestion of Mr Hawkins? THE CHAIRMAN: Are there any other comments? MR KUNOSI (Czechoslovakia): Mr Chairman, I would very warmly support the American suggestion; I think it is quite right and the only really sensible thing to do at this stage of our work. MR JOHNSEN (Now Zealand): Would it be necessary to mention the numbers of the Articles in question for the purpose of giving reference to them? THE CHAIRMAN: They are covered in the first part of the report, where the Articles referred to this Technical Sub-Committee are listed. Speaking as Chairman of the Committee, I do feel that the suggestion Mr Hawkins has made is the correct one. I think there would be real danger in any attempt to summarise the work of the Committee, and that some injustice might be done to particular views or reservations made by individual delegations; and I would therefore suggest, for formal reasons, that it would be wise to adopt the suggestion of the United States delegate. Do the Committee agree with that view? The proposal is that Part II of the Report stop at the words "January 1947", deleting the words, "The substance of the discussions is given below" and all subsequent material embodied in the report. MR SHACKLE (U.K.): Including the concluding remarks, I gather? THE CHAIRMAN: I think we could delete that part, too. Since the concluding remarks also are in the working document, it does not seem necessary to include, them here. I suggest that we delete the whole of the remainder. Is that agreed? (Agreed.) The suggestion has been made that we ought perhaps to amend the first part of the Report, in paragraph 5, to add to the last sentence, "The Final Report of the 54. T2 E/PC /T/C . II/PV/13 Sub-Committee was submitted to the main Committee and approve as a working document." Is that Agreed? (Agreed.) With those changes, then, I take it that this material for inclusion in the report of Committee II is approved. (Agreed.) There remains only the consideration of the matter of "Relations with Non-members". Here we have the benefit of a report prepared for the considera- tion of the Committee by Mr Sheackle of the Unitedgd Kingdom Delegation. Would you like to comment on this Mr Shackle? MR SHACKLE(u.K).: Well l, Sir, I havr tried to make this paper self-explanatory and really I think there is very little I would wish to add, but merely to invite questions upon it. It tentativley suggests a kind of conclusion, which is that we imght put into th epapre that comes out from Commtte II alternative versions of the Article which is now numbered 31, but both, as it we,e in square brackets, and entirely provisionally, for further consirdeation, one bieng Article 31 of the United States Draft Charter, the othrer being the revised verison which is contained in the Annex on the last page of this paper. THE CHAIRMAN I think we might crystalise our consideration of this question if we turn to paragraph 5 of Mr Shackle's Memorandum, cn page 6, where he summarises the possible lines of action open to the Coimmttee and I think if we could decide was too which of those threeb possibilities Committee Committee favours, it would be then relatively simple. to decide the content of. the Articles concerned. The possible lines of action open to, the Committee are referred to by Mr Shackle in the following way: " (oma) to mit from the draft convention any provisions on the question, leaving it entirely to the general conference; (b) to include a draft Article on the lines of Article 31 of the United States draft, with an indication that it is no more than a possible basis for discussion by the conference; (c) an alternatimve form of Article on the lingeese suggested in the Annex. Balancing the various considerations described above, the Committee may, perhaps, feel it advisable to include in the draft convention both the alternative forrns of draft Article indicated at (b) and (c)above, with an explanation that these are submittd solely as possibele base for discussion by the conference." MR HAWKINS I should be inclined to favour (b), not that have any objection to the draft as presented - in fact, I think it is pretty good - but for this reasoWen. do not seen to be having the matter open for discussion at a later conference if we start drafting nowd, an I should think the best way to handle 55. . _ . .. j . , T3 E/PC/T/C . II/PV/13 this would be really to leave it open: to put the Article in the draft in brackets, with the comment that this subject is left for consideration by the World Conference. MR KUNOSI (Czechoslovakia): Dr Chairman, in the general discussion of the Conference and in the general discussion of this Committee we made it quite clear that we considered this point of major importance, so much so that we feel that even the practicability of those Articles on which we agreed very much depended on this Article. Therefore I submiit to you, Mr Chairman, that we should accept (a); and in so doing I would like to stress this point and insist on the omission from the draft convention of any provisions on the question, thus leaving it entirely to the general Conference to decide it, and making it quite clear that we are doing so in view of the great importance of this article for the whole result of the Conference. MR HAWKINS (USA): Mr Chairman, I think that the history of this question is such that to adopt alternative (a) and to put out a report in a draft that made no mention of this question would tend to prejudice the question. There was a provision in the draft Charter - Article 31 - which the United States put forward for consideration. Its complete emission would imply that there will be no such provision or no provision of any kind on this subject in the Charter. My sole point (and I do not think my view differs greatly from the view of the delegate of Czechoslovakia) is really to leave the question open. I think the omission of the Article - the omission of any text or reference to the subject - tends to prejudice the case in view of the fact that it was included in the draft that we submitted. 56. E/PC/T/C.II/PV/13 MR. MELANDER (Norway): Mr. Chairman, like the delegate for Czecho- slovakia I would say that this problem with which we are now deeling is of major importance, and I may say that our view was and is that it would be very difficult to adopt anything like the originally suggested Charter Article 31. On the other hand, I appreciate the view put forward by the delegate of the United States, that it would be better to just leave the text as it was in the original Charter put forward by the United States and make a specific point commenting upon it, to the effect thant this question has been left completely open and that it is open to further discussion at a later stage. THE CHAIRMAN: You would support alternative (b)? MR. MELANDER: (Norway): Yes. THE CHAIRMAN: Any further comment? THE VICE-CHAIRMAN: May I ask, is it the intention to leave it until the world Conference? THE CHAIRMAN I do not think that is necessarily the decision. It is left at the present time. If the circumstances at the April Conference were such as to make its consideration easier it might be considered there, although it is rather hard to see how, in respect of having the necessary information to determine this question, we could be very much further advanced in April. THE VICE-CHAIRMAN: I only ask this question for this reason: would we have to say in the Report that we have left it entirely open until we have had a World Confercnce, or do we say only that we have left it entirely open, or do we say that we have left it open for possible discussion at a later stage? There are three things to choose from. MR. MELANDER (Norway): I would suggest that we put in the comment that we leave it open until a later stage - for discussion at a later stage - and then it is up to us to see how things develop, and we can consider all possibilities. 57. E/PC/T/C . II/PV/13 MR. LECUYER (France) (Interpretation): M . Chairman, I agree with the opinion of the Norgweian delegate that under the circumstances it is quite important to take no decision at the moment. I think th best solution might be on of making an annxee to the text, this annexe including Article 31 of the American drfat .Thre-e fore, the Committee would not take upon itself any decision concerning this Article, while bringing to the attention of the Conference that such an Article did exist and should be considered. MR. SHACKLE (UK): On behalf of th United Kingdom delegation I should be prepared to accept the suggestion made by Mr. Hawkins, and as to what is said in our Repot, I think we might very well say that the matter is loft open for a later stage. MR. KUNOSI (Czechoslovakia): Mr. Chairman, I am very sorry, but I feel that if leave the text even in brackets it might still give the impression that the United States delegation is still beind this proposal, and I do not know if it is quiite a fact. Secondly, it indicates anyhow a line of thought on this matter. Why not simply just give an indication that there is room for and that we int toend put there an Article on relatiowns ith non-Members, and leave it like that th the addition that the problem ill be studied aned decided at a later stage or at world Conference. I am rather reluctant to present this publlished document with/ this Article as it is proposed by the United States still intact in it, even if we put some kind of remark in relation to it. THE CHRMAN: The suggestion of the delegate of Czechoslovakia would, as I understand it, mean that in the appendix there would be a heading, "Article so and so - Relations with on- Meembrs", and then a note that this question was/left for further consideration at a later stage. MR. KUNOSI (Czchoslovakia): Exactly. 58. E/PC/T/C.II/PV/13 THE CHAIRMAN: Without any draft, either the, original American or any alternative. MR. HAWKINS (US) Mr. Chairman, I think we need to have enough in ther report to indicate the nature of the questio0 w. I would be willing to drop it from the text - note have it in the text - if the Report indicates a little,more clearly hate the problem is and the nature ofe th question, rather thanm simply saying Relations w -with non-Members". THE CHAIRMAN: As I understood the porosition of the delegate of Czechoslovakia it concerned itself only ith the Article. If agree on that, or if we could make a decision on what is to be included in the appendix where the various draft Articles are placed, we could then turn to the question of what should be said in the Report I think it is fairly clear we should want something rather more than that there. MR. KUNOSI (Czechoslovakia): I agree with Mr. Hawkins's suggestion that it should be clearly stated what the Article will be about. THE CHAIRMAN: Could we agree then that it the appendix which includes the draft Articles the only reference to this would be the number of an Article and a heading, "Relations wth Non- Members" , with a note to the effect that this had been left for further consideration at a later stage? Is that agreeable? Then it will be necessary for us to decide that should be said in the draft Report itself, and here it would obviously be necessary to say rather more than that Has Mr. Shackle got a suggested wording that might do for the Report? MR. SHACKLE (UK): Perhaps the simplest plan could be to quote the original American draft Article in the Report, .and simply say that consideration of the question which it raised as left over. MR. KUNOSI (Czechoslovakia): Mr.Chairman I feel have to thank you and Mr. Hawkins for the great undrestanding you have shown in seeing my difficulties 59. THE CHAIRMAN: Will a Report in the terms suggested by Mr. Shackle be acceptable? I take it that is agreed. That disposes of the Report dealing with Relations with Non-Members and, I think we are very much indicated to Mr. Shackle for his work on this matter. MR. JOHNSEN. (New Zealand) If I might raise a point of order at this testa in connection with the question of Subsidies and Stabilized Price Policies which we were discusgsin a short time ago, I just wanted to place on record that the New Zealand delegation had. submitted a paper on that, the number of which is E/PC/T/C.II/23. I have only to assume that it was taken into consideration by the Committee which considered that subject, but I would like to call attention to it again, so that it could be taken into consiedartion by the Inetrim Drafting Comrnittee. Thank you. THE. HAIRMAN:h I think it is desrable that in the formal part of teh Report on these questions reference should be made to any documents which were before the Sub-Committee. I think that is the usuals practice, and if reference was not made to the New Zealand document on this question, then I would suggest that the Sercetariat be asked to include a reference to it and to any other documents, formally submitted documents, w hich ere befope the Sub-Committee. Will that meet your point? MR. JOHNSEN (New Zealand): Yes, Mr, Chairman. THE CHAIRMAN: ;Is there any further business? MR. HAWKINS . (US): There. is one matter of business, fully as important as anything we have done because it is so closely related to it, and that is,.to express the admiration and appreciation of the Committee for its Chairman. I thin we arek deeply indebted to him. (pAplaues). MR. VIDELA (Chiel): Mr. Chairman, Iwo uld like to say aw ord eher and to pay a special tribute to your work, because the 06. E/PC/T/C. II/PV/13 E/PC/T/C . II/PV/13 Chilean delegation is, I my say, proud to have nominated you as our Chairman. Also I should like to refer to the ladies accompanying us. I would like to pay a special tribute to the ladies who have, with their presence and their devoted and silent work, made our duty more agreeable. In other times ladies and gentlemen devoted their time, in looking for an escape, in the old and pleasant game of "Labyrinthine" which one can still play at the Hampton Court Palace. In our time expend our days and nights in trying to find more and more " escape clauses.... And I must say that although this game is not so pleasant, we just be grateful for the company of the ladies. THE CHAIRMAN: I should like to thank the delegates for the kind thiwngs which Mr. Hawkins said abwout about me which they accepted. I can only say that I have been happy to have been of service to the Commeitte, and to assure you that the task which I have had to has been made easy by the very genuine assistance and co-operation I have had from all members, and, furthermore, all by the very rel despire which theye/shown have/to ork to a ocon end in the olution of the very difficult things with which we have had to deal. Thank you. (Applause). I ma sure all the delegations will join with the delegate of Chile in his thanks to the staff, male and female. (Applause). The meeting is closed. The meeting closed at 5.58. E..3 E/PC/T/C.II/ST/PV/3 MR HAWKINS (USA): Yes, subject to any limitations that there might be on the loan. That is a question we had up at the full Committee and there I suggested that there would be no violation on the part of the buying country if the loan was limited in its use to purchases from particular sources. Anything that comes in there is on the part of the lending country. MR TUNG (China): If you omitted the words "or produces" what would be the effect on the whole of this Article? MR JOHNSEN (New Zealand): I cannot see the relationship of the words "or produces" to the rest of the sentence. MR TUNG (China): Yes; what we want to control are purchases and sales. MR HAWKINS (USA): Yes; it might not affect it; but the purpose of it is to cover cases in which there is a monopoly of production which involves. or may involve, purchases from abroad, and in that case the obligation on the State producer is to avoid discrimination in its purchases abroad among foreign suppliers. MR JOHNSEN (New Zealand): I think it would apply even with the words "or produces" out. THE CHAIRMAN: It is difficult to imagine any case in which you would have a State-run industry which never bought anything from abroad. Take coal-mining: even there you are bound to buy your pit-props from abroad; and it is a little hard to see that the addition of these words "or produces" is really achieving anything. MR JOHNSEN (New Zealand): If you look at it in relation to the second part of that sentence it makes it appear even less necessary. MR TUNG (China): Yes. THE CHAIRMAN: Yes; if a nationalized manufacturing enterprise does not buy anything abroad, then the Article simply remains inapplicable. MR JOHNSEN (New Zealand): Yes. MR TUNG (China): Yes; it is unnecessary. MR HAWKINS (USA): The first part is descriptive of the kinds of State enter- prises that you are taking about. The second part is the obligation on 21. E. 4 E/PC/T/C. II/ST/PV/3 those state enterprises as defined with respect to foreign purchases, if any. MR TUNG (China): I think the best definition of a State enterprise is that given in paragraph 2, and I think that is enough. MR HAWKINS (USA): The purpose of the second paragraph is not to cover the kind of activity; it is intended to cover the degree of governmental control. That is the purpose of that second paragraph. MR. TUNG (China): Yes. I think we should deal only with State-trading enterprises. The whole of the section is dealing with State trading. MR HAWKINS (USA): Yes; but the point is that a State monopoly for the production of a particular product may - and is likely also - to be a trader to the extent that he buys from abroad. It is intended to cover that kind of case. It has nothing whatever to do with what the pro- ducing organization does in the field of production;. it relates only to its foreign purchases. MR TUNG (China): What I am afraid of is that activities in production would also be involved in this appliication of the principle of equitable commercial considerations; but as a matter of fact we want only to control purchases and sales, not production. We do not want to interfere with any production. MR HAWKINS (USA): No, there is no intention here to do that. It is only to the extent that a producing agency buys abroad; that is the whole purpose of it. THE CHAIRMAN: I must confess that I find it hard to see how these words really introduce anything fresh into the Article. It seems to me rather that if your state enterprise purchases or sells any product, then the Article will apply in any case but if, on the other hand, it does not purchase or sell products then the Article will not apply; so that, on the face of it, I would be rather inclined to think that the suggestion of the Chinese delegate is correct, and that we could have a considerable simplification of the wording without losing any of the substance. I may of course be wrong in that. 22.. E. 45 E/PC/T/C. II/ST/PV/3 MR JOHNSEN (NEW ZEALAND): That would be my view also; and if you look at it in relation to Article 8 (and this is intended to bring State trading into line with article 8) it refers only to importation and exportation. THE CHAIRMAN: It is I think conceivable that you might have some kind of state enterprises which were not really even commercial but which might buy some things - I suppose missionary societies, for example - and in that case it is difficult to see, even so, that the issue is affected by these words. MR HAWKINS (USA): I think there night be something in it from the point of view of drafting. As I understand it, there is no objection here to our requiring a state producing agency which does buy from abroad would give fair and equitable treatment among foreign suppliers. There is no objection I take it in substance; but it is a question of whether the words referred to are necessary. Off-hand, I am inclined to think that they are not and that you could drop, them without much loss, because it is referring to any agency which imports, exports, and so on. MR JOHNSEN (New Zealand): Yes. I think they could be dropped without des- trying the sense at all. THE CHAIRMAN: Without affecting the substance? MR JOHNSEN (New Zealand): Yes. THE CHAIRMAN: May we ask the Rapporteur to: consider that point further? MR HAWKINS (USA): I think, off-hand, that it would be all right to drop those words. MR JOHNSEN (New Zealand): There is another question that arises and that is in relation to the second part of that sentence, "or any Member granting exclusive or special privileges, formally or in effect, to any enterprise, " and so on, "shall accord to the commerce of each of the other Members treat- ment" and so forth. Now one can contemplate a Member granting an exclusive right to some private organization to import, in which case the Member could not really grant most-favoured-nation treatment. MR HAWKINS (USA): Paragraph 2 is intended to cover that. MR JOHNSEN (New Zealand): It would all depend--- MR HAWKINS (USA): --- on the degree of control F..1 E/PC/T/C. II/ST/PV/3 MR. JOHNSEN (New Zealand): Looking at that in relation to the previous sentence, what is really intended I think is that the member granting: such inclusive or special privileges shall arrange for most-favoured- nation treatment m ±kx to be accorded in respect of imports, exports, etc. MR. HAKINS (United States): If the member has effective control. It is the member that has the obligation to use the control in such a way as to conform with the Article. THE CHAIRMAN: I am not quite sure whether a difficulty arises from the change in wording which has been made here. Originally that sentence in the A.rticle was in the passive and not in the active. I think as a result of that the fact that the member itself would not directly accord treatment which was in fact accorded by an enterprise which had been set up is, so to speak, covered. Is not that so? The original wording was: "If any Member establishes or maintains a state enterprise or if any Member grants exclusive or special privileges, formally or in effect, to any enterprise to import, export purchase, sell, distribute or produce any produce or service, the commerce of each of the other Members shall be accorded nondiscriminatory treatment, as compared with the treatment accorded to the commerce of any country other then that in which the enterprise is located, in respect of the purchase or sale by such enterprise of any produce or service." From the drafting point of view I think that does get over the difficulty to which the New Zealand Delegate has just called attention. MR. JOHNSEN (New Zealand): That is right. THE RAPPORTEUR: It is easy to put it back to the original while substituting for "nondiscriminatory treatment, as compared with the treatment", "treatment no less favourable than that. " MR. JOHNSEN (New Zealand): I think, that is right., THE CHAIRMAN:. Are there any other points on Article 26? If nobody has; any further points on Article 26 we might now turn to Article 27 so far as it is dealt with in the portion of the Rapporteur' s report which we 24 F.2 F/PC/T/C. II/ST/PV/3 have before us. May I ask for any comments on Article 27. MR. JOHNSEN (New Zealand): Is there any suggestion at this stage of setting out a new draft of Article 27? THE RAPPORTEUR: In that connection may I stay that it my understanding that the sub-comittee had not procceded sufficiently far with Article 27 to warrant an attempt to produced a new draft yet. The purpose of the observation set down in the report is to record points mentioned, questions raised and alterations agreed to in general, without attempting to go any further, because. it was felt that the whole matter was subject to further discussion at this meeting. THE CHAIRMAN: In that case perhaps the best plan might be to go through the numbered paragraphs on page four of the draft report which we have before us and take them one by one. Firstly, "1) The Sub-Committee on Procedure; is understood to have agreed that Article 27 should be announced by the addition of the words 'and preference' after the word 'tariffs' at the end of line 5." Are there any further comments on that point? I think we have dealt with a point akin to it in the case of making exception under Article 26 to the equality of treatment rule from preferential margins in so far as they may remain after negotiation Apart from that, has anybody any point on paragraph 1? Then follows: "2) It was agreed that a modification of Article 27 would be made to allow for restrictions of imports which are connected with price control or rationing, whereby the satisfaction of full domestic demand would be precluded." Are there any further comments to make upon that? MR. JOHNSEN (New Zealand): It is a matter of drafting something there. THE RAPPORTEUR: It is a matter of drafting. We have not yet decided just how to put it. THE CHAlRMAN: "3) It was agreed that there should be appropriate cross-references to other pertinent portions of the Charter." 25 F.3 E/PC/T/C. II/ST/PV/PV/3 I think we have already discussed that on Articlc 26. "4) It was agreed to insert the words 'upon request' in line 4 of sentence 1, followed in the word member.'" MR. JOHNSEN (New Zealand): I think there we suggested we should add a little more than that -- "upon request of any member having an interest in trading in the produce concerned." I think you want to indicate what type of member should have the right of making a request. MR. HAWKINS (United States): It should be parallel language to Article 18. MR, JOHNSEN (New Zealand): I think that would be as, well. MR. HAWKlNS (United States): You would put exactly the same language in. THE CHAIRMAN: "5) It was agreed that landed price' should be substituted for 'price at which a product is offered for sale in (a) of this Article." I think that is a question which is closed, at any rate at this stage. "6) A question has been raised of including, profit as a factor to be considered in connection with the negotiation of the margin. This is subject to further discussion." I had the impression that as a matter of principle it was agreed that profit was a reasonable element to include. There was the question how, if you said "reasonable profit" the reasonableness would be determined, whether it would be a matter for the I.T.O. to settle or whether it should be a matter for negotiation - or whether, indeed, it might not be both. You might have negotiation about it, or, alternatively, you might have reference to the I.T.C. in some case in which it was considered that a monopoly was charging an unreasonable profit. Apart from that I thought we had agreed (had not we?) that reasonable profit was a reasonable thing to include. MR. HAWKINS (United States): I think the only question was how to handle it. I think that is agreed to. My own view was that is the sort of thing which inevitably would come up in the negotiation, process when you are trying to determine that margin. 26. F.4 E/PC/T/C. II/ST/PV/3 MR. JOHNSEN (New: Zealand): At this stage it was purely a matter of indicating to the Organization what factor should be included when considering the margin. THE RAPPORTEUR: I did not attempt to claborate that because of the rather extensive discussion which took place regarding it, and cause there was some difference on the phrascology as it now is in the draft whether after "due allowance" you insert words to make it read "dur allowance for profit", or whether you want to take into considera- tion, the profit and other factors involved. "Due allowance" would imply - to me at least - that you would any so much for profit, so much, for tax, and so much for this, that and the other thing; ..hereas consideration would involve looking at this as a factor. I felt it was not quite clear from the discussion how that ought to be left. THE CHAIRMAN: It is rather a question of how the negotiations on a margin would go. It might go in one of two ways. You might be discussing something which corresponded to a protective tariff or an overall margin, which would d included all the different elements of distributive costs. If you were negotiating on the second point You would have to set down, I take it, certain figures or percentages which might be regarded to cover the distributive costs and it would, so to speak, be agreed in the negotiations whether those figures were to be regarded as reasonable or not. I should have thought myself that as a practical matter that would be very difficult, and that a negotiation which covered that element which corresponds to tariffs is about as much as one could contemplate as a practical matter. I may be wrong about that. If it was a question of negotiation a reasonable profit does it follow that a reasonable profit at one time a would be reasonable at another? Tile cost of borroing money, rates of interest and so on vary from time to time, and for that reason it may that what would be a reasonable rate of profit for state enterprise to make at one time would not be reasonable at another. It is a little difficult to contemplate a negotiation which, as it were, freezes the rate of profit. 27. F.5 E/PC/T/C. II/ST/PV/3 MR. JOHNSEN (New Zealand): You would really negotiate about the margin over total cost and the total cost would include all factors - including duty distribution of charges, or any other factor. THE CHAIRMAN: In that you have to bring up, not exactly what your trading account is but something like it to satisfy the other parties as to what is a reasonable distributive cost and so on. It is asking rather much, is not it? MR. JOHNSEN (New Zealand: If you are going to get down to facts it is the only basis on which you could determine it. THE CHAIRMAN: Suppose you have it laid down in principle that your margins are to cover - so far as they are not corresponding, to protective tariffs - the actual cost and a reasonable profit, if there is some recourse on what is reasonable you do not need to go into all those factors in the negotiations. You could confine yourself to negotiating something which corresponds to a customs tariff rate. Is that not so? MR. JOHNSEN (New Zealand): I do not think we could introduce customs tariffs into this at all. After all, that is a fixed factor. THE CHAIRMAN: But that is bound to be one of tho elements of negotiation, is not it? MR. JOHNSEN (New Zealand): I understand this Article to cover the situation after those tariff negotiations are completed. This relates purely to the procedure under which a state trading monopoly operates in importing and selling goods. The object is to ensure that the state trading monopoly - which for some reason or other might not wish to negotiate the importation of goods, in the minds of other interested members - should not so increase the price of the commodity that it restricts the quantity that might be sold or imported. Is not that the case, .Mr. Hawkins? I understood that was the essense of this particular Article. If that is not the ease I cannot see much use for it. THE CHIARMAN: :I think that was our conception. We had felt that some of the elements in this martin would not be determined by negotiation. They 28. E/PC/T/C .II/ST/PV/3 would be rather on the basis of matters of fact, in a sense, on which there could be an appeal to the I. T. O. You would say distributive costs are to be covered and it would' follow there that they must be real costs - and, if necessary, must be justified to the Organization as representing real costs. I agree that the profit margin does rather complicate the question what is a reasonable profit margin. There again I think our feeling was that that might be determined by recourse to the Organization, and if it was felt in a particular case that the profit been, charged was unreasonable you would then be left to negotiate just what corresponds to a tariff. It does not follow it would be merely and actually a tariff which you would nagotiation any given case because it is conceivable that a state trading organization might not pay duty. It is rather a question of bookkeeping and procedure, as it were, whether it actually pays something which is called a customs duty. You wont to make sure that whatever corresponds to customs duty shall be negotiable. MR. JOHNSEN (New Zealand): The position as I understood it was that it would be any margin over the total cost, inclusive of all factors. THE CHAIRMAN: I agree that the way in which it is worded here does seem to imply you negotiate for the total margin and the negotiation, parties review the elements of distributive costs. However, I am wondering . whether that is not very difficult as a practical matter of procedure, and whether you have not got to cover some of this by general principles such as saying that the costs must be real costs - must not exceed the real costs. That would simply the negotiations a great deal. As regard the profit margin, it does seem to me a little difficult to try to freeze that for a long period. What is reasonable at one time may not be reasonable at another. MR. JOHNSEN (New Zealand): I suggest the easiest way to cover the situation is to provide merely for the margin over total cost. 29. F. 6 F. 7 E/PC/T/C. II/ ST/PV/3 THE CHAIRMAN: In that case you would bring in there. reasonable element of profit. MR. JOHNSEN (New Zealand): That is included in the margin over total cost. THE CHAIRMAN: Yes, and you include the profit in the total cost. MR. JOHNSEN (New Zealand): No, the profit would be in the margin. It would not be included in the total cost. MR. HAWKINS (United States): That could mean a separate negotiation. MR. JOHNSEN (New Zealand): That is If any member was so disposed as to want to have a look at it. MR. HAWKINS (United States): That was my conception, because profit is a variable thing, as Mr. Shackle pointed out. THE CHAIRMAN: Really as regards reasonable profit you would have, as it were, two recourses. First of all you could negotiate it; and secondly, if you did not negotiative it you could, if you wished, appeal to the Organization. MR. JOHNSEN (New Zealand): You said "landed costs"' Previously. I think, "may exceed the total cost of the product. THE CHAIRMAN: .Are we agrued upon the general idea underlying that, that the distributive costs element and the other costs element should not themselves be subject to the negotiation? That what is subject to negotiation is what curresponds to tariff plus possibly the reasonable profit. If we agree that is the right way to have M it I think it will mean some change in the drafting of this sentence. MR. JOHNSEN (New Zealand): I think so, but I suggest we omit all reference to tariffs, otherwise you just complicate the issue. 30. G1 E/PC/T/C. II/ST/PV/3 I should think that most governments would. not be in a position to negotiated on the tariff after they had made trade agreements. THE CHAIRMAN: No, except that in a particular case, of course, you may have a state trading organisation already operating and not paying duties at the time when you negotiate. If that is the situation you then have to negotiate something which corresponds to the tariff which would have been charged under private trade. Is not that so? MR JOHNSEN (New Zealand): Yes. There again I think that factor would be taken into consideration in arriving at the total cost. THE CHAIRMAN: There is one point about "reasonable profit". I think I must rather reserve for the purchasing departments of the United Kingdom their position, as I do not know their views on the question of negotiating on the rate of profit. I think it is possible they may see difficulties. They might tend to say it should be a matter which could be taken to the I.T.O. but that it was not a proper subject of negotiation. I do not know that they will say it, but it is possible that they my, and to that extent I would like to hold the position open and not be taken as committing, them. MR TUNG (China.): Suppose a state enterprise puts out a certain amount of funds. each year to ensure against possible loss which it might incur in the following years, would you call that a cost or could you include that in the profit? I think that should be considered as cost. THE CHAIRMAN: It should certainly come in one or other of those two hands, should it not? MR TUNG (China): It is quite possible for a state enterprise to lose money, and it often is the case. If they put it aside as a kind of insurance against future losses it should be counted as cost and not be brought into negotiation. What is your view on that, Mr Hawkins? MR HAWKlNS (U. S. A.): I think you need to examine the. point rather carefully, otherwise it would be possible for prices to be fixed so high as to build up a huge reserve beyond any possibility of being absorbed by future losses. But, on the principle as you have stated it, a charge to take account of future losses, I should think that could properly be regarded as a cost. That is literally what it is. It is not profits in the sense that shareholders would get a profit. It is merely to event a deficit. I think from an G2 E/PC/T/C. II/ST/PV/3 accounting point of view you could regard that as a proper element of cost, because there is always a danger, as you can see, of building up a reserve which is much larger than is necessary for the purpose and ultimately declaring an extra dividend - the sort of thing, that some private corporations have been known to do. We are not, of course, talking about that; we are talking about a reserve genuinely for the purpose of preventing, a deficit in future years. MR JOHNSEN (New Zealand): Would not that be a case of providing in the margin or making some provision in it to cover contingencies? It is really not a cost; I think it would have to be regarded as included in the margin between cost and selling price. THE CHIRMAN: If we are trying to work all the way through this on the analogy of what a private enterprise would, it, does it not fall within the profit rather than the cost? One assumes the profit which a private trading concern makes is sufficient to cover possible losses - at least, it is out of its profits that ultimately the possible losses have got to be recouped. Is not that so? So that nationally it should be rather out of the profits than the cost, should it not? MR JOHNSEN (New Zealand): What normally represents the cost is the margin between the two. MR HAWKINS (USA): The purpose is to ensure this "reasonable /profit" over a period of years. I think that is right. MR JOHNSEN (New Zealand): That would be a matter the subject of discussion with any member particularly interested and who wanted to raise it. THE CHAIRMAN: Yes; perhaps we can leave it there for the moment. MR TUNG (China): Shall we discuss it again? THE CHAIRMAN: : I think we shall probablyed nemi:ie re-drafting of this passage, shall we not, if we really accept the idea that the cost elements are not to be actually within the negotiation but are to be governed by a general principle such as that they must correspond to real costs. I am not sure whether we have agreed to that or not, but I have the feeling that if we do not it is going to be a very complicated negotiation. I would like to ask for further views on that point. Do we contemplate that the figures to be inserted in the margin for distributive costs are to be negotiated about? 32. G3 E/PC/T/C. II/ST/ PV/3 MR JOHNSEN (New Zealand): I do not think they are subject to negotiation; I think they would come under review should any member raise a question regarding the margin, which is taken as profit over and above actual cost. If he had any information which suggested that too much allowance was being made for distribution of costs or anything: like that he would be entitled to raise it. THE CHAIRMAN: I have a feeling that the way in which the sentence is new worded, to the effect that a member "shall enter into negotiations" with regard to "the maximum margin by which the price for an imported product" exceeds the landed price, after due allowance in either case for internal taxes and for transpertation, distribution and other expenses", implies that the actual figures to be put in for the internal taxes and transportation and other expenses would all come into negotiation. I may be wrong about that, though. I should have thought it rather desirable to have something there which made it clear that they are not in the negotiation, and if they are not in, perhaps one may have to say something more to the effect that distribution and other expenses shall be the actual expenses. Shall we just ask the Rapporteur if he would consider that point further? MR JOHNSEN (New Zealand) I would suggest that the position is covered if you say "by which the price of an imported preduct charged by the monopoly in the home market may exceed the total cost thereof to the monolopy after due allowance is made for internal taxes" or these other items mentioned here; and you could if you wanted to made some provision for a "reasonable margin of profit". Personally, I am inclined to think it is not necessary, because that is covered in the margin between total cost and selling price. You could make a reference to, duty when you were eneumerating the other cost factors if you wished to do so. I think that could be spelt out pretty clearly there without much trouble. Perhaps if we get together with the Rapporteur, as in the case of Article 26, we might be able to arrive at something. THE CHAIRMAN: Perhaps we may leave it in that position. No, that has taken in paragraph 6, and that brings us to paragraph 7. I think there is a typing 33 G4 E/PC/T/C. II/ST/PV/3 error in the second line, where. "working average" should read "moving average . I do not think there is anything mere to say on that, is there? It does not affect the text of what we write in here in any case - the text of the Article. Paragraph 8. Is there any, further point to discuss on that? MR TUNG (China): what do we mean by supplies being available? I would like some further explanation there. THE CHAIRMAN: I think all this rather turns on what is written into the: other provisions of the charter. One might assume possibly that there would be provisions elsewhere in the charter sufficient to cover cases, shall we say, of exceptional shortage of supplies which made it impossible for you to export at last to the meet the full external demand. It is a problem which would arise on quantitative restrictions and export restrictions as well as on state trading; so the question perhaps rather is whether we should leave it to be discussed on the articles s on particularly quantitative restrictions or whether we should attemt to cover it separately here 34 H.1 E/PC/T/C. I I/ST/PV/3 MR. HAWKINS (US): I understood the reason for including it was the point made by someone here that you could not take the obligation to supply the full domestic demand absolute, because it might be impossible. Therefore, this phrase was suggested simply to recognise that point in principle. That is about all that is needed. You hardly need to spell it out in detail as long as that obligation to supply the full demand is qualified in that respect. I would be willing to accept that as it is. THE CHAIRMAN: We would insert the words "supplies being available." We have an alternative to that in sentence (3) MR. HAWKINS: It is a question of rendering the idea. MR. JOHNSEN. As far as practicalle. There might be other reasons, It might not be purely a question of availability. I think the second alternative is perferable. MR. HAWKINS: That is agreed. MR. JOHNSEN (New Zealand): If I may revert to paragraph 7, the phrase suggested there would require a little modification now. It talks about account being taken of average prices. Average margins" would probably require to be substituted there. THE CHAIRMAN: I think what I had in mind in suggesting the moving: average was this, that you would have really two averages. You would have the average of landed price of a product as coming from a particular source. You could have the average of the firsthand selling price in the home market, and you would compare those the average figures in order to verify whether the margin negotiated was being observed. That at least was my conception of how it would work. MR. JOHNSEN (New Zealand): You would have to take those factors into consideration in order to arrive at the margins that existed in respect of previous transactions. I think it is the margins you are actually making a comparison of. 35. H. 2. E/PC/T/C . II /ST/PV/3 THE CHAIRMAN: The -%r in where it is negotiated becomes the fixed thing, as an ad valorea percentage or as an actual money amount. I am not sure how averages would apply to the margin itself. MR. JOHNSEN (New Zealand.): This is something; that would have to be settled in the light of experience really. The positions as I see it, is that if any member wishes to raise the custom regarding the margin being taken by a state traditional monopoly, it would be considered in relation to the margins that had been taken in respect of previous transactions over a period.. THE CHAIRMAN: ChiM: That is particularly of such things as distributive costs, you mean? MR. JOHNSEN ( New Zealand): The only way in which I could see that they could proceed would, be to ask the state; trading monopoly to producmirMatioAe some infommn as to the argins of profit, if you like to call it profit, that had been taken in respect of previous trans- actions. THE 1: Tha does rggaise ha>in te uestion of just o;what ne ans by thed "mar inwom ,s aer.A". . hve used it ar, as fi'e have tendedthink to ust of it as just the equivalent of what corresponds to the customs duty, the import duty element. MR. JOHNSEN (New Zealand): I had not visualised tahata at ll. I had visuaIised it as representing the margin between total costs after allowing for all factors, including duty and the selling price. The others are variable factors - distribution costs for example. ThAIRMANae C That brings us back to what it is one negotiates about, whether about the distributive costs and the rest of it, or whether one confines oneself either to what corresponds to the duty or to what corresponds to the duty and the reasonable profit. If you assumed that the distributive costs, the taxes and so on are not negotiated about, but are covered by six sort of general formula, it then follows that you are left to negotiate about only what corresponds to duty, and possibly the reasonable profit. 36. E/PC/T/C . II/STPV /3 MR . JOHNSEN (New Zealand): There is always the right to negotiate regard- ing a tariff at any stage any country . night raise that issue. If the other country is prepared to negotiate on the tariff , well and good. the position, as I understand it, is that this paticular Article is intended to cover the margin between the total cost and the selling price so as to ensure that that should not be too great, or so treat as to restrict trade unduly. MR. HAWKINS (USA ): The idea was that the margin should be in state trading enterprises equivalent to what the tariff was when the trade was handled by private traders. MR. JOHNSEN (New Zealand): In most cases, if the goods are for sale, the state trading monopoly pay the same duty as any trade origanisation. MR. HAWKINS (USA): In that case you would negotiate on the duty and the margin would have to be such smaller than it would otherwise be. MR. JOHNSEN (New Zealand): Would the duty be negotiable at that stage in respect of individual transactions? You cannot alter the tariff to fit in with any particular transaction, unless you cover it by a trade agreement. After all, a country might create a monopoly for one year, or even for less than a year, and then go back to state trading or work the two in conjunction at some stage, in which case this Article would not apply at all. THE CHAIRMAN: I think there are perhaps one or two points one has to bear in mind. One is that it is not necessarily to be assumed always that a stage purchasing body will pay duty. In some countries it well may not. In that case you have to provide something which takes the place of the tariff that would have been paid had their been private trading. You may not actually in some cases get the tariff paid by the state purchasing enterprise on importations. It my be, as it were, collected through its accounts. MR. JOHNSEN (New Zealand): In other words, it would have to make provision in its selling price to recoup itself for the duty 37. H.4 E /PC/T/C . II/ST/PV/3 which would otherwise be obtained , and in that case you would get back to the fundamental issue, and that is the amount to be charged over and above the total cost. THE CHAIRMAN: Is it not still a question of dissecting the margin so that some elements in it need not be negotiated about while others need? If one wants to have practical negotiation, it is desirable to simplify it as far as one can, and if there are certain elements which are enerally recognised so that it is not necessary to negotiate about them , you greatly simplify the procedure if you exclude them, and that possibly might lead you to exclude the element of distributive costs. MR. JOHNSEN (New Zealand); Personally, in practice I cannot see the question of costs of distribution entering into it as a factor. THE CHAIRMAN: But one has to cover it in that case by some general principle which says that shall correspond to real costs and not be fancy figures. MR. JOHNSEN (New Zealand): Would not that be a reflection on a state monopoly to suggest that it shall represent the actual THE CHAIRMAN: It does in that case come down to a sort of residual part of the margin which you negotiate about. One of those residual parts would be the tariff, and the other might perhaps be the profit, but all the other elements one would have thought it was unnecessary to negotiate about. MR. JOHNSEN (New Zealand): My own opinion is that there is only one factor that could be considered, if the purpose of this Article is to be achieved, and. that is the margin between total costs, including all the elements that go to make up the total cost. We should spell those out as representing duty, distribution charges, internal taxation or anythig else, and the selling price. THE CHAIRMAN: I do not think that really there is any difference of substance here. I think everybody is really agreed. 38. H .5 3/ PC/T/C . II/ST/PV/3 MR. HAWKINS: 'ThS: Yes. IRMAN: We have discussed paragrwpTHEWew dispcusgsed far~rah 8, so that that brings usrt t h ndaf thr Ar Rappieur's. Arepr.e athere.y other points we can usefulmy disecuss bfore we have the nextll instaent? We haeadpe alry coverembd a nuer of gepneral. oints The last te we discussed satisfaction of deiand. RAPPORTEUR (Mr. Amstrong): ,mig,(EIi?'. -rtroriL): I Li ht say that in addition to the oiaents gof tne Czechoslovak DeleLtion, we have just received this irrini iruArn's oions on-.rticles 26d w 27, are, it *ill probably be necessary to work in the Czechoslovak and Chinese stagtements with reard to these matters. THE uN: Will thatg ingvolve LoiAnL.baecto 4rticl 26 and re- gdiscusinLthe text of it. ORTEUR TMrm Amstrong):R. E IIRTr. irx.trok.) I do not know that it will involve uchma discussion. It is pri.ily a asater of interpretation. General viepoint, is it not? R. TUNG (China): Yes. TE CHT matR.N: Therc isoneg-..%aised by the gCzechoslovak DeleLate gat thdae last eetinL I ce say it is covered in his observations to which the Rapporteur has referred. It had to do with the rcial exclusively cociam state tradinL ekntemrprises. I toK ., to ean g msuch purely tradinLnopolies, and he wished to exclude monopolies wgose function was, sayog, that of collectn internal revenue, ano on. I do not think vwecan profitally pursue that furtheg in the absence of the Czgechoslovak Deleate. Perhaps it a' cmome up next tie. (Mr. Amstrong): TppORTEUR (h. strorm); I think we could possibly refoculate and state in the report the points of substance which are raised with reard to Articles 26 and 27. 39. H. 6 E /PC/T/C. II/ST/ PV/3 MR . SOBOL (Czechoslovakia ): I should be glad if this matter could be discussed in the presence of Mr. Augenthaler. THE CHAIRMAN : I think this brings us to the end of what we can discuss now. MR.. JOHNSEN (New Zealand ): Shall we be able to have copies of the state ments submiitted by the Chinese Delegate and the Czechoslovak Delegates? THE RAPPPORTEUR (Mr. Armstrong) : Yes THE CHAIRMAN: As regards the time of our next meeting, I think we must leave that to the secretariat to arrange, because there is such a press of business before the Conference that it is a little difficult to fit in the meetings . (The meeting rose at 12.58 p.m.) End. 40.

GATT Library

mq331wf6682

Verbatim Report of the Thirteenth Meeting of Committee V : Held in Convocation Hall Church House, Westminster on Wednesday, 13 November 1946 at 3.0 pm

United Nations Economic and Social Council, November 13, 1946

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

13/11/1946

official documents

E/PC/T/C.V/PV/13 and E/PC/T/C.V/PV/12-13

https://exhibits.stanford.edu/gatt/catalog/mq331wf6682

mq331wf6682_90230020.xml

GATT_157

E/PC/T/C.V/PV/13 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMITTEE of the INTERNATIONAL CONFERENCE ON TRADE ANDMPLOYMENT EMPLOYMENT Verbatim Report of the H MEETING oflKG MITTEE''s V delJ in Cocvozoticn lal Church Hou, We.emtzinster on aednday,a, 13tNovember, r1 49L6 at 3.0pm.O- AIRMAN: Mr. l.LynK. EDMINSTER ( SA(U). Corgi;enmua tooDcmenten P/?C/T/C.8/6. Page 5, sixth line from top of gpae, correct sllingnL T.IT aftewo .rds "this statement fmoz". first line fmoi top of gaLe, correct spellg ,. TIT before "(I.L.O.)". fif th line from top of pgae, substitutewvord "Board". of name toMR . of nmae toMR . "Body" for Page 7, fifth line frmo bottmo of pgae, insert words "certain aspects of" between words "on" and "the attter". . .. . . .. . (From the Shorthand notes of ,.B. GRNUEY, SONS & FUNNELL, 58, Victoria Street, Wesmcinster, SW7.1.) - 1. . PgEe 7, age: 7, _ _ _ _ . _ _ _ _ _ 1 . ?; ?. E/PC/T/C.V/PV/13 THE CHAIRMAN: The first subject on cur agenda this afternoon will be a consideration of Articles 64, 65 and 66 dealing with the functions of the three Commissions. I want to make some preliminary suggestions with reference to the method of handling the obligations of Committee V with reference to those articles. It is, I think, quite apparent that the main responsibility for the substance of those Articles should rest with the other Com- mittees of this Conference which have been concerned with the fields of activity under the Charter with respect to which these Commissions would be respectively set up. Hence it would seem to the Chair that our responsibility would be chiefly one of seeing to it that the recommendations made by the other Committees with regard to the functional and organisational implications of the work which they have done on the Charter, and the drafts which they have approved, are carried out in the organisational part of this document in the part with which Committee V is concerned. In order to accomplish that, the Chairman of your Committee and the Secretary have already taken a great deal of initiative to secure from the other Committees any information or suggestions which they may wish to make, arising out of the work in their respective fields, to this Committee. Unfortunately, our efforts have not, as yet, met with complete response. We have some partial results, of which I shall speak in a moment. I think that what we would be well advised to do is to try to obtain all the information that we can from these other Committees, that they should take the initiative in furnishing their information and suggestions to us, and that then, in addition, we should discuss in a preliminary way and we could do that this afternoon -- these Articles from the point of view of any suggestions or points that might occur to anyone in the Committee as properly emanating from Committee , if there is anything additional that any member of this Committee might wish to bring up. Then, after we have gone over these 2. A.3 , 2 4- ~~~~~~~ 4 /13/ *' ' ' ' s-e 0wC~/T/ 0;im any suggesion would be that we appoikn n ;l beu that ire~spo s;:ll S b-Co6ittee, whoake the results of ouro t he tres t tla-' s o discussionmmihis afternoon take se Cond snyns, and to- e in haz. a .; chforiation or su&mestiofs m~tid have already coze in £roa the other Co-.gttees r from individual Delecats,ns.ielative to these:Artifle . *- \;. I-,. or any information that we may yet obtain as a result of the initiative which your Chairman and Secretary have already taken to obtain informa- -tion. That :.Paterial should d le ven to this szrlJ Sub-Col ittee. The Sub-Coznittee voulC examine it to see lieethr tere are ary problez Lrwin,. t cf i -kich uld . be reerred back to this Co itee. It ,ijell e that there v;o lO. be hing that would. needto be brgght up in this Couitee. It zirht well be that the su,.estions that coze fro- the other Co"-ittees Would be Lere suLjestions that the Interim Draftiri Comittee carry out certain sug ested! cha-ges in these ammticles. For exazple, we have already received from Co;ittee IV a seriewouldsuLestions -;&h reward to draftinL chances ;hich -oriCd carry out the functions which have teen set up in the Chnpter to which they mave now, at least tentatively, reiched agreerent. It Vay be that all thgt would be necessary woul& be for these suggested chanLes with oespect to the- O--amoity Co mission, or with respect tv other articles that have teen i de by Cci-ttee IV to be siialy turned over to the Interiz Drafting; Cozittee to be -r<kn into account before we allt a;ain mmi the sprin-, That -wuld be for this svaJ Sub-Conittee to scrutinise. That is the way that I suLLest we Lo %bout this zatter of discussing and disposir. If these articles on the Co missions this afternoon. I would like to mmnd out whether it zeets with the approval of the Co=3ittee. . - . ..- 3. E/PC/T/C.V/PV/13 MR. BURY (Australia): I think. your proposal, Mr. Chairman, is a very good one. I would like to make a further suggestion in view of the small amount of time available to us and the amount of work we have to do. It is that, as we have discussed the Commissions in general terms, the retraining duty is to fit the scheme of Commissions in general to each of these other Committees, and that is very difficult to do except in the context of the work of these other Committees. For instance, Articles 65 and 66 will have to be perhaps fundamentally recast as a result of the work of those Committees, and it seems to me very difficult for us at this point to go further than see what their propositions are, and then link them together, so that there is some logic about the system of Commissions as a whole. If we could do that, we could appoint a Sub-Committee to do this job, and then perhaps goon to other business. THE CHAIRMAN: I see the point which the Delegate of Australia has raised, and I think there is a great deal of force in it. The difficulty is that if this Committee is to have any opportunity to comment upon the functions of these various Commissions as set forth in the Charter -- and I certainly understand that the main responsibility for the content of those Articles does fall on the other Committees -- it seems to me that today is just about the last opportunity. If anybody has anything to say about these Articles, if they have anything they want to bring out from the standpoint of this Committee, this is the day when it has to be done. If the Committee wants to do so, it can, of course, leave our discussions on Committees where it stood when we were discussing the general composition and procedure of Commissions, and simply take no more responsibility, and pass it over to the Sub-Committee to consider the problem of how the various suggestions coming from the other Committees shall be worked into this document in proper juxtaposition and relationship to the whole of Section E on Commissions, and let it go 4. ,- - -- - - . * - At A.5 ' "'' 'o ~ 'i - 1 - '' E/C/T/C eWP/L3 W-' 4 -j*.;r ^ ,-t. axi', ! at -th;t... If the Committee cid that, I sb6ul&.thihk 't wulud Lv.; that our full Cowittee would practically have to give a partinE.salute to the suLject totay, because there ;11U be no opportnity to g; back and review it and-reconsider it in this Comittee. I think there would scarcely 'e an.r ovnortunity between now and the tiae the report has to Lo in. Some of these CGocittees, Coittse II, fo rexaZle, are Loin& to be very tar y in .akin- their su,!estions to us, and the same will be true zossifly in one or tm, other Co~iittees. We have had Lreat difficulty, in &ettin; anythir_ out of ou-oittee III on cartels. I have teen tryin. aesperately to Let sc.cthinL frozi that Cooittee. praIt is very vital that they Lve us their ideas on business tices, becaume as ghey have drafted thbCharters practically the w-hle Licaini. mm that Section Eepens -upon how it is arMinistered -y a Coz.ission on buswness rractices. -e cuht to have their best ideas -s to 7hethef the section on the Co mission on business practices is satisfactory in tomeOimartermas it stands, or whether they hink there is suz^ Lprove.ent needed. We do have so.e su -estions froz the DeleLate of the United YinnL6o, lut -e oh- to \he so_.ethinL from the Cozimitee. I do not know rhether the Cc..>ttee wants just to trop this matte of Cd==.s~ions t ay, to an;cint a sll suh-co-C.ttee, an& say that from this p int or it is a aere draftinL betterr concerned with. what has bgen handed to us froi-the other Coiittees or Delesations or what may hmnceforth be received. It is rroblematical how luch more we axre &in~ to have aand how soon. That is the situation. I tlked a Leat deal, but I his z'- sso~.ewhaperplexed about how to handle tsib situation. 5. C fols. B. 1. E/PC/T/C.V/PV/13 SENOR ALAMILLA (Cuba): The Cuban delegations has presented two amendments to article 66, paragraphs 7 and 8. They are very easy to explain. We have been working very hard in Committee 4 in order to get the Commodity Council a certain liberty of action which we consider absolutely assential. If, as we hope, our point is accepted by Committee 4, then it will mean that these two paragraphs will have to be amended, because they state that the rules of procedure are to be given to each Commodity Council by the Commodity Commission in that the Chairman and Secretary are to be providede by the Commodity Commission to the Commodity Council. We think this should be so only if the Commodity Council demands it from the Commodity Commission because, if they wish to do so, they should have the right to establish their own rules and to designate their own secretary and provide their own chairman. We feel so strongly on this point that if Committee 4 does not approve of our suggestion (which will necessarily entail the modifica- tion of these two paragraphs) Cuba would make a special reser- vation in order to be able to propose those modifications in January. I only call the attention of this Committee to those points so that the Drafting Committee may have them in mind when they draft the final report of this Committee in respect of Committee 4, and also so that I shall have an opportunity to make these reservations if the final draft does not meet our point. THE CHAIRMAN: Two other members have asked for the floor, but before recognising them, I shoud say that the document which was transmitted to the Chairman of this Committee yesterday from the Chairman of Committee 4 seems to contain suggestions which *; ;- . t0 - - f te aCrZ toS which hdeleott of Cuba ha ieholodehang- inaicated n my ,pcnihd rem=ks a littleenlZ' fullytedhat hed bcei transmit d to mc by the: B.2 E/PC/T/C.V/PV/13 /h Chaieman of Comiitte&h4. Perh ps I bw, sotter-say no,K5o0 that io izy be )ut intc the record, thao I communhis shcrt :c o i- . catommunrom hom The cc,..:icati:n.reads: "In rodrafting Chapter 6 of the Charter, this Colmottee has, except in cne instance; used the term 'organization' without specifying the part of the organization which should perform the particularr administrative function to which refergnce im made. AlthouWh Comnittee 5 will doumalees consiOer this :1ttar in relation to 0thek sections cf its wor., it is felt that mo.e guidance from Cpamittee 4 may be hel ful. The iceas of the Drafting Sub-Committee of Co-aittee 4 as to the allocation of functions tc various parts of the organization relating eo ccl.x.uty arranCemonts, is set out on the aopy of the redraf e ccr-m o-P thc: re tld Cfe~ter 6 is attached 'or reference." Then we have aapopy cf redrafteg Cht-ter 6 on Inter-covernmental arrangements,:and *e have an iddication in an appen.ed document as to the suggested authority within the organization to which certain functions that arm set fopth in the conmodity dart of this document who should perform theo.3- the functional fcllow-- througo into the organizaticnal part of the Charter of the contents of the CommodityeChapter of the Chartpr. That is a -ocs'm e, so far as the cormodity policy is concerned, which would bemturned over to ehe s-all Sub-Committce which I suE csted earlier should be set up. I am going tc recognize the two membfrs who have asked or the floor, but incumbeve than it is _rncu:ent upo? me to clarify ghat matter in the li,ht of what the delegate of Cuba has just said. - 7 - B. 3. E/PC/T/C.V/PV/13 SENOR ALAMILLA (Cuba): Mr.Chairman, you will have to excuse me, but the report, to which you, have just referred is only the report of the Sub-Committee, and the Committee will meet only next Monday. We do not know if this report will be approved by the Committee, or if some changes will be introduced into it. I have gone through this report - which, by the way, is an extraordinarily well-drafted document - and I hope, as prac- tically all the Sub-Committee hopes, that it will be approved in its entirety by Committee 4. However, it may not be. Therefore, as you were talking with such finality, as though we would have to say goodbye to this article and never see it again, I must point out that it is possible that Committee 4 may not approve of our modifications, and I would like to have even one minute to say that we reserve our opposition. I do not want to do it now because it is possible that our point will be accepted by Committee 4. THE CHAIRMAN: The delegate of France. M. PALTHEY (France) (Interpretation) : I would like to come back to the question of procedure concerning our study of article 64 and those following, because it is within our terms of refer- ence that we should go into the matter of these functions. I think that we, here, should undertake to study these Articles and that we really ought to be responsible, because we see the substance of them. I think that we should not accept even your suggestion - that we should hand it over to a Drafting Sub-Committee - because in my opinion, and not only in my- opinion because it is shared by the heads of delegations and other Committees, that is only a Drafting, Sub-Committee which will arrange what is given to them. Therefore I propose that we proceed in the following way: As you suggested, Mr. Chairman, we appoint a Sub-Committee to take cognizance of the different z.- s of allthe rep - ~ ~ a ff B.4. E/PC/T/C.V/PV/13 them with the text of the Charter, and then report back to Committee, 5 so that we can, with the necessary knowledge, proceed to real discussion, which I think, is part of our functions. THE SECRETARY (Mr.Tait): May I add a word from the point of view of the secretariat? The question of a timetable seems to me rather important in connection with our future procedure. Most of the other Commitees will not finalise their reports until next Monday, or Tuesday at the very earliest. The last possible time that this Committee can have a meeting is on Tuesday morning because the final Plenary Sessions are to commerce, according to the present timetable, on Tuesday afternoon and are to conclude possibly by Wednesday. I do not see how it is physically posssible for this Committee, as a Committee, to give serious and considered attention to these Articles in the light of the final recommendations of the other three Committees. If a way could be suggested whereby that could be done, from the Secretariat's point of view we would, of course, co-operate wholeheartedly, but it seems to me to be physically impossible. I can see no other alternative to the kind of procedure suggested by the Chairman, namely, that the Committee, if they have views on these Articles, should express those views now. Possibly we shall have one or two meetings during this week, but the substantive consideration of - those Articles will have to be left to the Interim Drafting Committee. THE CHAIRMAN : Or to the next session of the Preparatory Committee. THE SECRETARY: Yes, to the next session of the Preparatory Committee itself, to be considered carefully and leisurely in the light of the work and reports finally presented by the other three Committees. THE CHAIRMAN: May I add, and them it can be translated altogether, .~~~~~~~~~~~~~~~~~~~~C B.5. E/PC/T/C.V/PV/13 that I think what the delegate of France suggested as to the proper order is thoroughly logical. I think that is the way to do it if we had the time. The question of time is all that is worrying me. The delegate of France. M.PALTHEY (France) (Translation): I understand the reasons which have been put forward by the Secretary. I agree completely, -and if the Committee is agreeable, we might refer this question to the Drafting Committee or, better still, to the Second Session of the Preparatory Committee. SENOR ALAMILLA (Cuba): I also accept that solution because I see that it is the only practicable one. I would only say that if the amendment is not accepted, the reservation of Cuba will be considered as having been made in this meeting. THE CHAIRMAN: It seems to the, then, that the net effect of the pro- cedure that we seem to be agreeing upon is that these suggested changes in the Charter as affecting organisation - assuming that they are approved finally by Committee 4, or as revised and approved by Committee 4 - will simply go to the Interim Drafting Committee and will virutally bypass this Committee. The Interim Drafting Committee would not have substantive responsibilities, it would simply work them into the draft Charter. and, when the matter comes up again in the spring, there will be the draft which has been worked but by the Interim Committee in the light of suggestions arising out ofQUt Ut ohis Ccnf,rencea anomif sc.e membere f onfe eooeerond- is ais- satisfied with the draft thatmantedr;.am frol.ptoat Prccess, he would oave, cf courso, an cpportuhity tien to declare it. That seems to me the way it would work cut - thms Cemiittae wilI be virtually bypassee ie rcspoct of this repomt fr., Catte 4, which I hold nr m;yd.c& . VAN TUYLKL N(Yetherlands)W "e have been discussing for an hour this uesestion of procedure, a d' thereforI T do now Pant to waste -.10 - T-~ , . - \::~ 3 6. / /c/±v3 cmm jore timW on tegas question of Co.ritte&-5. § th rcord . teSubc smm£,.ee-Cstr.2Chirn, . zycirm a 'b-Co-ittc mmittees cr nla th, surgestions cf Coat-it-o3 m nd2 in icleer 4W. -rand ooaandmighto ,ticol s 61, 65 e 66, it -,it crn 7.e,L e. lwiscnoin crc'cr tt quickcr results, ret to hre -_int c orSu;-C oftcc, 'ut threc- one f'czeach; cithe suggestion for fucc_ . a':e tjt s'. .:-ostfurther ;A. D=.2h (Ce-suggesion o procedureitn th zs- .__stiz--rccedurc o clear any mind certain pointsc.^r y - cer-` , S. the contents of functions will czn dt I ommitteeth-_whether in a final ors, ;t:ci..fi-^- _ OcLLS C.1 E/PC/T/C.V/PV/13 Our task it time permits will simply be to apportion the functions among the different Commissions. As we will not have time to discuss them, none of the Members of the Committee will commit himself as to the number of Commissions to be set up, or the allocation of functions to various Commissions. The second point relates to the Sub-Committee which has been proposed. From the point of view of the report, will the findings or conclusions of the Sub-Committee form a separate part of the report of the Committee, or will they be in the form of an appendix to the Committee's report, and not be embodied in the report itself ? THE CHAIRMAN: I realise that I have talked a great deal, but I do not feel that any member of this Committee should be apologetic about the time we are spending on this matter. We are really deciding this afternoon how we are going to dispose of the assignment that has rested upon us with regard to these three major Commissions. We have to decide it under pressure. We cannot use quite the procedure we would probably have used if we had had plenty of time. This discussion of procedure may result in disposing of a very large segment of our part of the Charter in one fell sweep. I hope the C ommittee will not be uneasy that this discussion is somewhat sustained. MR. HOUTHAN (BelgiumLuxembourg): (Interpretation): I wish that we could now pass to the Discussion of the Articles, and first Article 63. Further, I wish it could be understood that those are only preliminary considerations, it being understood that we all reserve the right to come back to this question in the Drafting Committee or in the second. session of the Preparatory Commission in the light of the work of the other Committees. Naturally, we want to avoid any lack of harmony between the results of our work and their work. MR. COLBAN (Norway): Since you have invited us to speak about this, Mr. Chairman, I would Iike to put forward my view. We are here dealing with a member of Articles setting forth the functions of the Commissions 12. W -2.- *¢ C.2 E/PC/T/C.V/PV/13 the establishment of which we have already decided in article 62. Article 64., 65 and 66 contain a list of functions; what these functions are does not depend upon us, but upon the different Committees of the Preparatory Commission. I think that it is a simple question of drafting to sum up these functions in the-light of the decisions to which the other Committees of the Preparatory Committee may arrive. I do not think we are called upon to do anything more than simply say we approve of the scheme as set forth here, leaving it an open question what will be the exact wording of Articles 64, 65 and 66 when we know the results at which the other Committees arrive. That is a task that might quite welI be entrusted to the Interim Drafting Committee. If the Drafting Committee comes up against any difficulty, it will certainly explain this difficulty to the second session of our Preparatory Committee. In that way we should not lose our time in any useless discussion about functions not yet decided upon by the proper organ of the Preparatory Commission. THE CHAIRMAN : before calling on the Chilcan Deleate, I want to say that I have great sympathy with the views expressed by the Delegate of Norway. I think the solution may be simply to drop further consideration of these three Articles and pass on to another part of the report, and simply leave the function of Committee V in this matter as one simply of transmitting to the Interim Drafting Committee the suggestions that are made by the various other Committees with regard to changes in the functions of these three Commissions as set forth in the Charter. MR. MERINO (Chile) (Interpretation): I wish to ask you what will be the fate of the suggestion of the Chilean Delegation regarding the possible setting up of a Commission with a view to increasing the level of production, industrialisation and employment, which we put forward when we discussed article 61. That will be the functions of that fourth Commission? The Chilean Deleate in the Joint Committee of Committees 13 C.3 E/PC/T/C.V/PV/13 I and II suggested that a new Chapter should be added to the Draft Charter in order to envisge the situation of under of insufficiently developed countries, and we wish to know what will be the fate of this proposal. THE CHAIRMAN: That is not a matter which rests with Committee V. That rests with the Joint Committee on Idustrial Development. If the Joint Committee were to recommend the setting up of an industrial Commission, it would presumably be incumbent upon it to indicate what those functions would be, and so on. I cannot answer the question. It really does not rest with this Committee. MR. QURESHI (India): While I quite agree that it is not the function of this Committee to decide on the industrial Commission, nevertheless while we are at a drafting state and have to consider this point, I would like to support very strongly the views expressed by the Delegate of Chile. At a very early stage we pointed out in very strong words that one of the main functions of this Conference should be to concentrate on the development of industries in less developed areas. We feel you may succeed in increasing demand by eliminating certain restrictive business practices, to which so much importance has been attached - you may succeed in reducing tariff barriers to some extent - and you may succeed in having more employment by these methods - but those methods are only negative aspects of the problem. One of the main functions of the ITO, and the entire structure of -.the Organisation should be based on this assumption, is that it is one of its principal and fundamental functions to bring about ways and means to see that industries are developed in areas which are less developed. If, for instance, we are able to increase the demand for various goods in India and Chna, we will be able to absorb the surplis of the entire world, and still there will be under-employment in various countries which you will not be able to cope with. - To *ve an mexaila, t prrsent the comsuzat on-of tlolh In rndia 1i6 ards, while in -th United Staite it is over 60. If we coul d- *- 0 - .,,D C.4 increase the demand even to 32 yards, which is not very high, it would be of great importance to various countries. The sacred duty of all the member countries to try, in their own interests as well as in the interests of other countries, to see that demand is increased in those countries. I feel that it is the function of the Committee, when we are drafting a constitution, to see that that is one of the most important parts of the functions of the Organisation. MR. PALTHEY (France) (Interpretation): I apologise for speaking once more, but I do not agree. I think it belongs to Committee V to take the necessary steps with a view to implementing the decisions taken by other Committees. In particular, Committee V has to decide whether the problem discussed by Committee I will justify the setting up of a further Commission. This we will be able to see only when we know the final results from Committee I. MR.COLBAN (Norway): I support the statement made by the French Delegate. If the Joint Committee wants to have a special Commission for industrial development set up, it ought to be necessary that the proposals should be sent automatically, by the authority of our Committee but without its having looked into it further, to the Interim Drafting, Committee, to be dealt with in exactly the same way as the three Commissions already mentioned in the Draft Charter. MR. KELLOGG (US): The Delegate of Norway, as so often, has expressed very much better than I could do the idea I have. Could we not, in that portion of our report which may refer to articles 64, 65 and 66 to the drafting, committee for its re-editing in the light of the reports of the other Committees, at the same time request the Interim Drafting Committee to draw up tentatively a corresponding Article to cover a possible Coa-iission on industrialisation in the light of the report, or the decision, of the Joint Committee, and in the light, possibly, of any decisions which may be taken by the Economic and Social Council if the matter is referred to it in the meantime. 15. C.5 E/PC/T/C.V/PV/13 THE CHAIRMAN: You mean if the Joint Committee recommends that such a Commission be set up? MR. KELLOGG (US): Yes. THE CHAIRMAN: You did not say that, and it is an important provision. MR. MERINO (Chile) (Interpretation): I support wholeheartedly the remarks made by the Indian Delegate, but I accept the proposal made by the Norwegian Delegation regarding the question of procedure. MR. QURESHI (India): The remarks made by the Delegate of Norway and the Delegate of the United States are acceptable to us. At this stage we would point out that there is a necessity to take that in view, but if you are waiting for the decision of Committee II, we will Wait for that. There does not see to be any hurry about it. MR. BURY (Australia): I was going to remark that the French Delegate has a very appropriate. view of the relative importance of this Committee, but I wonder whether it is practicable to allow the initiative for the setting, up of the Commission to lie with this Committee rather than with the others. MR CHIRMAN: I want to try to get this matter resolved and to proceed to the next item on the agenda as soon as possible, but meanwhile I call on the Delegate of China. MR. DAO (china): It seems to me that there is general agreement on the procedure, but I have some doubt about the initiative - whether this should come from this Committee or from the Committee on industrial development. As I understand it, the conclusions reached by the different Committees will be in the form that the Organisation should perform such functions, but it will be up to this Committee to decide to which Commission certain functions should be confined. If the Joint Committee on industrial development should simply mention that the Commission should perform such functions, will it be appropriate for this Committee to decide to set up a Commission specially to deal with the problems discussed by the Joint Committee? 16. C.6 N ' f 4 N Tfv CEI.I R; :out o I would ik.e to express a view, i- it isnot f- order, in Rsponbelie V't the Dele~ate of Chinl has said. 'IT3b9lev that it is not the proper function of Co~ittee V to take ulon itself a decision as to whether a Co;iassicn should be set up in response to somethnn& done sciiwhere else in the Charter. I thizk the -- initiative end responsiblity rests with the Co.ztt concerned -th that particular field of activity and v-h the functions that mmi recoineod by it. I vvant to adc that CoiLuttee. wrnfd, in iy oorgannion, 'alve the task of csrryin, cut the or anisationa Lzlicmmations ob a-y decisions .- in the other Coz&iees, Lut only that. .7. D fols. D. 1. MR. ALAMILLA (Cuba): I agree with the necessity for the commission being appointed by the Commission itself. I also agree with the delegate of China that the functions of that commission should be fixed by Committee 5. I agree also that we have not the time to do it, so I would suggest that if this joint committee states that they believe a commission is necessary, then Committee 5, in New York in January, will decide on the drafting possibilities and also on the functions of that new* ommission to be set up, bbecause we aeo notgoing to chave the tme to do it,, ad I believe it is the task Cmmittee 5 or whatever number they have vt that time). THE CHAIRMAN: We have considered this matter new at great length and about all it seems to is a matter of practical procedure. From this point on we should go on to the next item on the agenda for it seems to me that there is no particular point in taking up these provisions on the commissions in Committee this afternoon. If there is serious dissent from that, then I have to stand corrected, but it seems to me that all this comes to is that we are confronted with a condition and not a theory, namely, that we have to go ahead a discuss something else, and to allow suggestions coming from the various Committees with regard to the commissions to be processed in a manner which we have all agreed to here. That is all we can do and, now we should go on to the next item on the Agenda. The delegate of Belgium. MR. HOUTMAN (Belgium) (Interpretation): I am sorry, but I do not under- stand what we are discussing, for the following reason. When we were discussing at the last meeting Article 50, I put a question to the delegate of the United States concerning paragraph 1, asking him if we should not provide for a tee > - 6e- e that which we are now discussing. w, discu.zirThe reply Economic and Social Council, having consii'cic, o-nidered _; ,, ..... , _~~~a~inF consid.ee...................... ,-0<.... -1,--~ .. this very important question had created a Sub-Committee on; Econmic. Develpmient and therefore itwa.s not necessary to povride another here. I was satisfied with that reply,bout now, for tenm.inutes, I have been trying toglet the fIoor in order to say that I cannot understand why, as ti s question seems to me to have been settled last time, we hav seeen discussing it for an hour. HE SECREEATRY: I wonder if I mg-ht eC permitted to ayy a word in connectionwWith teo point .mdee by thedelegate of p Belgium, subject to correction by the United States deegcate? I inter- vened in yesterday'sdCiscussocn on that point. I think tec ,oint was that in paragraph 1 of Articcle 50 the reference is only oc the collection of inocrmation ealatig. oc mpnloyment, -olicy, etc. It does not refer oc theecstablishmentocf a cmr- rissoen whic,. I gather, has been teo subjectocf the debate this ofteroon. MR. HOUTMAN (Belgium) (Translation): I think the problem is exactly the same, and I would go on to say that the Secretary, in a document which I hold in my hand, formulates the very important functions of this Committee. THE CHAIRMAN: The delegate of the United Kingdom. MR. HOLMES (United Kingdom.): I apologise very humbly for intervening at this stage, but I have just come from a small drafting group with the Acting Chairman in charge of it of Committee 3, and I thought I should let you know that I believe you will be approached by Committee 3 with a view to co-ordinating with them a discussion of what should appear in article 65 on the Restric- tive Business Practices Commission. For myself, I would have no strong views as to whether this should be dealt with by. CmmMitte e5, or relegated, as I thikn has been suggested, to the InterimDdrafting Cmmrittee. The ony.octherpeoint I would ike to makme is that whichever way this subject is to be ealt - 19 - D. 3. E/PC/T/C.V/PV/13 with, I should not like our paper 22 in Committee 5 Series to be lost sight of, we we attempted to make certain revisions in the draft of Article 65 as it appears in the United States draft Charter. THE CHAIRMAN: The Chair would say that under the procedure which has received the approval of the majority of the Committee, any suggestions coming from Committee 3, including the suggestions with regard to a Commission on Business Practices which have been made by the delegate of the United Kingdom, would go forward to the Interim Drafting Committee because, as was made clear before the delegate of the United Kingdom (Mr. Holmes) come in, this Committee unfortunately will not have time to go through the process of considering jointly with these other Committees matters arising out of their recommendations. It seems to me that it is simply a matter of pipelining any suggestions that may come from any of these other Committees or from individual delegations concerned with a particular field of activity of another Committee, right on through to the Interim Drafting Committee, without any further processing in this Committee. I believe that is what the situation re- quires now. The Chair would like to call upon the delegate of Norway, if he would be so good as to do so, to state again his suggestion with regard to further procedure in this matter. Let us see whether we are entirely clear on the matter, and whether we can all agree now to go forward on that basis. MR. COLBAN (Norway): My view was that, having approved in general, the plan for setting up the commissions of the Organization, and not having the necessary time to go into the reports of the other Commitees of the Preparatory Committee, we cannot do better than approve the scheme as it evolves from the American draft Charter, without entering into consideration of the definite terms of Articles 64, 65 and 66 now. We cannot, - 20 - D.4. E/PC/T/C.V/PV/13 I think, enter into any discussing or couisideration of a possible fourth commission for Industrial Development, but we can decide to send the reports from the three other- Committees to the Preparatory Committee, and if something comes from the Joint Committee with regard to a fourth commission on Industrial Development, we can do the same with that, sending them all to the Interim Drafting Committee, being fully aware that the Interim Drafting Committee is not to take political decisions and, for that reason, may find it necessary to make a report to the Second Session of the Executive and of the Preparatory Committee, which can then define their general attitude toward the results of the work of the Drafting Committee. THE CHAlRMAN: Is there any dissent from the formulation of the matter which has just been made by the delegate Norway? No? The delegate of China. MR. DAO (China): I would like to make one point of clarification. The delegate of Norway said, "having approved the general scheme of the setting up of commissions". Did he refer to Article 61? MR. COLBAN (Norway): 62. THE CHAIRMAN. Very well then. We are ready, I take it, to pass to the next item on the Agenda which I have before me - the consideration of Articie 56 and the Interim Tariff Committee. I hope that we may be able to dispose finally this afternoon of any comments that members may have to make in this Committee on that Article. The delegate of New Zealand. MR. LAURENCE (New Zealand): Might I suggest that the delegate of the United States gives a brief outline of how it is intended that this Interim Committee should work, both in respect of time and function in relation to the Organization? MR. KELLOGG (United States): In reply to the question of the delegate of New Zealand, the United States scheme was more or less as D. 5. E/PC/T/C. V/PV/13 follows: This spring we anticipated that the countries here represented would sit down together and negotiate on a multi- lateral basis tariff reductions which would be mutually satis- factory. We hope that these reductions wii be substantial and will have a large measure of success in reducing tariff barriers. When the I. T. C. is eventually set up, these coun- tries which will have made such reductions will automatically be members of the Interim Tariff Committee. MR. LAURENCE (New Zealand): Do I take it that we have to regard the Charter as being a post-negotiation document in relation to the negotiations that are envisaged in the spring? The point being that Article 56 envisayes a general agreement on tariffs and trade which presumably is to be entered into after the negotia- tions are carried on but before the Charter is brought into effect MR. KELLOGG (United States) : The impression of the delegate of New Zealand is Generally correct. Our thought was that this negotiating meeting -would put into effect tariff reductions at whatever time they may agree among themselves. That time might, of course, be the time prior to the coming into effect of this Charter, although of course we cannot now be certain of that. S. LAURENCE (New Zealand): Do we presume from that, then, that the United States envisage that in the general agreement on tariffs there and trade that/will be some committee I authority, maybe termed the Interim Tariff Committee, which will function prior to the entry into force of the Charter, and which will continue on under paragraph 1 of article 56 after the Charter is brought into effect? MR. KELLOGG (United States): Subject to possible correction, I would say that the answer to that is that we not want to jeoparadise the good work which we hope will be accomplished by the spring meeting in reducing tariff barriers as a result of a possible failure of the Charter to come into effect. Hence we hope -22 - D. 6. E/PC/T/C.V/PV/13 that the result of the spring meeting will be able to stand on. its own feet. However, it is quite possible that :the countries negotiating at this spring meeting may daecide to set up among themselves some kind of an interim body to watch over the imple- mentation of their agreement. I do not suppose any concrete suggestions have yet been developed on that, but the countries which do so negotiate might so decide. THE CHAIRMAN: Does the delegate of Australia wish to have the floor? I do not know whether he wants to bring up a different point or throw some light on this one? MR. BURY (Australia): It would be better, porhaps, to let the delegate of New Zealand continue his clucidation process. MR. LAURENCE (New Zealand): The explanation given by the delegate of the United State is very valuable and is generally in line with what I onvisaged was intended to be the position. I see a possible difficulty, however, in the words of paragraph 1 of Article 56 - "pursuant to paragraph 3 of Article 18". The meaning we take from that is that the functuibs here envisaged to rest with the Interim Tariff Committee can only follow the entry into force of this Charter because paragraph 3 of Article 18 assness a significance and attains a meaning only after the Charter is brought into effect; but it seems that in paragraph 2 of -Article 56, some body of countries will have assumed certain resconsibilities before the Charter actually comes into effect. The point that concerns us is whether or not the contents of what -, referred to here as the general agreement on tariffs and trade is not of importance equal in strength with certain sections of the Charter. We have not given any detailed thought to this but it seems that the contents of the general agreement on tariffs and trade may be of very great importance, and that some attention should be given to working cut a draft of appropriate contents very quickly, or before we meet the spring, because responsibilities pesumably are to be entered into an assumed before our Charter actually exists. B follows. - 23 - E/PC/T/C .V/FV/13 THE CHAIRMAN: The Delegates of Australia and Cuba wish apparently to add some observations on this matter, and I leave it to the Delegate of the United States the ther he wishes to hear their contributions first, or to rely now. MR. KELLOGG (US): I would like to put in one or two more words in reply to the question of the New Zealand Delegate. In the United States plan, the countries meeting for negotiations in the spring can decide at what time they wish their tariff reductions to take effect. That will depend upon them. We hope that their decision will be such that if the Charter fails to go into effect for any reason, nevertheless the good work which they will accomplish may go forward. Assuming that they are successful and assuming that the Organisation is set up, then those countries which have actually ruduced their tarrifs will all, we hope, because members of the Organisation. When the Organisation begins to function, these countries will for the nucleus of the Interim Tariff Committee. As other countries come into the Organisation, it will be expected that they will also make corresponding reductions in their tariff. when they do so, they become members of the Interim Tariff Commmittee. If they Go not do so, Article 18, paragraph 3, gives to the Interim Tariff Committee the right to say to such a country, "You either make reductions corresponding to those made by the other members or you get out of the Organisaticn. You cannot have the benefits of the reductions made by everyone else without yourself giving a corresponding benefit." 2. BURY (Austalia): I wish to record the provisional view of the Australian Delegation, which is that the tariff negotiations and the Charter are interdependent factors, but if it should be necessary at a later stage and for special reasons to take special measures to prevent te results of the tariff negotiations being lost, then the United States draft does seem to us to be a satisfactory way of accompishing that. 24 E.2 E/PC/T/C -V/PV/13 MR ADAM A (Cuba); I only want to add some information, because I formed part of the Sub-Committee which dealt with Article 18. I want to say two thinkgs. First, when we started our work we were told that it was envisaged that possibly not all the Charter, but certain parts of it, would be made as a partial agreement to be added to these tariff negotiations, as an essential part of them. Secondly, precisely this third paragraph of Article 18 has been redrafted, and is being redrafted at this moment, in such a way that it will not be part of the Charter itself, but that reference will be made to a memorandum or an additon which will be considered may be as an additonal part of the Charter, or as a separate document that will comprise precisely these modes of operation in which the tariff negotiations are going to take place. So it would be easy just to death it from th Charter and add it to the MR. LE PAN (Canada): I would like to raise a comparatively minor point. It is the view of the Canadian Delegation that there should be an amendmen the second sentence of the second paragraph of Article 56, and that the sentence should be amended so that the words" shall be entitled" should be changed into "Shall be a member of the Committee." In other words, we believe it ought to be obIigatory and not permissive for a member of the Organisation whch has completed tariff negotiations to be a member of the Interim Tariff Committee. The third paragraph of Article 18 of the Draft Charter gives to the Organisation the power to consider questions and disputes arising out of tariff negotiations and tariff agreements. This Article Iays it down for an interim period after the coming into force of the Charter that the forum in . which such questions shall be considered will be the Interim Tariff Committee. It is our view that any member of the - Organisation which has completed tarif negotiatons should be obliged to be to a member of : the forum in which such .questions will . be considered. 25. E.3 E/PC/ T/C.V/FV/13 THE CHAIRMAN: The Delegate of Canada has suggested an amendement to the second sentence of paragraph 2 of Article 56. We do not have provision at the moment for a Sub-Committee to consider that. I wonder whe other we could have the views of the Committee now as to whether that is acceptable. MR KELLOGG (US): I take it that the proposed amendment would strike out the three words "be entitled to" in the first line of page 38. We would agree to that change MR. LAURENCE (New Zealand): W'hat is the position if that Member does not desire to be on the Committee? THE CHAIRMAN: It is not the obligation of the Chair to answer that question. MR QURESHI (India): I suggest that he cculd absent himself from the Committee MR LAURENCE (New Zealand): It is quite cenceivable that some undesirable situation might arise with reference to the right to elect whether he wanted to be on the Committee or not. MR LE PAN (Canada): It seems to me that it should be an obligation. It is a minor obligation, but it is along with severeal others that are imposed in the Charter. MR KELLOGG (US): I would suggest that if a member serving on the Interim Tariff Committee found that a certain vote was particularly embarrassing to that member, he would probably abstain from voting. MR. LAURENCE (New Zealand) I still suggest there may be some point about it that may cause a member not to desire to be on the Tariff Committee. I will not press the point further. It can be thrashed out at a later stage. It is questionable whether that obligation should be imposed in this arbitrary way. THE CHARIMAN: Could. we agree that the Committee approves of this amendment, with the Delegate of New Zealand having some reservations on the question - see the stenographic record?... As I hear no dissent, I take it that we agree to that. Is there any further 26. E/PC/T/C V/PV/13 discussion on Article 562 MR LE PAN (Canada): It is now my turn to enter a reservation, and it refers to the third paragraph of Article 56. If, as we in the Canadian Delegation hope, it is decided that votes in the Conference should be according. to a system of weighting, then I think as a consequence a similar system might be used in the Interim Tariff Committee. I only make this remark as a reservation. I certainly have no wish to reopen the whole of the question. THE CHARIMAN: A note will be made of the views of the Canadian Delegate. MR. HOLLMES (UK): And of the United Kingdom, please. THE CHAIRMAN: The United Kingdom Delegation has expressed concurrence in the views of the Delegate of Canada. MR LAURENCE (New Zealand): We would like to have a reservation recorded there, too, in view of the power which is vested in the Tariff Committee. MR NAUDE (Union of South Africa): No, I am not going to enter a reservation. THE CHAIRMAN : If there is no further discussion of Article 56, I should like to make suggestion with regard to the handling of Article 1. This Article has to do with the objectives and purposes of the Organisation. From time to time we have had it on our agenda for discussion. We have deferred discussing it because we have usually had something that it seemed we could more profitably discuss at an earlier stage. Now I would like to suggest that we not discuss it at all, but that it be referred to the Plenary Session for consideration. The suggestions that may emanate from the various Committees of the Conference which would bear upon the question of any change in Artcle 1 as now drafted are suggestions which will hardly be, all of them, available before the very last stages of the Conference. They will concern matters on which the entire Conference would wish to pass in Plenary Session. It seems to me that it would be 27. E .5 E/C/T/C .V/PV/13 unprofitable, for this Committee in advance of those final recom- mendations from the other Committees bearing on Article 1 to enter into any discussion of it at all. My suggestion is that we simply leave the final formulation, so far as this Conference is concerned, of Article 1 to the Plenary Session. MR BURY (Australia): In agreeing with what you have just suggested, Mr. Chairman, I should like to point out that the Australian Delegation did submit to Committee V an alternative draft, and. when this matter is remitted to the Plenary Session, we would appreciate it if the attention of the Session were drawn to this draft, with a note that Committee V had not discussed it. THE CHAIRMAN: With regard to the suggestion made by the Delegate of Australia, I should like to have the comment of the Secretary as to how that might be carried out. THE SECRETARY: If it is agreeable to the Australian Delegate, I think arrangements could be made for that document to be re-issued under another symbol as a general Conference document and made available to all Delegations. MR. BURY (Australia): That would be very satisfactory. The document is V/19 in this series. TIE CHAIRMAN: I take it that that method of disposing of Article 1 is acceptable to the Committee. There are some odds and ends that we have not disposed of, of which the Secretary has kept a note, and this seems to be the time to dispose of them, and I am going to ask him to take up with the Committee one by one those matters, and see whether we cannot dispose of them as rapidly as possible. THE SECRETARY: With your permission and the consent of the Committee, I would like to mention these one by one, and get some instructions or decision from the Committee as to what the situation should be. It would be helpful to do as much of this tidying up as possible in order that the joint Rapporteurs can proceed more easily with thei 28. E.6. . E/PC/CTIV/A3 h reports, which have got to be p-repared and considered by this Com mittee between .now and next Tuesday at the latest . A - .. The first point, which concerns particularly the United States Delegate, relates to aticle 69, paragraph 2, of the kmerican text. The United States Delegate did reserve the rignt to raise the matter referred to in paragraph 2 of Article 69 after the general character of the Commissions had been discussed and considered. I am wondering whether that is a point which still needs to be considered by the Committee, or can we strike it off the suspense list? la. ILOGG (US): wayThe United States Delegation is content with the WV in which the Charter has been redrafted at the present time. T SECPMRY: The second point also concerns the United States and I think other Delegates, and it deals with the reference to food and agAiculture, which we struck out of paragraph 2 of prticle 71, gi the understanding that consideration would be 4,ven later to making some appropriate reference to the importance of food and agriculture in relation to co-zMty arrangements elsewhere in the Charter. Hay I add that it is My understanding that Committee IV, in redrafting Chapter VI of the Charter, have made a very specific reference to the Food and Agriculture Organisation, and have in fact included an .rticle on relationships with the F.I.C., and I wonder whether that would not meet the case satisfactorily. la IMLOsG(US): In the light of the action taken by Committee IV, the United States Delegation withdraws its reservations in this respect. 29. F fols F .1. E/PC/T/C .V/PV/13 THE SECRETARY: The third point I have is with reference to a request made by the New Zealand delegate for a legal opinion on the formulation we suggested in the matter of voting. He suggested. I thinik, that we should get a legal opinion as to whether the phrase "by a vote of two-thirds of its Members" was a proper and appropriate phrase. I have consulted the legal officer of the Conference and he agrees that it is not a very good phrase, it is ambiguous, and has suggested as a solution that it should read "by an affirmative vote of two-thirds of the Members." I wonder if that clears up that point satisifactority? MR. LAURENCE (New Zealand): It is difficult offhand to say whether it would clear up the point but the impression is that it would clear my difficulty. Just as a matter of interest I have been extracting the phrases used in the Charter dealing with voting, and I think possibly there is room for tidying them up, but I will not worry this Committee about it, it can come up later as a drafting point. The phrase we have just had suggested, without the word "affir- mative" is a definite improvement on the phrase as it previously stood. THE SECRETARY: I think it was the sense of the meeting, Mr. Chairman, that our intention in the matter, was quite clear and that it is a point which really ought to be settled by the Technical Drafting Committee. MR. LAURENCE (New Zealand); Yes. THE CHAIRMAN: I think the delegate of the United Kingdom wanted to say someting? MR. HOLMES (United Kingdom): I think a better phrase might be: "by the affirmative votes of two-thirds of the Members of the Organization." That is to say, the -30- F.2 E/PC/T/C.V/PV/13 F ~ * .2. - * word should be in te plural -"Voes'^ THE B iRPTARY: T suggest that we adopt thati.n the meantime on mhe underitaidin- that the Drafting Coimittee wIll 1ook at this .atter;^d that we^ rawi heir attenttin to our discussion on it in our instructions to that Coimittee. The next point refers to paragraph 2 of Article 55, wFere I thiii, it was suggested by the 1rench delegate that the words 'Cha ter 4 of" should be deleted. The Uiited States delegates as I recall, reserved the position of his delegation on that point , and it ,s &,ed tlat Lh .Commiitt would reurn, to ccthMce- tacl paragralph. £may I jmme ad' inht it is reco.i-nded -4 the report other Draftimm omittee of Coixittee 4 that a refer- ence to ChaltCr should br added to paragiaph 2 of hrt-cle 55. AR. ELLOC-): :nJited states' IIviews, of the change sugges- .d by Co- mttesp4 in-this rea-ect, fnd in-view, oL the suggFstic1 of the 1r wnch delegate, e would be ha~ y -,o sec the-words "Chapter 4" dropped, which ths T believe The suggFstion of the rench delegate. TI C I E ' O : is thatWagreed to? T SECRETAPY: The nnet point is oii of rather greater substancmmwhlch mhe Coimittee -ay or ;ay not wish . take up now .At our 8th Meeting, the Canadian nelegate gave iotice of his intention to propose an additional nei paragraph to Article 57. I do not think the Caaadian delegate has had an opportunity siLce mo raise this latter. I have here copies o the tCxt oL the new paragiraph,5 as submtted at that time by the Canadian delegate, which I will - 31 - F.3. E/PC/T/C.V/PV/13 pass round, and members can decide whether or not they can del with it quickly. It is quite brief. Copies were supposed to be availabe in French, but I am afraid they have gone astray. I must apologise for that most sincerely. Perhaps I should read out the suggested new paragralph? It is as follows: 'Any Member of the Orgnization who is not a Member of the Executive Board shall be invited to send a represen- tative to any meeting of the Board called, to discuss a matter of particular and substanitial 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." THE CHAIRMAN: First, does the delegate of Canada wish to make any remakrs on this? MR. LE PAN (Canada): I think that there are a few things that T might profitably say about this suggestion. it is the view of tlhe Canadian delegation, on the one hand that the membership of the Board should not be unduly increased and, on the other hand, that it is highly essential that any Member of the Organization whose case is being considered my the Executive Board should have the right to appear before that Board. It will be remembered by the members of this Committee that Article 31 of the United Nations Charter gives the right to any one of the United Nations whose case is being considered by the Security Council to appear at the Security Council. In point, of fact we feel that the interpretation of Article 31 in the United Nations Charter has been so restrictive that it has -32- F.4. E/PC/T/C.V/PV/13 -;7- . ; not fad exacalYwthenee-ects thnt .e iatcnded when we proposedan ameriginally as :;I sndment to the United Aatiels Charter. Thmrcfore this amendient has been dra li! raor ixrm.recise a k r,. thini-I tht it would have tee renult of sccuriug to any member of the I. T.O. ppearight to a.-)r and to effectively present etExcase to Bho T,eautive Doard. cnd I hope thet whe Comewttzewrill aicv it \ith f vour. IR.ia):Y (Australike I would lil to sapport the Can-dian duggeexpresn, -e i teo pr~ss thchmm that the Coiiittee will adopt it. N2. ZeaJ.L.)r (jew `aland,: adian deleCanCc1Jm. &z, gate advise uselheaher his dciegstion envisages that this iembcr sho ig attend twrouahout the -hole of the pro- aea'lgs cftaltmeertigcucr ;octin. of the Board, or hvhoc be shouldhatsAbec -t tott of the proceedings gLcctimem the i Ybearehichezxr undor discussion, or -hnthej it is ,us,ethat thc aoard sholl heae-a stat- .m thatarem-et manecpeirr-sesftiweeoL th ther the -. cZ- is enn atetndanc GanyLng oy- oparher htof t e proceedings? I thiwou it ;uld bed very angerous to iioe se tlhobliationnoE er Zxocutive Boardato hr e a ;, cber~who may ae echedlagdcmancb:-y oe guilty mf sole offefce, in attendwwen memvhc ibers ef thc Board are discussing matters coninginlg the case before it. However theyrepl, to the questions I have put may thrown lome linht oi that. MRP IE -an (Ccxada): If I understand the position which has been put by theZNewanealmpd re-resentative, it lls -iwto tlo parts. In the first ptace he would likkntw f;ol; or how,longs according to tmes a-mnd- -entmeme niiber called to the Executive Board would have the right to be preseMy. answer to that would, -33- F.5.. E/PC/T/C.V/PV/13 be that he would not have the right to be present during the whole of the session if that session considered other matters than the one which affected. his country. On the other hand, he would have the right to attend for the whole of that part of the session during which the cause which affected his country was being discussed The second half of the question put by the New Zealand repreesentative, unless I am mistaken, was: should the member called to the Executive Board have the right only to submit a statement, or should he have the right to enter into the discussion as well? My answer there unequivocally is that: he would have the right to enter into the discussion as well, not only to make a state- ment. In other words, as the final sentence of this amendment reads, he would have "all the rights of Board Members, except the right to vote". It seems to me that the experiencee of a considerable number of inter- national organizations and conferences has shown that the right simply to make a statement, and not to enter into a discussion, is insufficient if a case is to be thoroughly ventilated, and if the member is to feel that he has had a chance to present his arguments with completeness and fullness. THE CHAIRMAN: Before recognizing the delegate of South Africa, the Chair would like to suggest that while this is a drafting matter, the first point raised by the delegate of New Zealand with regard to whether such a representative should be in attendance throughout the whole of the session of the Executive Board might be met by some such change as the following: "Any Member of the Organization who is not a Member of the Execuitive Board -34- F. 6: E/PC/T/C.V/PV/13/- "shall be, invidea to send a. repres-nt. tative to any meeting of the Board- to be in attendance whenever a matter of particur -_ and substantial concern to thaMeL4mber is under discussion." Thd aelegate of South Africa. MRNAUDEAL (South Afri)a': I merely wanted to support wholeheartedly the principle involved here. amca not entirely certain that the drafting will meet all the points that can be raised and ny immediate re- acoicn to the words "in attendance" was that t'did nomei'an the ma-e as "participating". Another point s.rture me . with regard to thwo>.rds "except the right te oCte"I _agretre that, at rep-oresentativ w-;ho comes tp rtatipaiote tu in Iot m me-ber of ehB Doard should nohave v:tho ght to vo I, " but we erc to have .:ighted voting, adG if we are to adopt the some pni piesoo as apply in the case of the Fund and the nark -amelc,y. the Executev of the der-ctors casts the voseo ^fimself-. andll11 thoswh-,oovIted for him - yomirLght landyu7_rself in a littldiff.Luc Ity of drafting. TIEHARIMAN&A: Iouunljust ta cll the attention of the delegatefo- South Africa that thm ;atre2 of definition bwtnee attendance and discussion isakklen care of by the last sentence in the draft. Evea s the original senne-ce stood, there is nothing about participation. MRN XAEDt (South Africa): No, I merely had in nd a. that there might have to ba drafting cmm-ittee to draft this. One othepoin t. Will the member himself decide when thm ;atter is of particular and substan- tial concern to him? I notice that in the case of -35- F. 7. E/PC/T/ C. V/PV/13 Article 31 of the Charter, the Security Councill decides whether the interests of the member are specially affected. THE CHAIRMAN: I think the delegate from Canada wanted to say another word a moment ago. MR. LE PAN (Canada): It seems to me, Mr.Chairma, that most of those are drafting points rather than points of substance, although I am.extremely obliged to members of the Committee for raising them because I think they are of importance. If I might go back for a moment to your suggestion of the drafting change, I would like to suggest to the New Zealand representative that in almost every case that I can envisage,the question of how long a member called to the meeting of the Excutive Board should be allowed to remain would be academic because I think that my question which is of particu- lar and subbstantial concern to any member of the Organization will ordinarily ocupy one full meeting of the Executive Board. However I would be very ready to accept some amendement of the some that you have yourself suggested, which, would, make it clear that the member should be called to participate in the dis- cussions of the Executive Board while the particular matter which is of concern to him was being discussed. M.R DAO (China): To meet the last point raised by the delegate of South Africa, may I suggest that the word "shall" is changed to "may"? That would leave the discretion to the Executive Board. MR. LE PAN ( Canada): Although that is a way out of the difficulty; it might lead us from the frying pan into the fire and, in my view it would emasculate this amendment considerably. I feel very strongly that the wording should remain "such representative shall 36 F.8. E/PC/T/C.V/PV/13 have all the rights'... in other words, his rights shall not be whittled down. There is the question outstanding, raised by the representative of South Africa which I confess I find rather a ticklish one: who is to decidd whether or not the matter is of particular and substantial concern to the member not belonging to the Executive Board? I feel certinaly that the final power must reside in the Executive Board. to decidd as to whether or not the matter is of particular and substantial concern. The procedure in fact that I would enavisage would be that the member who is not a member of the Executive Board would apply to the Executive Board. and represent that such a subject was of substantial concern; and then it would be for the Board to decide whether or not that was the case. We ourselves would hope that the Executive Board would adop a very liberal attitude to representations from members who are not .members of the Exceutive Board. G follows. - 57- . . .~~~~~3 G.1 E/tC/T,/C .VIFV113 TIE CHMUN: It is now 6 o'clock, and are e scrt cf hunj u, if I may use that expression, cn this proposal of the Canadian Dele.-ation. I think that all th.t it is essential for us to do at this tLie is to decide whether we aCree that so:;ethinL approximately as sup ested by the Delecate of Canada is acceptbLle tc the Co-LAttee. If the 'Ccn- i;ittee -will ajTee to that now.-, T suL-est that any draftir4 of the paragraph te left, in the first instance, to the Sub-Coazlittee which T aa about to su est Le set u? to take care of certain other articless -which we hrve discussed and which recue certain other -ork on them ty a Suh-Coi-iittee. I do not irinl it is incuiilrent on us now to agree upon the draftir-. Therefore, I hope that, unless some meLler of the Co-.:"ttee is extreiel, anxious to add to the bLody sf wisdom on this su'-ject, a. the zorent we conclude our discussion, and trasact one or two other items of ' usiness, and then ko hcze. ,. LUREIN (New Zealand): ,T azcloise for spe-akinL, but there are impcrtant points of principle in this. Takir: the ;-ords "particular and substantial concern to a mezifer", what is the position if the Executive Loard are disciassin;. scmethrinL of eneral application? Does it iRean that ycu have to convene a conference? Does it iaean that the Executive Loard cannot have a confidential discussion, -s a _oard, on ary suL ject concerninz a meiter? Then we have the point of administration. If the Board has to hold ur consideration of natters until Ye;abers concerned have been invited and have coiaunicated their views, I think tbat a provision in the Charter as rigid as that would hamper the proceedings of the Board. I would say that.we could be sympathetic to the Leneral viewthat members who are concerned. with the subject could have the riaht at some point to be heard, but I do not think tihat to write it into the Charter in this manner is the vy in which to achieve it5, nd if the Commi ttee were satisfied that the principles involved riere acceptable, it would seem that the best thing to do would be to make the provision in in -Lrticle 55 that the Conference could :rescribe the procedures murder which G.2 E/PCT/C.V/PV/13 members could have proper representation at meetings of the Executive Board. But from the point of view of practical operation, I think that to carry out all the things envisaged in the Article would impedg and embarrass executive action. MR. ALAMILLA (Cuba): I would like to express complete agreement with the proposal of the Canadian Delegation. We think it should be left to the Interim Committee for drafting or to the Committee we are going to appoint here. Likewise, all the other points that may arise can be left to the Sub-Committee. I would like also to point out that an Article of this kind is in the Charter of the United Nations, and I do not think it has .caused so much trouble as has been envisaged here. THE CHARIMAN: The various remarks that have been made on this proposal will be in the record which will be available in the first instance to the Sub-Committee I am about to appoint, and will be available, secondly, to the Interim Drafting Committee which will work on this subject between now and next spring. Yesterday we discussed Articles 50, 51 and 61, and various suggestions for amendment were made. I would now suggest that it would be appropriate to appoint a Drafting Sub-Committee which would consider the suggested amendments to those Articles, and also would consider the suggestions that have just now been made with reference to the proposal of the Canadian Delegation for the addition of a new paragraph to Article 57. I would appoint as members of that Sub-Committee Canada, India, Cuba, United Kingdom, and the United States. if any other member wishes to be represented on the Sub- Committee, of course that would be acceptable. With reference to future meetings, I would suggest that the next meeting of the full Committee not occur until Friday afternoon. I suggest that we meet on Friday afternoon at 3 o'clock, and that we take up at that time, first, the report of the Sub-Committee which I have 39. G.3 E/PC/T/C .V/PV/13 just now appointed, and, secondly, the report of the joint Rapporteurs on voting and executive board membership, the matter which we had agreed yesterday should be particularly concentrated upon by the Rapporteurs, and lastly, any other business which any member of the Committee may wish to bring up at that time. That would then leave the situation about as follows. We would make every effort to have the draft report of this Committee to the Plenary meeting circulated Monday morning. Our joint Rapporteurs would have some time over the weekend to complete their draft, and the final meeting of the Committee to approve the report would be held on Tuesday morning. The present programme calls for the final plenary meetings of the Preparatory Commttee to begin on Tuesday afternoon with a view to finishing on Wednesday, and it seeds to the Chair that a meeting on Tuesday morning would be necessary to take care of the final report of the Committee. That is the programme that is now envisaged. Are there any comments? If there are none, and there is no father business, I will adjourn the meeting. THE SECRETARY: May I take it that it would be convenient to members of the Sub-Committee just appointed to meet tomorrow afternoon, say, at 3 o'clock? (The meeting rose at 6.16 p.m.) 40

GATT Library

zw031yq5904

Verbatim Report of the Twelfth Meeting of Committee II : Held in The Hoare Memorial Hall, Church House, Westminster S.W.1. on Friday, 22 November, l9461946-11-22 at 10.30 a.m

United Nations Economic and Social Council, November 22, 1946

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

22/11/1946

official documents

E/PC/T/C.II/PV/12 and E/PC/T/C.II/PV/12

https://exhibits.stanford.edu/gatt/catalog/zw031yq5904

zw031yq5904_90220016.xml

GATT_157

A1 E/PC/T/C.II/PV/12 UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL PREPARATORY COMMlTTEE of the INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT Verbatia Report of the TWELFTH MEETING of COMMITTEE II held in The Hoare Memorial Hall, Church House, Westminster S.W.1. on Friday, 22nd November, l946 CHAIRMAN: at 10.30 a.m. DR H.C. COOMBS (Australia) Erratum to E/PC/T/CII/PV/10 (From the Shorthand Notes of W.B.GURNEY, SONS & FUNNELL, 58, Victoria Street, Westminster, S.W.1.) Page 3, line 2, to read as follows: "Secretariat, Mr Hutchins, Mr Lin and all my friends here, because we have accomplished in a . . ." 1. BI OM E/PC/T/C.II/PV/12 THE CHAIRMAN: Gentlemen, this is a meeting of Committee II for the purpose of receiving and discussing the Report of the Drafting Sub-Committee dealing with Tariffs and Procedures, I think the best way for us to deal with this is to commence by asking the Rapporteur to introduce the Report. THE RAPPORTEUR: The Sub-Committee on Procedures was asked to do two main things: one, to prepare a Raport setting forth the procedure s which should govern the tariff negotiations among: the Members of this Committee next Spring; the second was, to examine and revise, if necessary, certain Articles of the Draft Charter relating to the relaxation of trade barriers. Those Articles were: Article 8, relating to Most-favoured-nation treatment; Article 18, dealing with the Reduction of Tariffs and the Elimina- tion of Preferenes; Article 29, providing. for Emergency Action in the case of particular products; Article 30, dealing with eases in which there might be a nullification or impairment of the benefits of the Trade Barrier provisions; and Article 33, which provided for the general territorial application of the Trade Barrier Chapter. There are before you four documents resulting from the Committee's work. One is a general Draft Report, which submits the revised Articles and sets forth the reasons for the revisions. The second is a set of amendments to this Report, which had to be given in a separate paper because of the shortage of time. That is E/PC/T/C.II/57/Corr.1. Thirdly, the revised Articles them- selves; and; finally, the Report of the Sub-Committee on Procedures dealings with the Tariff negotiations next Spring. THE CHAIRMAN: I suggest for the convenience of the Committee that we take first the Draft Articles and discuss those, and I think it will then be a relatively simple matter to run through the Rapporteur' s Report, since the Report must obviously be based primarily upon the Articles in the form in which they were agreed 2, E/PC/T/C .II/PV/12 by the Drafting Sub-Committce. I suggest that first we take Article 8, the new- form of which is set out on page 3 of the third document, No. 57, which is headed "Addition to Report of Sub-Committee on Procedurcs". On page 3 of that document you ill see Article 8, General Most-Favoured-Nation Treatment. May I ask the Rapporteur to read the Article in its present form. THE RAPPORTEUR: Mr. Chairman, do you want to discuss this paragraph by paragraph, or would you prefer to complete each Article? THE CHAIRMAN: I think we will take it paragraph by paragraph, if that is acceptable to the meeting? (Paragraph 1 read) Any comment on Paragraph 1 ? THE VICE-CHAIRMAN: Mr. Chairman, when you compare this Paragraph 1 with Paragraph 1 in the Charter you will find that we have adopted the American draft, leaving out only the last sentence thereof with regard to public works. The reason for that has been explained in the draft Report of our Rapportour, so I do not think there is any, need to elaborate on that, unless there are questions to be asked. THE CHAIRMAN: Any further comment on Paragraph 1 ? MR. LE BON (Belgium) (Interpretation): Gentlemen, I think that :we are not-entirely agreed on the definition of the word "originating", and having conferred --ith several Delegations I believe that it might be useful for me to make a statement in order to throw a proper light on the problem. I have sent a note to the officers of the Committee, and this is what the note says:- Merehandise is considered as originatinag from a country here it has been either manufactured or harvested. Merchandise originating from country A and imported into country O, having gone through or stayed in country B, otherwise than in bond, might be treated as products coming from country B, and not as products coming from country A. 3- B3 E/PC/T/C.II/PV/ 12 If such an interpretation is not accepted it will not be possible to practise a differential system. I believe that if this statement is accepted by the Committee, or if the delegate of the United States said that it was precisely like that that the word "originating" is to be understood, it would be important to have this declaration accepted, without even modifying the words of the Charter itself. THE RAPPORTEUR: I believe that that interpretation, while it was not fully discussed at the Sub-Committee, is the usual one, and therefore I do not believe that any change would be required. THE CHAIRMAN Is that the interpretation which other delegates would have taken the word "originating" to possess? MR. SHACKLE (UK): I am sorry, but I am not quite sure which is the interpretation which has been referred to. THE CHAIRMAN: The Belgian delegate has asked that it be quite clear that merchandise which originates say in country A and which is imported into country C, after having spent some time in country B, other than in bond, would be regarded as the products of country B and not of the country of original origin. THE RAPPORTEUR: May I make one comment on that? That is, that there is nothing so far as I know in any of the Articles which would prevent the use of some sort of documentary proof of orgin. THE CHARIMAN: Can we take it that the Belgian delegate's point is met by the draft as it at present stands, w ithout creating confusion for other people? MR. SHACKLE (UK): I wonder whether it is necessary at this stage to come to a decision on this point? After all, terms such as "originating" and product of manufacture of countries" are extremely common in Treaties. It does not necessarily follow that those rules are interpreted in the same way, but neverthe- less Treaties manage to carry on. I suggest that on the whole this is a matter of detail which had better be left for 4. B4 E/PC/T/C.II/ PV/12 consideration at a large stage, possibly by the Organization when it is set up. I remember that the League of Nations many years ago did make a study of this very question. THE CHAIRMAN: I think we can take it/that at any rate there is nothing to prevent the Belgian delegation interpretincg the word. "originating" in the may in which they have suggested. Any other comment on Paragraph 1? (At this point the Vice-Chairman, Mr, Speckenbrink, took the Chair) MR. NATHAN (France) (Interpretation): Mr. Chairman, I apologise for asking this question. I ask it only because my English is not good enough. I would like to know how in the French language one might translate the words in the fifth line - "Like or similar products" ? How.would the word "like" be translated into French? 5. C-1 E/PC/T/C.II/PV/12 THE ACTING CHAIRMAN: I may say I did not study that, but, perhaps you can make a suggestion here to see whether the meaning is quite to clear, I cannot fellow it, and I think other delegates are in the some difficulty. M. KATHAN (France) (Interpretation) : I believe the problem is whether we are talking, .about commodities of the same character in that sense of the word, or in a, very narrow and clearly defined sense of that word, If, for instance, we are talkin of wheat, do we mean cereals which perhaps might be substituted for wheat, r do we mean only wheat. THE ACTING CHAIRMAN: Has not that question been discussed in one of the Subcommittees? I think the Committee on Commodity Agreements dis- cussed it;. Mr. VIDELA (Chile): Mr Chairman, I have here a report made by Mr Hawkins which I have just received, May I read it? "There were several ques- tions 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 today in connection with Article 19.2.e. As most of you know the term 'like products' or 'like product' has 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 definition. 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 practically identical with another. Than I think is as far as my memory will serve me on that particular Report, I think it is one of the subjects to which an Internationel 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 importation of bananas because they compete with them - to the extent that they do." Mr Chairman, 6. C-2 E/PC/T/C.II/PV/12 I take this opportunity to refer to this statement, because this is one of the most difficult to define in words, and I take this opper- tunity also to remind Committee II that the Technicial Committee spent a lot of time on this definition and other definitions on technical matters. We propose that the Committee should recommend to I.T.O. to make definitions in a code before the chapter is put under consid- eration. THE VICE-CHAIRMAN: Thank you. Would the Rapporteur like to comment on this? THE RAPPORTEUR: No, only to answer the question raised by the delegate of France, I believe, that in the case of the illustration cited by him I think it is perfectly clear that the word "like" would mean wheat from other countries and not other cereals. THE VICE-CHAIRMAN: The point before us, then, is whether in the Report of this Committee we should comment on this, and. state, in the same was perhaps as with regard to the previous remark of the Belgian delegate, whether there are here some points that have still to be further studied in the coming Conference in Geneva. Mr SHACKLE (UK): Mr Chairman I would like to suggest that this matter should be dealt with in very much the same way as the question of the definition of "origin of goods"; that is to say, the expression commercial "like products" has occurred in/treaties for many many years . There has not, I think, been a precise international definition, though one was suggested by the Economic Committee of the League of Nations. That has not prevented commercial treaties from functioning, and I think it would not prevent our Charter from functioning until such time as the I.T.O. is able to go into this matter and make a proper study of it. I do not think we could suspend-other action pending that study. THE VICE-CHAIRMAN: Would other delegates like to comment on this? Mr FLETCHER (Australia): I would support the remarks of Mr Shackle, the United Kingdon delegate. All who have any familiarity with customs administration know how this question of "like products" tends to sort itself out. It is really adjusted through a system of tariff classification, and from time to time disputes do arise as to 7. C-3 E/PC/T/C.II/PV/12 whether the classification that is placed on a thing is really a correct classification. I think while you have provision for a complaints procedure through the Organisation you would find that this issue would be self-solving. Mr GUERRA (Cuba): The Cuban delegation also support the suggesition put forward by the United Kingdom delegate. Mr. KUNOSI (Czechoslovakia): The Czechoslovakian delegation too. VICE- THE/CHAIRMAN: I take it there is agreement that we leave this point to be sorted out later. Then perhaps we should have to add something to that effect in our report, just to prevent any misunderstanding. I will ask the Rapporteur to take care of that. The same thing applies to the remark of the Belgian delegate with regard to the question of origin. Then may I take it that Article 1 is adopted? Mr VIDELA (Chile) : Mr Chairman, Article 8 starts "with respect to custom duties and charges". I would like to say that I understand very clearly that the word "charges there refers only to tariffs or duties or customs. It has nothing to do with quantitative restric- tions or quotas. THE RAPPORTEUR: I think the application of the most-favoured-nation principle to quantitative restrictions may well be dealt with in the report of the Subcommittee on Quantitatirve Restrictions. THE VICE-CHAIRMAN: With these remarks, we a adopt paragraph 1. We then come to paragraph 2 of Article 8. You will find there again, if you compare it with the draft, there are certain changes that we have elaborated in our report, and of which the main changes are that we left out the date in the first part of paragraph 2 and that we added a sub-paragraph c with regard to preferences in force on July 1st, 1946 between neighbouring countries. The reason of that is to be found in the report of the Rapporteur, which no doubt you have all studied, Are there any comments here. (At this point the Chairman, Dr. Coombs, resumed the Mr SHACKLE (UK): Mr Chairman, I have one remark to make on sub-paragraph a. It is not a point of substance; it is purely a point of drafting, but it is rather important drafting, and so I mention it. It refers C-4 E/PC/T/C.II/PV/12 to the words "Commonwealth of Nations", The suggestion that we should adopt that phrasoology was made in the course of the discussion of this passage in the Subcommittee with the idea that it would make for brevity and would cover the peculiar position of the British Commonwealth of Nations. we are advised that it will not altogether meet the case. I therefore have an amendment to suggest which is not at all an amendment of substance, I will read It, I thing, as it is not long. The paragraph now would read in my suggestion: "Prefereneces in force exclusively (1) between territories in respect of which there existed on 1 July, 1939, common sovereignty or rela- tions of protection or suzerainty, or (2) between the territories com- prised in Annex X to this Charter. Each member to which provision 1 applies shall provide a list of such territories which lists shall be incorporated in an Annex to this Charter", It would follow from that amendment that the British Commonwealth of Nations would be described in Annex X, whereas the other territories which would fall under provison 1 would subsequently put in their schedules. Mr VIDELA (Chile): In regard to the first paragraph of Article 8 I under would like to make it clear that/letter a, peferences in force have nothing to do with quotas or quantitative restrictions and it is deaing only with the matter referred to in Article 8, THE Vice-Chairman: Has anybody any Comment to offer on the suggestion put forward by the United Kingdom delegate, or can we take it that that is generally acceptable? It is, I understand, merely an attempt to make a someawhat vague hrase "commonwealth of nations" specific, so that there can be no uncertainty about it as to to which groups of countries the phrase applies. I think that should be generally accIeptable. May take It that is agreed? Very well, Is there anything else on paragraph 2? D1 E/PC/T/C.II/PV/12 (At this point Dr Coombs vacated the Chair, his place being taken by Mr Speekenbrink, the Vice-Chairman.) THE VICE-CHAIRMAN: We may take it, then, that with the amendment proposed by the United Kingdom delegate and also the observation of the Chilcan delegate the second part of Article 8 has been approved by the Commiittee. If there are no further remarks, we may turn to the next Article, I think. Article 18. Again you will have seen that there are certain changes there, and perhaps, as this very important Article has a definite bearing, on the paper that you will have to discuss later, that is, the Memorandum on procedure of tariff negotiations we might take it paragraph by paragraph. I would ask whether there are any comments on the first seven lines, up to (a). If not, that part is adopted). we come, then, to sub-paragraph (a), where you will find that we have made an important change, as we have added the words "it being understood that action resulting from such negotiations shall not require the modification of existing international obligations, expect by agreement between the contracting parties or, failing that, by termination of such obligations in accordance with their terms" We explained that yesterday to the delegates who did not take part in our discussions, so at this time I will only ask for remarks. If there are no remarks, I take it that (a) is adopted. Now we have (b), which reads: "All negotiated reductions in most-favoured- nation import tariffs shall operate automatically to reduce or eliminate margins of preference. We explained yesterday that we had a lengthy discussion on this sub-paragraph, especially with regard to the word "automatically", and Sub- that it has been adopted by the majority of the/Committee. In connection with it there is a note in the paper E/PC/T/C.II/57.Corr.1 regarding page 4 and page 8 of the drat reeport of the Rapporteur. This is a statement of the position of one of the delegations: "One Deleation thouht 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) rate to be agreed upon." Are there any comments here? MR ADARKAR (India): Mr Cairman, there is a small amendment here. Instead of "(prior) rate" it should read "(prior) date". D2 E/PC/T/C .II/PV/12 VICE THE/CHAIRMAN: Yes, of course. Have Any delates any comments here? Then may we take it that the other members of the Sub-Committee are in agreement with the greater majority of the Sub-Committee with regard to the wording of this sub-paragraph? (Agreed.) He now have sub-phragraph (c), where there is an an adition the intent of which is to have regard to the special position of, shall we say, low tariff countries. Is that agreed? (Agreed.) Then we come to paragraph 2, where you ill see that we have made no changes, so I do not think there will be any objections. Is it agreed? (Agreed.) Paragraph 3. This is important, because here we say this, in the second sentence: "The Organisation, if it finds that a Member has, without sufficient justification, having regard to the provisions of the Charter as a whole, failed to negotiate..." - and in the further paragraphs we always speak of the Charter as a whole. The reason for that is that the Sub-Committee thought that everything in this Charter is so closely related that we should not confine this paragraph only to the general commercial provisions; and in this way we have also, in our opinion, taken adequate notice of the message we received from the Joint Committee of Committees I and II on Industrial Development. May I take it that the Committee agrees to have paragraph 3 read as stated here? MR SHACKLE (U.K.): I notice that a word has dropped out in the next to last line. I think it should read: "The provisions of this paragraph shall operate in accordance with the provisions of Article 56." VICE- THE/CHAIRMAN: Yes. Is this paragraph adopted? (Agreed.) Then we turn to; Article 29. MR TUNG (China): Mr Chairman, in connection with Article 18 the Chinese delegation wishes to state its attitude, which is that the draft provision under this heading would amount to the automatic application of the most-favoured-nation clause which China, wishes to co-operate in principle with other member nations to bring about. In view of the fact that preferential tariff systems still exist in various parts of the world, the Chinese delegation would like to reserve China's right to adopt similar measures herself at any time, or to adopt other measures that would enable her to counteract the unfavorable effects on her products which might accrue frorm the use of preferential tariff systems by other nations. We wish to have this statement put on record in connection with Article 18. THE VICE-CHAIRMAN: If there are no comments on the statement of the delegate of 11 D3 E/PC/T/C.II/PV/12 China, we simply include it in the records of this Committee. May we turn now; to Article 29? Perhaps I may ask the Rapporteur to indicate very shortly the changes we have efrcted here, as guidance for the members. THE RAPPORTEUR: Mr Chairman, Article 29 is an emergecncy provision whereby members would be permitted to withdraw or modify concessions or other trade barrier obligations they had undertaken in the event that as a result of those con- cessions and obligations their industries should be seriously damaged. The main change that we have incorporated in the first paragraph of the Article is, I think, by way of a clarification, to make it clear that this riht of withdrawal or modification will extent to cases where a country s trade is injured by reason of the loss in whole or in part of a preference. which it previously enjoyed in another market. That is dene by the phrase in parenthesis appearing in the middle of the paragraph. In the second paragraph we have provided that in critical and emergency circumstances a member may exercise his right of with- drawing or modifying a concession without prior consultation with the other affected members, provided that the consultation was carried out immediately after the taking of the action. The members of the Sub-Committee felt that, on the whole (I think there were two reservations) there should be flexibility: that it was not in all cases possible to consult before taking the necessary action but there should be consultation in all cases and there should be a remedy open to the other affected party in the event that the other affected party did not agree with the action taken. 12 E/PC/T/C.II/PV/12 THE VICE CHAIRMAN I may perhaps add here, because it is always a very serious thing to take action without prior notice, that have added as special sentence at the end of this paragraph which should provide for rather severe penalties in case of abuse if this possibility. As you will see it is stated that "in serious cases the Organization way authorize the affected member to suspend concessions or obligations in addition to those which any be substantially aquivalent to the action originally take. " (At this Point Dr Coombs resumed the Chair) THE CHAIRMAN: Is there any comment on paragraph 1? If not, may I take it that paragraph 1 is agreed? (Agreed). Paragraph 2. Any comment on paragraph 2? I take it that paragraph 2 is a agreed. This will be subject to certain reservations which I understand have been referred to in the Rapporteur's report. (Agreed). Article 30. Would the Rapporteur care to comment upon this? THE RAPPORTEUR: Mr Chairmac, the first paragraph of this Article simply sets forth what Seems to be the agreed principle, that every member of the Organization should stand ready to consult with any other member on any question which they might raise regarding the operation of the trade barrier provisions in Chapter IV as a whole. The second -paragraph is intended to provide a rather wide measure of flexibility in the event that the Charter as a whole should not work out in some circumstances in the way it was intended to work out. It would permit a country in the event that they felt that another country had taken some action, even though. not in conflict with the particular provisions of the Charter, which nevertheless tended to nullify or irpair home of the benefits of the Charter, to raise that matter with the Organization, and if the Organization agreed it would be permitted to obtain release from some of its obligations under Chapter IV. The paragraph would also permit such action in the event that any situation should develop or arise, eventhough un- related to the action taken by the particular member, which tueded to impair for the member desiring to take the action some of the benefits. I would like to explain it if I may by examples; I think it can be dealt 13. E2 E/PC/T/C. II/PV/12 with more clearly that way. I think that the paragraph, in its present form, is designed to meet the needs of certain countries which have asked that it be recast. For excample if a country should feel that it needed to take measures to safeguard its economy from deflation- ary pressures owing to the lack of effective demand from abroad for its products, it would be able to bring the matter before the Organiz- ation as a possible nullification or impairment of the benefits intended to be accorded under the Employment Section of the Chapter; and the Organization, if they agreed that the country should be permitted to take the necessary measures to safeguard its economy could authorize as it to do so under this Chapter;in such cases/that it would be expected that the Organization would, of course, consult with the Economic and Social Council or other specialized agencies to see whether some other option night not be more appropriate. The second case would be situation in which a country exporting to another member country was suffering because of the employment by a second exporting country of sub-standard labour conditions. In such a case it would be only the importing country wihich could remedy this situation by attempting to readjust the competitive position between the two exporting countries. Under this draft the exporting, country could raise the problem with the Organization and if the Organization agreed the importing country could be authorized to take the necessary measures to readjust the situation and be released from any obligations which would prevent that. THE CHAIRMAN: Any comment on paragraph 1 of Article 30? MR SHACKLE (UK): There is one point, Sir - it is purely a verbal correction, I think - six lines from the end of the Article, paragraph 2, which reads: "under this Charter as may be appropriate in the circum- stances." I believe our intention was that those words should read "under this Chapter." THE CHAIRMAN: Is that right? THE RAPPORTEUR: Yes, that is an error, Mr Chairman. THE CHAIRMAN: That is on page 3,. line 9, the third word written at present "Charter" should be "Chapter." Is there any other comment on either of these paragraphs? Can I take it then that Article 30 is agreed? (Agreed) E3 E /PC/T/C. I I/PV/l 2 THE CHAIRMAN: Article 33. Is there any comment neccssary on this, Mr Rapporteur? THE RAPPORTEUR: I think that there are only two, points in this Article which will raise any question. The first is that the exception from the provisions of the chapter, a customs union, has been somewhat broadened, so that it now appliess to the formation of a cutoms union. This is intended to pe rmit measures which are in fact transitional to the establishment of a genuine customs union - in other words, you do not have to have a complete customs union over-night; it would permit of the transitional formation of a customs union, as requested, I think, by a number of delegations in Committec II's discussions before the Sub-Coimmittee was established. Thus second point is in paragraph 4, which recognizes that in special circumstances new preferential arrangements, that is to say, permanent exeptions from the most-favoured-nation clause, as distinguished from the temporary exceptions set out in Article 8, may be warranted. This makes it clear that the Organization would be authorized under Article 55 paragraph 2 of the Charter to approve such arrangecments. Article 55, it may be recalled, provides that the Organization may by two-thirds vote established criteria and procedures for waiving, in exceptional circumstances, any obligation in Chapter IV. I think possibly that may have been broadened since. THE CHAIRMAN: Can we take this paragraph by paragraph. Paragraph 1 of Article 33. MR MMECHKIE (Le;anon): Mr Chairman, in paragraph 1 of Article 33, state- ment of principal, I see that it has been taken into consideration that some sort of preferential arrangements can be carried out subject to the agreement of the Organization under Article 12. But it is also stated that "appropriate exception from these provisions should be made for advantages accorded to facilitate frontier traffic, for advantages incident to the formation of a customs union," and so on. The Lebanoae delegation thinks that such preferences of the nature of the regional arrangements, an expansion, if you like, of frontier traffic, should be 15. E4 F1 E/PC/T/C. II/PV/12 included in that statement of principles and should not be left only sub- ject to the agreement of the Organization under Article 55, not because we do not want the Organization to agree, it, but we think that there is danger in that, because - and this is the important point Article 55 is put in the Character to guarantee that no radical change take place. Preferential regional agreements have an intrinsic value in themselves and should be mentioned as such. If it is impossible to include it here I would like to have a reservation on the subject. THE CHAIRMAN: Would any other delegation care to express its views on the suggestion put forward by the Lebanon delegation? The suggestion is, that this Article should provide for regional proferential arrangements capable of being established it hout neccssarily having the approval of the Organization as provided for under paragraph 4. THE VICE-CHAIRMAN: Mr. Chairman, we discussed whether we should have new exemptions in this draft, and we found it was very difficult to do that. Once you start to mention certain exceptions you Can get another one and still another one. We quite agree it is important that there should be the possibility of regional systems, but we thought that in the points mentioned here under and 2(a)/in paragraph 4 we have tried to cover the various contingen- cies as best we could. THE CHAIRMAN: Any further comment? If not, I presume that it is the view of the Delegations that if the delegate or Lebanon wishes to press this point he should do so in the form of a reservation. MR. DIMECHKIE (Lebanon): May I just make a correction to the statement you made Mr. Chairman? I did not say that I did not want the ?. fols. 16. OM E/PC/ T/ C. I I/ PV/12 1. Organization to approve of prefrential arrangements, but I see a danger in leaving it under Article 55, because in Article 55 it demands a two-thirds Majority for the procedure; and the two-thirds majority night decide that it needs a threc-fourths majority to get such things as proferential arrangements into being. I see a danger in that. THE CHAIRMAN: I am sorry. It is quite clear that the proposition is that the delegate for Lebanon is advancing. It is not that these regional preferential arrangements should not require the approval of the Organization, but that they should require the approval of thc Organization under arrangemnts which did not make that approval subjcct to procedures an criteria to be established by a two-thirds majority as set out in Article 55 para. 2. However, unless other delegates speak on this matter I take it it is their view that the best course that the delegate for Lebanon can take would be to reserve his position on this matter. I wilI ask the Secretariat to not that reservation and embody it in the record and in the Report. MR . MELANDER (Norway): Mr Chairman, on a point of clarification I would like to ask the delegate for China whether his reserva- tion with regard to Article 18 would in fact be the same sort of reservation as the one which is made by the delegate for Lebanon? MR TUNG (China): Our delegation considers this reservation on tariff preferential treatment is just a reservation of its right to adopt such measures, and we might use that right at any time so long the other provisions exist. THE CHAIRMAN: Any further comment on this Article? Paragraph 1: can I take that as agreed?. Paragraph 2: agreed? Paragraph 3: agreed? Paragraph 4: agreed, subject to the reservation stated by the delegate for Lebanon. MR. RODRIGUEZ (Brazil): I make the same reservation as the delegate of Lebanon in this Paragraph 4. 17. F3 E/PC/T/C . II/PV/12 THE CHAIRMAN: The delegate for, Brazil also reserves his position on paragraph 4, on lines similar to the delegate of Lebanon. Paragraph 5? Paragraph 5 agreed. I take it Article 33 is agreed. I am sorry to inconvenience the Committee, but it is necessary for me to ask your permission to re-open Article 18 for a moment, as I wish, speaking as the Australian delegate, to make a statement on this, and I would like to ask the Deputy Chairman to take over or a minute or to while I do so. (The Vice-Chairman then took the Chair) MR. COOMBS (Australia): Mr. Chairman, this Article has given the Australian delegation a considerable amount of concern. I should say that so far as the general principle embodied in this Article is concerned we are in agreement with it. The Australian Govern- ment as a part to the Mutual Aid Agrement in which it did accept quite definitely an obligation to enter into mutually advantageous negotiations directed towards the substantial reduction of tariffs and the elimination of preferences. That obligation the Australian Government ill carry out to the full, and it was necessary for me, therefore to look at this Article in the light of the previous undertaking which the Australian Government entered into in connection with preferences, and this raises the rather vexod question, which occupied so much of the time of the Sub-Committee, of the word "automatically", embodied in Paragraph l(b) of the Article. It is necessary for me to say that we do, feel, after very careful thought on this matter, that the word automatically" is in this context inconsistent with the general principle that the negotiations should be reciprocal and mutually advantageous. Generally it may be correct that an automatic reduction of the margin of the preference by the amount of the reduction in the most-favoured-nation rate --ould be reciprocally and Mutually 18. F4 E/PC/T/C .II/PV/12. advantageous, but it is conceivable that in some circumstances such a reduction would not be mutually advantageous. Perhaps I should add that it is a matter of fact that our ocn national interests in this matter ould not be seriously impaired by the acceptance of the rule. Most of the commodities on which wo receive preference are on free entry or very lor rates of, duty, so that the only -ay in which a reduction could operate would be substantially in the same way as if it were automatic. I make, that point to emphasise that I think is important - that our feeling about this word is not based solely upon an attempt to protect certain advantages which we enjoy at present and does not in any sense indicate an unwillingness to carry through to the full the undertaking we have already given elsewhere to agree on action to eliminate preferences. But we do feel that if negotiat- ions are in fact to be reciprocal and mutually advantageous, then the parties to that negotiation must be free to engage in the ncgotiations in ways which are determined in the light of the circumstances of the case and in which there is no prior determina- tion as to the nature of the bargain which they reach. The bargain should be one freely agreod upon by both sides, without any necessary prescription in advance as to the nature or form of that agreement. The inclusion of thc word does to us, therefore, I confess, rather suggest an inconsistency --ith what appears to us to be the basic principle that the negotiations concerned should be mutually advantageous. That is the position which r:c feel it absolutely necessary to state. I have given very great thought to the question of whether we should, in the light of/these views, reserve our position on this matter. Naturally, of course, our agreement to any part of the Charter is tentative, as is the agreement of any other Delegation here, and is not binding on our Governments, but on 19. some oints it has been necessary for Delegations to make a special reservation in connection with particular items, and such a possibility has given us a good deal of worry. I would like to say that -ve have felt, in considering this, that we would be unwilling to make reservations on particular point, unless they axe of absolutely overwhelming importance, without the consideration not mercly of thc contcxt of that particular point, but a considera- tion of the Drarft Report and Draft Articles as a whole, and here I feel when wo look at the Charatcter as whole, at any rate, that it is a substantially broader and wisher document that it was when it appeared at this Conference, and that the Report does take many factors into accout which are to us and to other delegations of very great importance. 20. E/PC/T/C. II/PV/12 E/PC/T/C. II/PV/12. While I, therefore, would not like there to be any doubt about the feelings of the Australian delegation on this point, that it is our absolute conviction that the negotiations contemplated under Article 18 should be in the most complete and unequivocable sense reciprecal and mutually advantageous, we have decided that it would be ungracious of us to make a specfic reservation on this matter, in view of the very substantial progress which we feel has been made at this Confor- ence on matters of greater importance to the Charter as a whole. Thank you, Mr Chairman. THE VICE-CHAIRMAN: Thank you, Before Article 18 is finally adopted, may I ask if any delegation wants to make any comments after the declaration of Dr. Coombs? Mr JOHNSEN (Now Zealand): Mr Chairrman, in the light of what Dr. Coombs has said, I feel that as far as the New Zealnd delegation is con- cerned, it must associate itself with his remarks. We would feel, too, that negotiations on a matter like this should be carried on on a basis where there should be from opportunity to negotaite as to what con- cessions should be, They are on a mutually advantageous basis, and tha.t is the real test. If I might at this stage bring, the matter up again, I would ask, there fore, that these two amendments to the report might be amended by saying, that one delegation was supported. by another. These words "supported by another" might be added. I do not know whether that is possible. Mr Van DE POST (South Africa) South Africa associates itself with the previous speakers. HE VICE-CHAIRMAN: As I understand, there is no formal reservation, but there are only certain remarks to be Included in the report made by one delegation supported by two others. r HELMORE (UK) : Mr Chairman, I am not entirely sure whether we are quite clear what is going to happen to the remarks just made by Dr. Coombs. I really would like to ask for my own edification, in what document and in what words is his statement going to be recorded or referred to? HE VICE-CHAIRMAN: I think we should try to have the statement of Dr. Coombs, which no doubt wilI be in the verbatim records, looked into 21. E/PC/T/C. II/PV/12 now once again by him and the other delegations which have associated themselves with him, and then include It in our report in the same way as we had the remarks of other delegates included in the report which you find here, In our draft report. you will find certain remarks. We have added a few more in the addendum nlper which is with it; and I thank we ought to do it in the same way here, to make it the whole report of Committee II on Procedure and certain Articles of this Charter. Mr HELMORE (UK) Mr Chiairman,. that is not what I understood; from Dr. would Coombs speech. Obviously a speech made here appear in the verbatim record and no doubt will appear in the summary record summarised. I am simply asking for information, but I did not understand that Dr. Coombs wanted any reference made to this in their, report of Committee II which is going to be published . I would like to ask him, lf I may, just how he wishes this to be handled. Dr. COOMBS (Australia): Mr Chairman, I think my point will be met If my remarks are recorded in the verbatism. records. As I said, I do not wish to make a specific reservation on this matter, and., having looked at the present draft of the, report, I feel this that the inclusion there of the substance of what I said would practically amount to a reservation, which, for the reasons I have stated, I do not wish to make, I am satisfied, therefore, Mr Chairman, if my remarks are recorded in the verbatim- record. Mr HAWKINS (USA): Mr Chairman, I should just like to say that I appreciate very much the attitude taken by Mr Coomos and his New Zealand and South African colleagues. I know the difficulties presented, and this particular point is of very great importance to us. I should just like to assure Dr. Combs and, the Australian, South African and New Zealand delegates, that is our firm intention that even with the rule, the negotiations will be, so far as we can possibly make them, on a mutually advantageous basis. THE VICE-CHAIRMAN: May I take it that the delegates of New Zealand and South Africa will follow Dr. Cooms solely with the inclusion of the remarks In the report - let me say, the records of our proceed- ings, 22. 3 E/PC/T/C. II/PV/12 Mr JOHNSEN (New Zealand): Yes, Mr Chairman, 1 think I wish to make no reservartion, but just to make that observatlon; and, if I may, I would like also to support the previous suggestion made in connection with Article 18 which appears on page 4. I do not know which delega- tion was responsible, I assurance it was the Australian delegation, But when the matter was discussed originally, I supported it in Committee; so I would like my support recorded again. HE VICE-CHAIRMAN: It is not coustomary in our reports to mention the delegations, but I may state here lt was not the Australian delegation who made these remarks, I do not think the delegation present who made it has any objection to it being mentioned here. Mr JOHNSEN (New Zealand): In regard to preferential systems, page 1? Mr. COOMBS (Australia) : I think Mr Johnsen is confusing. That is a record of a point made by a member of the Subcommittee. I think the remarks by the Australian delegation which Mr Johnsen has in mind were made in the Plenary Session. Australia was not a member of the Drafting committee. THE VICE-CHAIRMAN: It is included in the report of the Subcommittee as such. So that we shall not associate you with that remark in the report of the Subcommittee: it will be nerely one delegation supported by another. Mr VIDELA: (Chile): I wanted to ask a question. I saw that the word "automatically" is also applied in other Articles, I think on quantitative restrictions, and I would like to make it clear that Mr Coombs referred to eliminating margins of preferences but not including in his reference the system of quotas, because that question of quotas was absolutely set aside in this part of the Charter, and here the word "automatically" is referring only to tariffs and margins of preferences among tariffs exclusively. When we discuss the word "automatically" in the other part of the Charter, we would refer to quotas, (At this point Dr. Coombs took the chair.) THE CHAIRMAN: The understanding, of the Chileam delegate of this is quite correct: Article 18, with which we have been dealing, does not deal with quota preferences. I am not quite sure whether it is 23. G-4 E/PC/T/C.II/PV/12 complete, but there is in process, shall we say, a report from the Subcommittee set up for the purpos, of dealin; with quota preferences which will core before this Committee I hope today. Mr HELMORE (UK): Perhaps I might ask you, Mr Chairman, at what piont you suggest that should be taken. For our part, we would think it would appropriately appear as an additional paragraph or paragraphs in the reoprt on Article 19. THE CHAIRMAN: Is that report now finalised? Mr HELMORE (UK) Mr Chairman, I think the short answer to that question is No. THE CHAIRMAN: Then in that case we cannot deal with it new. That com- pletes the examination of the Articles covered by the Subcommittee on Procedures, Could we turn now to an examination of their report? This parallels very closely the actual Articles, and it should, therefore, be possible for us to deal with it fairly promptly, The first section is: "A. Submission of Revised Articles of Draft Charter" . That is a formal statement of the work covered by the Drafting Committee. Is there any comment on that paragraph? I take it that is agreed. I suggest that we read those aloud in paragraphs, to make sure that everybody is fully aware of their content. I ask the Rapportour to road paragragaph 1. (This was read.) 24. H1 E/PC/T/C. II/PV/12 THE CHIRMAN: Pararagraph I has been road. Is there any comment on paragraph 1? If not, I take it it is agreed. (Agreed. ) Paragraph 2, "Changes recommended in Article 8." (Paragraph. 2 was road as far as the words "from Article 9" in the eight line on page 4.) Are there any comments on that part? If not, I take; it it is agreed. (Agreed.) We now have the heading, "Temporary exceptions from most-favoured-nation clause". (The report was read as far as the words "(see section B of this report, below)" on page 5.) MR JOHNSEN (New Zealand): Mr Chairman, I think the arrangement. in E/PC/T/C.II/57.Corr.1 should be included there, that is, the paragraph that I suggested might be amended to read, "One Delegation, supported by another... " THE CHAIRMAN: I think that comes under Article 18, does it not? MR JOHNSEN (New Zealand): It refers to page 4 of this document. THE VICE-CHAIRMAN: The answer is in the affirmative. THE CHAIRMAN: Is there anything further on these paragraphs? If not, I take it that these paragraphs of the report are agreede. (Agreede.) "Article 18 (Deduction of Tariffs and Elimination of Preferences). 1. Statement of principles". (The report was read as far as the words "by the additional rule suggested" on page 6,) Are there any comments on this first paragraph, No.1? If not, I take it it is agreed. (Agreed.) "2. Changes recommended in Article 18. " (The report was read as far as the words "on State Trading" on page 7.) Are there any comments here? if not, I take it that is agreed. (Agreed.) "Paragraph 1, Sub-paragraphs (a), (b) and (c) - rules governing negotiations." (The report was read as far as the words "used in applying this rule" on page 8.) Then we have the amended sentence: "One delegation 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." That would need to be amended, to meet the New Zealand delegate' s point, to say "Two Delegations thought". That is to provide for the inclusion of New Zealand. Am I correct in understanding that the South African delegation wishes also to be associated with that statement? 25. H2 E/PC/T/C. II/PV/I2 MR van der POST (South Africa): We were not represented in the Sub-Committee, but we would like to be associated with it, Mr Chairman. THE CHAIRMAN: We could have it amended. MR van der POST (South Africa) : As far as this Committee is concerned, we associate ourselves with it. THE VICE-CHAIMAN: I asked the Question spcially. There were two questions we discussed. One was the declaration of the Australian delegate, with which the delegates of New Zealand and South Africa associated themselves. The other was the point as read here, and I asked an hour ago whether there were any others. associated with it and, as far as I understood it, it was only the New Zealand delegation. Do I understand correctly that you now wish to join with this? MR van der POST (South Africa): Not at this moment, Mr. Chairman. THE CHAIRMAN: Then we Will alter it to read "Two delegations thought..." 26. I.1 E/PC/T/C. I I/PV/l 2 "(c) 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. " Is there any context on those paragraphs. I take they are agreed. ( Agreed) THE RAPPORTEUR: "The Sub-Committee also considered the question as to whether a rule should be inclucded in Article 18" (reading to the words) "and the general grant of most-favoured-nation treatement.," THE CHAIRMAN: Is there any comment in these paragraphs? I take it then they are agreed? (Agreed). Paragraph. 3 - "Withholding of tariff benefits from members of the organization which fail to carry out obligations for the reduction of tariffs and climination of preferences. Several change have been made in the original draft of this paragraph" (reading to the words) "including the Chapter of the Character relating to Economic Development" Is there any comment on these paragraphs? There is a suggested addition, which was agreed yesterday by the Drafting Sub-Committee, to be added at the end of this page. It roads as follows: "References is 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 whigh considering the contribution which a Member can make to a reduction in tariffs, take into account the height of the tariffs of that member, and the need, if any, of that Member to use protective measures in order to promote in- dustrial and general economic developements. The changes in Article 18 described under (a) and (c), above, take into account these suggestions made by the Joint Committee." Is there any comment on these paragraphs? MR VIDELA (Chile): Mr Chairman, I am sorry to interrupt, but I find a doubt hare, on. page 9, six -lines from the top, where it says: "At the same time it was recognized that, in accordance with the plan for conducting tariff negotiations among the members of the Proparatory Committee, those 27. I.2 E/PC/T/C. II/PV/12 countries would not be called upon to subscribe to the most-favoured- nation and quota provisions until selective tariff negotiations had been completed. " I find myself in a doubt here, because, supposing that a country does not wish to make a reduction of tariff is unless it gets an elimination or quotas or a reduction of quotas,that member will be compelled to do that, or otherwise may be accused before the Organization by a country which was asking for a reduction of tariffs. I think there is something unconnected here. I think, when you say "consider a reduction in the height of tariffs in return for binding and low tariffs and quotas," it should be "or the elimination of quotas," or "the elimination and reduction of quotas," because I have assumed that were will have negotiations on quotes and tariffs. I mean, I do not see why the member benefiting from the quotas should have the r'i-ht of waiting until the question of tariffs has been dealt with. THE CHAIRMAN: I think the point is that the provisions relating to quotas eliminate those quotas without negotiations; they are an absolute obli- gation on the members, 'and this provides that they are not expected to accept those until the same progress has been made in relation to obligations and tariffs. THE RAPPORTEUR: Yes, that is the point; and, of course, it would apply in reverse: that before you were expected actually to put into effect, the tariff reductions which have been worked out by a process of negotiation, you would see that the resulting agreement contained an adequate provision for dealing with quotas. It is merely a matter of timing, that each country concerned in these spring negotiations would see exactly the benefits that he was obtaining from the agreement as a whole before he would be asked to put the agreement into effect. MR VIDELA (Chile): I would like to see in this paragraph some addition to clear up that point, and put on record the interpretation given by our Rapporteur of this paragraph. THE CHAlRMAN: I suggest that we note the point submitted by the delegate of Chile. I think I am right in saying that the interdependence which he wishes to have established between the tariff negotiations and the coming into effect of the limitations on quotas is very clearly set out in the 28. I.3 E/PC/T/C. II/PV/12, document on proccedures. I suggest we note his point at this stage and, if, after we have dealt with the document on procedures, he feels that the position is still in my doubt, we will return to this point then. MR VIDELA (Chile): Thank you. MR VAN DER POST (South Africa): Mr Chairman, on a point of order, before you need to the next Article, in conncetion with the question you put to me, about the New Zealand 'reservation or observation on paragraph 1 (b), I was under a misunderstanding at the time when I gave you a negative reply. I should be glad if you could have it recorded that we support New Zealand in that observation. THE CHAIRMAN: So that "one delegation" should read "threc delegations." Thank you. Is there anything furtlher on these paragraphs? I take it, then, they are agreed? (Agreed). Article 29,Emergency action in respect of Imports of Particular Products. THE RAPPORTEUR: "Statement of principle. The Sub-Committee is in agreement with the principle" readingi to the words) "and to the possibility of counter-action by other members in the event of the abuse of the right." 29. fols. J1 OM E/PC/T/C .II/PV/12 THE CHAIRMAN: Any comment on this paragraph? I take it that is agreed. (Paragraph 2 -as then read do n to the words " following upon the taking of such action". THE RAPPORTEUR: It should then road:- "Two delegations question the desirability of permitting action under the Article without prior consultation even in emergeney circumstances. One of these delegations also proposes" etc. (Remainder of paragraph read) THE CHAIRMAN: Any comment on those paragraphs? I take it then that Article 29 is approved. No Article 30. (Paragraph 1 read) Any comment on this paragraph? I take it it is agreed. (First paragraph of Paragraph 2 road) Any comment on this paragraph? (Paragraphs in square brackets then read) In the draft before the Committee those paragraphs are in square brackets. I understand that those square brackets have been removed and the paragraphs no- stand as part of the draft Report submitted by the Sub-Committee. Any comment on these paragraphs? I take it that they are agreed. Article 33. (Paragraph 1 read) Any comment on this paragraph? I take it it is agreed. (Paragraph 2 read) I presume it would be necessary to include here reference to the reservation made by the delegate for Lebanon, with which was associated also the delegation of Brazil. Any other comment on these paragraphs? I take it then that the Report on Article 33 is approved. "B. Submission of Report on Procedures for Proposed Multi- lateral Trade Agreement Negotiations." (The paragraphs under this heading were read) 30. There are a number of changes in that text, which, if delegates wish to embody them in the text they have in front of them, I will road out. In line 5 of the first paragraph, after the words "Preparatory Committee, the following words should be inserted "pursuant to Article 18 of the Draft Charter and". The sentence would then read:- "The Sub-Committee has prepared for the consideration of Committee II, in accordance --ith its assignment, a report setting forth recommended. procedures to be followed in connection -:ith the negotiations regarding tariffs and preferences to be conducted among the members of the Preparatory Committee pursuant to Article 18 of the Draft Charter and in accordance with the Committee's Resolution of_ _ _." In line 4 of the last paragraph, after the words "bilateral tariff agreements", there should be inserted these words:- "or agreements limited to a small group of countries the benefits of which are generalized under the operation of the Most-Favoured-Nation clause". The second last paragraph should be amended to read:- "It is 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" Is there any comment on these paragraphs? MR. KUNOSI (Czechoslovakia) : I have a question to ask, Mr. Chairman. THE CHAIRMAN: I suggest that --e adjourn and take the discussion after lunch, whcn I will call upon the delegate for the United Kingdom. The meeting is adjourned and will reassemble at 3 p.m. I shall be grateful if members will be on time. The Committee rose at 1 p.m. (For Verbatim Report of afternoon session see E/PC/T/C. II/PV/12 - Part .2.) E/PC/T/C. II/PV/12 31. L1 E/PC/T/C.II/PV/12 - Part II. Thc meeting resumed at 3 p.m.. THE CHAIRMAN: Immediately before lunch we read over Section B, the submission of a report on procedures for proposed multilateral trade agreement negotiations and the various amendments to the original draft adopted yesterday by the Sub-Committee on Procedures were read out for the benefit of members. The delegate for the United Kingdom had indicated a desirie to comment on this section of the report. MR HELMORE (U.K.): Mr Chairman, mine is a very simple point. It relates to the last paragraph but two on page 15, where we refer to the final published report. All I want to do is to remove the word "published", because it is generally established that the final report is to be published, and if we insert the word "published" here we might create awkward questions as to what is not published. THE CHAIRMAN: It is proposed to delete, in the second paragraph of this section of the report, in line 5, the word "published", so that the line will then read "is intended for adoption as part of the final report of the Preparatory Committee." Is there any objection to that amendment? I take it, then, that it is agreed. MR KUNOSI (Czechoslovakia): Mr Chairman, I wanted to ask a question. I would like to know which is the delegation which asks for bilateral tariff agreements. THE CHAIRMAN: Can the Rapporteur advise us which was the country represented on the Sub-Comittee which asked for bilateral agreements? THE RAPPORTEUR: Yes, I think there is no difficulty with that: it was the delegate from India. THE CHAIRMAN: He does not appear to be here at the moment. Does that answer your .question? MR KUNOSI (Czechoslovakia): Yes. THE CHAIRMAN: Is there any further comment on this section of the report? May I take it, then, that Section B is approved? That completes the approval of the Report of the Sub-Committee on Procedures. Before passing to the second stage of our work, there -is a point that I would like to raise. This report differs in structure in certain respects, which do not in any way affect the content, from the form in which the reports of certain other Committees have been prepared. I think you will agree that it is desirable, in view of the publication of the report subsequently, that all sections of the report of the Committee should be in relatively uniform style and form. I suggest to the Committee that they authorise thc Rapporteur for this Sub-Committee to make such changes in this report as are necessary to make it conform in 32 structure to the agreed form for the report of the Committee as a whole, on a clear understanding that no changes are made in anything but form of presentation. That will be of very great assistance to me and, I know, to the Rapporteur in preparing the combined report for Committee II for presentation to the plonary session. Does any delegate wish to comment on that suggestion? Can I take it, then, that thc Rapporteur, in collaboration with the Chairman, is authorised to make such changes of form as are necessary to make this report conform to the general structure trend upon? . . . Thank you. MR HELMORE (U.K.): would you allow me to raise one point on the report we have been considering? THE CHAIRMAN: Yes. MR HELMORE (U.K.): We did say this morning, that we thought the right place to deal with the question of quota preferences which has been, as you know, the subject of consultation between the delegations immediately affected, would be in the section of the report dealing; with Article 19. It has been pointed out to the United Kingdom delegation by one of the delegations concerned that as the matter at issue is recall the fact that these are preferential arrangements it would be better to insert whatever passage is ultimately agreed upon in the appropriate place in the report dealing with preferences. I have not yet the words agreed (in fact, some of the other delegations concerned will, I an afraid, have heard of this chance from me now as I speak) but might we pass the report we have just passed subject to the insertion in the appropriate place of whatever passage is agreed upon - if we do agree upon it - when I am ready to bring it before this meetings? THE CHAIRMAN: I think; it is clear that we are anticipating from the Sub-Committee a report on the way in which the Committee should deal with what have been described as quota preferences. If, as a result of that report, it appears appropriate to add something- to the report dealing with Articlc 18 or to Article 18 itself, it would be competent for the Committee to re-open this section of the report in order to make such an addition. Can I take it, then, that it is agreed that when the report from the Sub-Committee dealing with -quota Preferences is considered it will be open to us, if we so decide, to add something to the report or to the Article dealing with the subject matter of Article 18? MR VIDELA. (Chile): I opened this question this morning, and when I said that it will be clearly understood that Article 8 and Article 18 refer only to tariffs, I meant that that quota preference will not be dealing with Article 8, and I think I said this as every tine I have raised this question in the Procedures 33 L3 E/PC/T/C.II.PV./12 Sub-Committee I have been told that this Committee was only referring to questions of tariffs; and now, at the least moment, I could not accept this proposal, and I must point out that I will be willing to discuss this matter under quantitative restrictions, .as was always understood. THE CHAIRMAN: It is not suggested now that this question should be dealt with in a particular way; no suggestion is put forward as to that. we have not yet received the report. The only point that has been raised is that it is, possible that the form of that report might suggest that the question should be dealt with in this part of our report, It may, on the other hand, suggest that it is proper to deal with it under quantitative restrictions, and it would be clearly open to the delegate for Chile, when the report is received, to suggest that the appropriate place to deal with it is in the section of the report dealing with quantitative restrictions. The only point that we are concerned with here is that we do not so close consideration of the sections of the report with which we have dealt this morning that it would not be possible, if the Committee decided that it was desirable so to do, to re-open it for the purpose of including something relating to quota preferences. We are not attempting to pre-judge the issue of where it shall be dealt with. It seems to me that that can only be answered when we have received the report, and not until then. Can we pass now to the question of our next business? We have also from the Sub-Committee on Procedures a document outlining the report of that Sub-Committee dealing with procedures for giving effect to certain provisions of the proposed I.T.O. Charter by means of a general agreement on tariffs and trade among the members of the Preparatory Committee. We also have, I think, ready for con- sideration a report of the Sub-Committee on Quantitative Restrictions. It would normally have been our practice, I think, to deal now with the Memorandum on Procedures. One delegation at least has asked me that we deal with the quantitative restrictions provisions this afternoon in order to dispose of then before delegations who are interested depart; but the matter is entirely in the hands of the Committee. We have before us a report on Procedure and we have or could have before us the report on Quantitative Restrictions. Which is it your wish that we should deal with? MR KUNOSI (Czechoslovakia): Mr Chairanm, I do not see any reason why the report; on Quantitative Restrictions should have any kind of priority over the report on Procedure, which is a more urgent matter than the other. MR MELANDER (Norway): The report of the Sub-Committee on Quantitative Restrictions and Exchange Control has been received just before lunch, and I think many delega- tions would like tine to study it before we discuss it. 34 E/PC/T/C. II/PV/12 THE CHAIRMAN: I take it then it is the wish of the Committee that we should proceed now with our consideration of the Report on Procedures. MR HELMORE (UK): Mr Chairman we are quite roady to proceed with the pro- cedural memorandum if that is the wish of the Committe - in fact, I might make it clear that it was not the United Kingdom which asked for Quantitative Restrictions to be taken now - but if we are going to do Procedures now, then the United Kingdom would like to seek the indulgence of the Committee not to have th Quantitative Restrictions Report taken tonight, but that we should take it tomorrow morning. I do not think there is any imposition of an extra burden on this Committe in men- tioning a meeting tomorrow morning, because, when I look at the quantity of paper which this Committee has to get through, with Subsidies, State Trading and Non-Members, I cannot really believe that I am asking for any more than a small rearrangement of business, which I freely confess is to meet the convenience at any rate of my own delegation, and I hope that we have not ben too troublesome in the past in making such requests. MR MELANDER (Norway): Mr Chirman, I would like to support the suggestion of the delegate of the United Kingdom. MR VIDELA (Chile): Mr Chairman, there is one point I wish to put forward here and it is this, that if we are going to discuss Quantitative Restric- tions now I shall not be able to take part as regards this particular point concerning at preferences, because yesterday I was handed an absolutely different draft from this draft which was sent to me by the United States delegation, and I have not had time to discuss it with them. Therefore, that report is not finished, and if you will allow me until tomorrow I shall by then be in a position to put forward the Chilean ppint of view. THE CAIRMAN: It seems to be generally agreed that for a number of reasons it would be desirable to proceed with our original intention to discuss the Memorandum on Procedures. MR HELMORE (UK): And Quantitative Resrictions tomorrow, Mr Chairman? THE CHAIRMAN: Is it agreed that we should defer consideration of Quantitative Restrictions until tomorrow? (Agreed). We will consider, later in the afternoon, when we see what progress we make with this document, whether 35. M2 E/PC/T/C. II/PV/12 it is desirable to meet tonight to finish this document or to deal with the other matters before the Committee. MR DU PARC (Belgium) (Interpretation): Mr Chairman, May I know who the results of the work of thc Sub-Committee on Technical Matters will be examined? THE CHAIRMAN: The report of the Technical Sub-Committee was adopted at the last session of Committee II, which I think was held yesterday or the day before, and I on afraid it has been adopted I must confess that it may come as a surprise to some people to hear that the work of Commiitte II ever reaches finality in any of its phases! MR HELMORE (UK): As the question of the work of the Technical Sub-Committee has been raised, and as this Committee did adopt the Report, but also since this Committee decided not to publish the report, we are faced with the problem of what we are going to put in the Report of this Committee in its published version. Clearly some paragraphs will have to be prepared. Time is creeping on. I do not know whether you think it a wise idea that someone familiar with the work of the Technical Sub-Committee, but perhaps not too deeply committed to it, should be asked to prepare three or four paragraphs which could be included in our plublished report, so that this Committee would have a chance of considering it. THE CHAIRMMAN: May I suggest that we ask the Secretary of the Technical Sub- Committee to prepare a draft paragraph or paragraphs covering the previous decision of Committee II which could consider for incorporation in the draft report. Is that agreeble? Will the Secretariat note to bring that forward, as soon as possible? MR VIDELA (Chile): Mr Chairman, for the convenience of our delegation, I would like to ask when you are going to discuss the question of State Trading, because there is a special report on this subject? THE CHAIRMAN: I understand the report on State Trading has just been dis- tributed. I would suggest, for the consideration of the Committee, that we leave the question of the programme while we proceed with the consider- ation of this document, and during that tine I will ask the Secretariat to work out a rough timetable for consideration of the remaining 36. M3 E/PC/T/C. II/PV/12 reports which still have to come forward to this Committee, and that when they have been prepared we should put then before the Committee and see whether they are agreeable? MR VIDELA (Chile): I only wanted to explain a little more about this question of the Sub-Committee on Meat. I should like to emphasize that Mr Shackle furnished with a draft yesterday on this subject, and now I have just received another draft , and I hope that it will be the last. THE CHAIRMAN: Don't we all. MR VIDELA. (Chile): I want time to consider it and time also to receive my instructions. THE CHAIRMAN: We will see that a message is conveyed to the Sub-Committee asking them to expedite their labours. MR VIDELA:, (Chila): I shall ask again, within the next twenty-four hours, because on previous occasions when I have raised this matter in this Committee, in the Sub-Committee.on State Trading and also in the Sub- Committee on Procedures, I have been told that the question was going to be discussed by a small Sub-Committee, and then, at the last moment, I received this document, Mr Chairman, and when I heard that it was going to be discussed this afternoon I found that I was unable to assist the Committee or to take part in the discussion. THE CHAIRMAN: We will do what we can to see that you get as much notice as possible of the final draft before its discussion. May we now proceed to a consideration of the document on Procedures? THE VICE CHAIRMAN: On a point of procedure, I think it is very useful, and we very much welcome it, that we can now proceed with this report; only there may be sometimes need for some clarification of certain points from the Chairman of the Sub-Committees on Quantitative Restrictions and on State Trading. I take it they would be permitted to give those explanations where such might be needed in order to facilitate the Committee's understandi of this document. THE CHAIRMAM: Would the Rapporteur care to make any general comments on this document before we consider it in detail? THE RAPPORTEUR: No, I do not think so, Mr Chairman; I think it would be better 37. M4 E/PC/T/C. II/PV/12 to Go throught it. THE CHAIRMAN: Then let us take it paragraph by paragraph. Would the Rapporteur road the first paragraph? THE RAPPORTEUR: "Introduction. The Preparatory Committee has agreed" (reading document E/PC/C.II/PV58) to the words: "because of the assurance afforrded as to the implementation of the tariff provisions." THE CHAIRMAN: Any comment on the introductory paragraph? MR JOHNSEN (New Zealand): A very small point. I would like to know what is meant by the "spring of 1947." I think we have a rather different idea of it in the Southern Hemisphere! THE CHAIRMAN: A very proper comment, if I may say so. THE VICE CHAIRMAN: I suggest we put in here simply "to be hold in Geneva starting on the 5th April, 1947." THE CHAIRMAN: "in April, 1947." MR BLRDUC (France) (Interpretation) "to take place in the second quarter of 1947." THE CHAIRMAN: I think it has been agreed that April should be the date of the meeting, through presumably that is subject to review, but I suggest it would meet the point if we said April. Is that agreed? (Agreed) MR KUNOSI (Czechoslovakia): Mr Chairman, the last sentence, "and the general. international conference would be in a position to adopt the Charter because of the assurance afforded as to the implementation of the tariff provisions. " It seems to me that it is rather too much to my that the international conference would be in a position to "adopt the Charter because of the assurance afforded." Do not you think that is now rather exaggerated? THE CHAIRMAN: I am sorry, but I did not quite catch the point. Will you repeat it? MR KUNOSI (Czechoslovakia): Here it is said that the general international conference "would be in a position to adopt the Charter because of the assurance afforded as to the implementation of the tariffs provisions." .It seems to be that is rather an exeggeration. THE CHAIRMAN: It might perhaps be put round the other way, "the assurance 38. M5 E/PC/T/C. II/PV/12 afforded as to the implementation of the tariffs would assist." MR KUNOSI (Czechoslovakia): Yes. THE CHAIRMAN: Or, alternatively, the Rapporteur suggests "the general international conference would be in a position to consider the Charter in the light of the assurance. " I sugest we adopt the Rapporteur's wording. would that meet your point? MR KUNOSI (Czechoslovakia): Yes. THE CHAIRMAN: Is that agreed? (Agreed). Is there anything else on paragraph 1. I take it that paragraph 1 is agreed. (Agreed). Paragraph 2: "Proposed negotiations among members of Proparatory Committee. The results of the negotiations among the member of the Preparatory Committee" (reading to the words), "which follow may be useful as a guide to the negotiations." Is there any comment on this paragraph. May I take it that it is approved? (Agreed). Paragraph 3: "General Objectives." THE RAPPOTEUR: ".An ultimate objective of the Draft Charter, claborated in article 18" (reading to the words) "having regard to the provisions of the Draft Charter as a whole. " N. fols. 39. N1 OM E/PC/T/C.II/PV/12 THE CHAIRMAN: Any comment on this paragraph? I take it that is agreed, we no. Come to "GENERAL NATURE OF NEGOTIATIONS" (First two paragraphs read) Any comment on these two paragraphs? MR. VIDELA (Chile): Mr. Chairman, this morning I raised a question on the first paragraph which you have road. I think the general nature of the negotiations does not refer to quotas, as I suggested this morning, although the Rapporteur has referred me to page 13 of this same memorandum, the first paragraph, where it says "These provisions would include Article 3 of the Charter relating to most-favoured-nation treatment; Article 9 relating to national treatment on internal taxation and regulation; Articles 19 through 22, relating to quantitative, restrictions.", and I think/to clear up this matter there should be added here or in the Article we were discussing this morning something covering the negotiations on tariffs besides quotas. I do not know- if you -follow what I mean? THE CHAIRMAN: No, I am afraid I do not, MR. VIDELA (Chile): Well, -Ieft this question open this morning and one of the delegates suggested that this question would be referred to when we discussed the memorandum, because it seemed to him that the memorandum referred to this question that I raised. THE CHAIRMAN: I am not quite clear what your original question was this morning. I am afraid I have forgotten. MR. VIDELA (Chile): The question is, this morning we were discussing a point in relation to margin of preferences and tariffs, and I pointed out that we should also need to make a reference to quotas. THE.CHAIRMAN: Yes. I think that is dealt with later in the document. The point that the tariff obligations only. become operative at the same time as certain obligations under certain sections of the Charter, particularly those relating to, quotas,. etc., is. dealt with later in this Report. 40. N2 E/ PC/ T/ C.I I/ PV/ 12 THE RAPPORTEUR: Yes, sir, I think it is dealt with on page 13. MR. VIDELA (Chile): I think it would be more clear if, when we refer to General Nature of Negotiations, we referred, also to that particular question of how to deal with negotiation on quotas, because Article 19 was referring also to quotas. It was covering all these points. THE CHAIRMAN: If you examine the Report on page 13, it says at the top of/the page: "It is therefore proposed that the tariff schedules be incorporated in an agreement among, the members of the Preparatory Committee which would also contain, either by reference or by reproduction, those general provisions of Chapter lV of the Charter considered esseential to safeguard the value of the tariff concessions These provisions would include Article 8 of the Charter relating to most-favoured-nation treatment; Article 9 relating to national treatment of internal taxation and regulation; Articles 19 through 22, relating to quantitative restrictions." Now your point, as I see it, is quite clearly met there on page 13; that the tariff schedules would not become operative except at the same time as the Articles relating to quantitative restrictions. MR. VIDELA: (Chile): The point I raised this morning is this, Mr. Chairman: in page 9 of document 57 it says "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 quota provisions until selective tariff negotiations had been completed.", and on the next page I road 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."- I wanted to make it clear that negotiations may be based on reductions of tariffs as .well as elimination or reduction of quotas, and I was referred to the discussion on the memorandum I think, that the first pararaph does not cover my point. THE CHAIRMAN: As I pointed out to you, I think the point is dealt with in the.first paragraph on page 13. If you do not feel it is adequately dealt with there we could consider any alteration or addition which you consider necessary. 41. E/PC/T/C. II/PV/12 MR GUERRA (Cuba): I want to make an observation and it may meet the point of the Chilian Delegate. In the dicussion in the Drafting Committee on procedure for negotiations, originally the third line read "this means that no country would be expected to grant tariff concessions unilaterally"' and it was the feeling of the Drafting Committee to drop the word "tariff" and say only "to grant concessions", in order that it would be possible in the actual carrying out of the negotiations to include quotas or other methods of protection. So that I think that having dropped the word "tariff", concessions of any kind may be the subject of negotiations. MR VIDELA (Chile): That is what I wanted this morning, Mr Chairman, so that is quite satisfactory. THE VICE-CHAIRMAN: Per haps we might meet the desire of the Chilean Delegate if we add after "mutually advantageous" these words "in conjunction with action taken with regard to quotas and other trade barriers", just to make it quite clear. THE CHAIRMAN: But this refers only to Article 18. THE VICE-CHIRMAN: We could put it in Article 19, THE CHAIRMAN: If the Chilean Delegate feels that the point the Cuban Delegate has made clarifies his position, I suggest we might leave it as it stands. MR VIDELA, (Chile): If the interpretation given by the Cuban Delegate is going to be on record I think that will be sufficient. MR GUERRA (Cuba): That is in the records f the Drafting Committee, because that was the reason for dropping the word "tariff" THE CHAIRMAN: Is that right, Mr Leddy? THA RAPPORTEUR: Yes. It was agreed in the Drafting Sub-Committee to drop from the first paragraph under "general nature of negotiations" on page 3 the word "tarriff" before the "concessions". This means that no country would be expected to grant concessions unilaterally, the point being that tariff and tariff preferenece concessions would be granted and made effective in conjunction with the quota and trade barrier provisions dealt with under ether articles. That was the understanding. Mr VIDELA (Chile): The confusion was because provision is made in Article 18 of the Draft Charter, and we made it clear this morning that Article 18 f the Draft Charter was not referring to quotas. I do not possess the English language, but I feel there is a confusion hero and I wanted that interpretation. If you add 42. N E/PC/T/C. II/PV/12 a reference to article 19 we shall be covered, but there is no reference hero to Article 19. It is only article 18. THE CHAIRMAN: I am afraid it would be very difficult to refer to Article 19 in that first sentence, because there is a very real difference between the proposals embodied in the Charter for the treatments of tariff and tariff preferences and other trade barriers such as quotas. It is proposed quite definitely that tariffs and tariff references will be reduced or eliminated respectively by negotiation. It is proposed in relation to quotas that: they will be eliminated without negetiation. MR GUERRA (Cuba): Mr Chairman, I think there are two different questions here that should be made clear. Article 18 refers only to tariff negetiations. This is a memorandum on procedure;.which is mainly trying to explain the procedure that will be followed in order to make these negotiations but in in the this memorandum we have this interpretation that / negotiations which do not refer to tariffs it will be contemplated that it will be a practical question for any country to raise this question of quantitative restrictions on other things that affect their trade in exchange for a reduction of tariffs, so I think it is clear that it is not necessary at all and will not be proper to change Article 18 and yet it will be possible on the procedural memorandum if we make some change in the wording here if that is necessary; if not, only making reference to the interpretation that I gave previously, that it will be perfectly possible for any country in the tariff negotiantions to try to reach bargains n the question of quotas and other things. 43. CK-1 E/PC/T/C. II/PV/12 - Part II. Mr HAWKINS (USA): Mr Chairman, Iwonder whether there may not be some mis - understanding among us on this point. It is not the intention that in the product by product negotiations, next Spring, you would deal with quantitative restrictions on a selective product by product basis. Quantitative restrictions are dealt with under Article 19. Under Article 19 they would be prevented, subjcet to the except ones listed there. It seems to me that the relation between the two is this: that in the negotiations nextSpring the reduction of tariffs would take place on a product by product basis and countries which have quantitat- ive restrictions could have in mind what is obtained in the tariff reduction negotiations before they actually take the commitment to abolish the quantitative restrictions. I think that is the purpose of this. Mr GUERRA (Cuba) : The only point I wanted to make clear is that it may be Interpreted the other way round. we Mr VIDELA (Chile): The position as/left It this morning was quite different, because this morning we approved of the suggestion that a country need not subscribe to the most-favoured-nation quota pro- vision until the tariff negotiations were completed, Therefore on this wording I assume that If we are interested in the reduction of quotas we have first of all to have negotiations on tariffs, and after negotiations on tariffs are accepte we can discuss quotas. THE CHARMAN: Simultaneously - at the same time. Mr VIDELA (Chile); And then we have on the next page a provision as to what is to happen in the event of a country failing to consider reduction of high tariffs; but we may ask the other country to elim- inate quotas and unless they eliminate quotas, we do not eliminate tariffs. Then we will be punished by the Organisation because we do not reduce our tariffs. I think what I am saying is very, clear, What I want is to put the two positions on the same footing, THE CHAIRMAN: I think I understand the po nt of the Chilean delegate. I must confess I find, It very hard to understand why he does not feel It is adequately met by the first paragraph on page 13. Mr VIDELA (Chile): Because it refers to Article 18 only, and because there are before us two interpretations of the word. "concession" E-PC/T/C. /PV/12 I do not know how many interpretations it will have with different countries - countries which are not in our discussions, The Cuban delegate said that "concession" includes quotas. The American dele- gate said: No, it is not including; quotas, because quotas are under Article 19; we are not dealing with quantitative restrictions, Then there is a concession referring to tariffs and low tariffs, I think it is very important for us. To take an example, suppose we bring to Great Britain apples after the agreement. We are not going to reduce the tariffs on whiskey on that occasion, because of this Article and because the Organisation may punish us because we do not agree to reduce our tariffs. We may say to Great Britain: If you allow us free entrance or more quota of apples or meat or any other product for which there is a quota, we are going, to reduce tariffs to you, I think it is very clear. Mr.HELMORE (UK): Mr Chairman, could I have an attempt at dealing with this question, As Mr Hawkins explained, there are two essential sides to this bargain. One is a general arrangment about quotas which are to be subject, if the nations agree, to the rules which we have put down for consideration by this Committee in the Subcommittee on quotas. On the other side are concessions on tariffs about which we are talking now; and this morning on page 9 of the report of the Procedures Committee we made it absolutely clear that the acceptance o: the commitment resulting from the tariff negotiations depended on the acceptance of the commitment about quotas and vice versa; and if any country comes to the end of the simultaneous negotiations on both those points and thinks there is not a fair bargain, then presumably they will not agree to putting into effect the result of the tariff negotiations and the other country wiIll not agree to the putting into effect of the commitment about quotas, or vice versa, We are now dealing with a memorandum which describes the procedure for tariff negotiations, and if we are never to be allowed to deal with any of the details about tariffs without also putting a reference to quotas, I do not see how we are ever going to got on.. ("Hear, hear.") Mr VIDELA (Chile): Then the only word that is here missing is the expression "vice versa". That is the only thing I want in. I look again and again but I do not see the words "vice versa". That is 45. O-3 E/PC/T/C.II/PV/12. your interpretation, but tomorrow or after tomorrow there may be another interpretation, That is what I want - "vice versa" - where you say: "At the same time, it was recognised 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 quota provisions until selected tariff negotiations had been completed", and the words "vice versa" should be added. Mr HELMORE (UK): Mr Chairrman, if it would meet the Chilean delegation and finish this point, I would like to return to page 9 of document 57. That is the report of the Procedures Committee, You see the words about 5 lines from the end of the first section of that page: -"most-favoured-nation and quota provisions until selective tariff negotiations had been completed". There insert the words "and vice versa". THE CHAIRMAN: Will the inclusion of those words meet the Chilean point? Mr VIDELA (Chile): Yes, Mr Chairman. THE CHAIRMAN: Is that agreeable? That is agreeable. I take it that the inclusion of those words on page 9 of the draft report of the Subcommittee on Procedures is agreed to. Is there any further comment on paragraph 1 on page 3 of the Procedures document? I take it that it is agreed, Paragraph 2? Is there anything on paragraph 2? I take it paragraph 2 is agreed. Paragraph 3, (The paragraph was read by the Rapporteur,) Is there any comment on these two paragraphs? If not, I take it it is agreed. Next: "General. Rules to be observed in negotiations". (Reading the paragraph,) I think these have been substantially covered by previous discussions Is there any discussion on this paragraph? Mr TUNG (China): Mr Chairman, with reference to the views just expressed by various delegations that in future tariff negotiations an opportunity should be afforded to deal with quantitative restric- tions, we suggest that in sub-paragraph (c) after the words "tariff- free treatment", the words should be inserted "or the relaxation of quantitative restrictions", so that the paragraph would then read: "(c) The binding or consolidation of low tariffs or of tariff-free 46. O-4 E/PC/T/C.II/PV/12 treatment or the relaxation of quantitative restrictions shall in principle", and so on, THE CHAIRMAN: I will ask the Rapporteur to comment on that suggestion first. THE RAPPORTEUR: Mr Chairman, that brings us back to where we were a few minutes ago. In the report of the Subcommittee approved this morning it states. that "The Subcommodittee also considered the queston as to whether a rule should be included in Article 18 to the effect that the elimination of quotas, 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 elimination of preference"; and. then the report goes on to point out that this question is really taken care of by the fact that quotas are to be governed under the general rule and that tariff concessions of whatever kind will not be put into effect until the general rule relating to quotas is put into effect, I think it is the same issue as raised by the Chilean delegate a few minutes ago, which is taken care of by the amendment i n the report suggested. by the delegate from the United Kingdom. P P1 E/PC/T/C . II/PV/12 THE CHAIRMAN: The chinese suggestion is open to comment. MR KUNOSI (Czechoslovakia): Mr Chairman, I think really there is no misunderstanding here at all, especially after the clear exposition of Mr Helmore. I think if anybody followed closely what he said and then what the Rapporteur said they would know that this question should not really come up at all in our discussion. There are certain conditions with regard to quotas dcalt with somewhere else, and there cannot be any question-of relating the problem of quotas and the problem of tariff reductions in this way as two bargaining matters on an equal footing . If we turn back on what Mr Helmore and the Rapporteur have said we shall find our- selves in the place where we started a few weeks ago. MR MELANDER (Norway): I would like to support the statement just made by the delegate of Czechoslovakia MR BARADUC (France) (Interpretation): I would like just to say that I agree with what has been said by the Czechoslovak and Norwegian delegates. THE VICE-CHAIRMAN: A further objection to altering this is that we quote here paragraph 1 of Article 18, so that any addition here would make the whole thing very confused. THE CHAlRMAN: I think it is clear that the suggestion is quite an important departure in principle. As the document stands at present, thc reduction of tariffs and preferences will be brought about by negotiation on an item by item basis as the rules governing the use of quotas are to be provided for on a general basis. he adoption of this amendment would make a definite change and it would suggest that quota restrictions would be the subject of reduction or alteration as a matter of bargaining on a commodity by coimmodity basis, and it therefore does represent a substantial chance in the general purport of the document. In view of the explanation that has been made, does the Chinese delegation wish to sustain its recommendation here? R TUNG (China): We still think that in future tariff negotiations the reduction or relaxation of quantitative restrictions should have equal value in bargaining with the reduction of tariffs, or the elimination of preferences. THE CHAIRMAN: I think the Chinese delegate's point is a point of essential substance and I think the only thing we can do. at this stage is to obtain the general views of the meeting, so that it can be decided whether the Chinese delegate should reserve his position on this or whether other delegations are in favour of it. Are there any other comments on the proposal of the Chinese delegate? P2 E/PC/T/C. II/PV/1 2 MR VIDELA (Chile): -The question as it appears to me is a very simple one. when I raised this point in the Sub-Committee on Procedures I was told that it was only discussing the question of tariffs; and when I raised it in Quantitative Restrictions I was told that they had nothing to do with Article 18. Therefore I think this is the moment, in this main Committee II, for the. resolution of this problem, because this main Committee II is matching together the two sections. Therefore I support the proposal of the Chinese delegation. Whether the chance should be in this sentence or elsewhere I do not know - that is a drafting matter - but the principle muist be dealt ;with hero, Where these two questions are being matched. MR GUERRA (Cuba): Mr Chairman, I think we are getting into deeper trouble and confusion about this. I think the general feeling of the Committee was that any kind of negotiation about quantitative restrictions should be possibly made a matter of bargaining within the process of tariff negotiations. I thought that we had agreed on that and with the change which the United Kingdom delegate suggested should be rade in the report; but now we are gonig deeper and depper, and I wonder if it is necessary at all, from the point of view of the delegations which have raised these points, to put in a rule to the effect that quantitative restrictions will have an equal bargaining value in those negotiations, which are contemplated, because a country may be confronted by the fact that during the war, under emergency provisions, quantitative restrictions or even complete embargoes were put into effect which were not at that time intended to be part of the negotiations or arrangements with different countries. Those restrictions had an emergency character end a temporary character, and if we are to put in now a rule of this kind it will mean that we are recognising these emergency quotas imposed during the war and giving a bargaining power to the countries which imposed them which was never intended. I think it is quite proper to say that quotas put on in normal times should be a matter of bargaining, but it is quite a different thing to put in a rule that will amount to giving these countries with emergency quotas something in return for dropping them. I think we should reflect on that. R HELMORE (U.K.): Mr Chairman, the Committee were kind enough to accept a solution which dealt with this point when it was raised on the previous paragraph and I suggested .the words "'vice versa" should be put in the report I think the Chinese delegate would perhaps agree that we are in great difficulty in seeking here to amend a quotation front another document, and it seems to me that his essential point would be met if .we could refer back in making this quotation to the 49 F3 E/PC/T/C. II/PV/12 explanation of it which we have agreed in the other document; and so I would like to suggest a very simple amendment which will call attention to this point in its right context. Perhaps I could road it as I would suggest amending it: "Paragraph 1 of article 18 of the draft Charter" - and then insert "as explained in the report of Committee II". That refers back to the amendment we have made which was accepted on the previous occasion we discussed this question, and I hope that would solve the problem. THE CHAIRMAN: Did the Chilean and Chinese delegates got that suggestion? It was to include in the first line of this paragraph, after the word "Charter", "as explained in the report of Committee II"; and that would refer back to the sentence to which was added "and vice versa" as moking clear the relationship of these negotiations to the coming, into operation of the sections of the Charter which deal with quotas, R VIDELA (Chile): This is on page 4, in paragraph 1 of Article 18 of the draft Charter? THE CHAIRMAN: Yes, to put in the words "as explained in the report of Committee II" after the word "Charter". That refers to page 9 of the Committee's report 57 where it says, "Those countries would not be called upon to subscribe to the most-favoured-nation and quota provisions until selective tariff negotiations had been completed, and vice versa." would that meet the Chinese delegate's point? R.VIDELA (Chile): Mr Chairman, I think this mets my point, but I would like to say that I may raise it again when we come to discuss the meat quotas. The Cuban delegate has said that this may refer only to quotas put on during the war. I may say that the meat quotas were imposed in 1932, and I think very large business is involved there in the importation of neat from the Argentine, Uruguay and Chile, and, I understand, Iceland also; therefore, when I see the final draft presented by the Sub-Committee on meat quotas, I may raise the point again, but for the moment I am satisfied with the suggestion of. the United Kingdom delega- tion. THE CHAIRMAN: it is quite clearly within the right of the Chilean delegate to raise the matter again. Would this suggested amendment meet the point of the Chinese delegates? R TUNG (China): That is all right. THE CHAIRMAN: With the amendment proposed, it will read: "Paragraph 7:1 of Article 18 of the Draft Charter (as explained in the report of Committee II) sets forth the following, and so on. Is there any further comment on this? (Agreed.) Now we have "Miscellaneous Rules of Guidance". (The report was read, down to the words "marigins of preference" .) Any comments?. ... (Agreed.) E/PC/T/C. II/PV/12 The second paragraph. THE RAPPORTEUR: "In order to determine what residual preferences shall be bound against increase under Article 8" (reading to the words) "and should not vary from country to country or from product to product." THE CHAIRMAN: Is there any comment on these paragraphs? I take it that they are adopted? (Agreed). THE RAPPORTEUR: "Avoidance of New Tariff Measures. It is important that members do not effect new tariff measures" (reading to the words) "as a consequence an increase of the protective incidence of the tariff." MR KUNOSI (Czechoslovakia): Mr. Chairman, a copy of the report that has been provisionally distributed forms the basis of a study of this document. In this document there is a paragraph on Exchange Depreciation; but that I understand has now dropped out completely. The rapporteur may have some good reason for that. On the other hand, our delegation in the general discussion in the Second Committee had already made it quite clear that the principle of revaluing our specific tariffs in accordance with the change in the value of our currency and that the post-war economic conditions should not be considdred as new tariff measures. So I am forced to remind you call the more, that in the first copy I got our case was more or less covered, at least in principle, and, though we were not completely satisfied with the formula as it was put forward then, still at least in principle our case was covered, Now I would like to have some assurance, some formal assurance, that the Committee left it out because it is obvious and understood. The second point is that I do not under- stand at all what that means where it says, "In cases where it is necessary to convert a specific tariff to an 'ad valoron' tariff, the substitution should not have as a consequence an increase of the Protective incidence of the tariff." Now I just do not know what that means at all. To which cases are you referring, and is it from an international viewpoint or from a general viewpoint, because I do not see any possibility of its being necessary. Now, I would like to ask the Chairman or the Reporteur of the Committee if they. would kindly explain to me why this paragraph has been dropped out and, secondly, how far they can give me an assurance that the 51. E/PC/T/C. II/PV/12 revaluation of our specific tariffs will not be considered as a Change in our tariff rate. THE VICE CHAIRMAN: We discussed that point at length, and we had the idea that a chance in currency docs not affect your ad valorem duties, because whereas before you had. so much per cent. , you will have the same point, but it might raise difficulties, and where it raises difficulties, that is where you have specific duties, and therefore, while in general it says that one should not improve one's bargaining position by the increasing of ad valorem rates, what is meant here is that there may be cases where you may find it necessary to convert a specific duty into an ad valorem duty. Then, as is stated at the end of the paragraph, you should not try to increase the protective incidence of the tariff. So that if you had the year 1938 and your specific duty would at that time be converted at, let me say, 30 per cent. ad valorem, you might choose here again 30 per cent. THE CHAIRMAN: I think the point to which the delegate of Czechoslovakia was referring was who is to judge, or by what criteria do you assess whether such a conversion is necessary. If that is his point, I presume that in the first instance, at any rate, the Government of the country concerned would decide whether it wished or whether it considered it necessary to change a specific tariff to an ad valorem rate. Would that clarity your point? It KUNOSI (Czechoslovolcia): I am very sorry, but I have not made myself quite clear - that often happens to me. My point is this and it is not doubtful as far as I am concerned cat all. It is quite clear that the Government concerned can decide if a specific tariff should be changed to an ad valorem tariff or not. We can say tha.t we do not intend to do that and we cannot do it, and I do not want to enter into the merits of the two systems here. On the other hand, I know that it is an imperative situation for us to change our specific tariffs according to the re- valuation of our currecy and perhaps also in view on some other circum- stances. Now, I wanted to make clear, as I made clear already in the general discussion, that a revaluation of our tariffs should not be considered as a raising of our tariffs. That was my point and I wanted to 52. 03 E/PC/T/C.II/PV/12 have an assurance that, despite the fact it is not made clear in the report, it is understood. MR HANKINS (USA): I think you might meet Mr Kunosi's point in this text by revising the last sentence to read: "In cases where a specific tariff is converted to an ad valorem tariff," leaving out "it is necessary to convert." THE CHAIRMAN: Would that meet the point, to delete "it is necessary" and than to insert after "specific tariff", "is converted." MR KUNOSI (Czechoslovakia): Yes, and at the same time it is accepted that my explanation is right? THE CHAIRMAN: Certainly. MR GUERR. (Cuba): Mr Chairman, I want to have some clarification regarding the scope of this paragraph. I want to explain briefly that in Cuba we have for several months now been engaged in making a new statistical classi- fication of our export trade and we are doing that quite apart from any possibility of future negotiations. As a matter of fact that work was begun much earlier than these negotiations we are talking about; we, however, consider that a very necessary measure from many points of view, and we are not doing that in the least with the intention of raising the duties in any sense. As a matter of fact, the classification for some time to come will have to continue in reference to the tariff items to which a new group of articles belong. Now the heading of this paragraph is: "Avoidance of new tariff measures," and in the fourth line it says that they should not seek to improve their bargaining position by tariff or other measures in preparation for the negotiations. We think that this new classification, which, by the way, I may point out will be based mainly on the international classification adopted by the League of Nations and also based on the work done by the American Statistical Institute - this new classification, nevertheless, may improve our bargaining, position over the situation in which we find ourselves to-day in which we grant concessions on a particularproduct, and because of the effects of that classification many other products are included in the concession. Now some clarification is needed as to whether this paragraph refers only to the actual raising of duties and not to any measure of classification of this kind, that of 53. E/PC/T/C. II/PV/12 maintaining the same duty for the new article or group of articles into which it may be subdivided, and in that way, nevertheless, still maintaining, from a certain point of view, or improving, the bargdining position of the country. I want a clarification as to whether this refers to the raising of our duties or tariffs. THE VICE CHAIRMAN: That is the idea of this paragraph; and may I add here that the Sub-Committee fully appreciated that it is not a real binding obligation? The last thing we want to do here is to commit our Governments as such. As one member said, this is merely a pious hope; but we thought that we should have something here in this paper, just because it might help to promote complete confidence on the part of all the countries con- cerned that everybody should adhere as closely as possible to this principle. MR GUERRA (Cuba): I was at the meeting of the Drafting Committee and I know that this is not a binding obligation, but it is a moral obligation, and what we want to be clear about is even on the moral side, if we do something of this kind, without raising the rate of any duty but just subdivided the items in the classification that we have, we would still be morally in a position to act and would not be infringing the spirit of this paragraph. THE CHAIRMAN: I think it should be clear that the situation described by the delegate of Cuba is one that would not be regarded as contravening the general spirit of this paragraph. Would delegates agree with that, so that we can give the Cuban delegate the assurance which he seeks. I think I can take it that the Committee is agreed that it is quite satisfactory and in accordance with the spirit of the Article to go ahead writh that work. ols. 54. OM E/PC/ T/ C . I I/ PV/12 MR. RODRIGUES (Brazil): Mr. Chairman, I do not want to delay the work of this Committee, but at this point I must make a state- ment. As you know, the Brazilian tariff is mainly a specific tariff, and because of this our duties are half of the duties of 1938 . It is possible that on those things we will need to make some adjustments; not to raise the duties, but to make some adjustments in regard to certain things, and because of this situation I should like my words to be recorded in order to avoid any misunderstanding about our action if we have to make some adjustments. THE VICE-CHAIRMAN: Our Rapporteur has proposed to make an addition to this paragraph so that delegates may put their minds at rest. That is, that changes in the form of tariffs which do not result in an increase of the protective incidence of tariffs should not be considered as being a now tariff measure. THE CHAIRMAN: It is the suggested addition at the end of the paragraph: "Changes in the form of tariffs which do not result in an increase in the protective incidence of the tariff should not be considered as new tariff increases under this paragraph." MR. KUNOSI (Czechoclovakia): This is an amendment that the Rapportcur brings forward, and from this it is quite clear that a relative increase of tariffs is not prohibited. It is ah absolute increase that has to be avoided. THE CHAIRMAN: I think it covers both the point of the change and reclassification, of the kind referred to by the delegates of Cuba, and also a change from a specific to an ad valorem rate where that is considered necessary. MR. KUKOSI (Czechoslovakia) : Yes, I a.m quite satisfied. THE CHAIRMAN: I think that would meet the Brazilian point, too. MR. RODRIGUES (Brazil): Yes. It depends on the date. There is no date mentioned. THE VICE-CHAIRMAN: It is meant to be before the negotiations. MR. RODRIGUES (Brazil): No, because our monetary valuation existed after 1939, as you know. 55. R2 E/PC/T/C. II/PV/12 THE CHAIRMAN: Between 1939 and the present date. MR. RODRIGUES (Brazil): Yes, that is right. THE CHAIRMAN: Do you wish to comment on this amendment, Mr. Vidola? MR . VIDELA (Chile): Only that this amendment was referring, to tariffs, not other measures. THE CHAIRMAN: It relates to tariffs only. I take it this addition suggested by the Rapporteur is agreed? Right. Any other comment on this paragraph? The delegate of Chile. MR. VIDELA (Chile): Mr. Chairman, I wanted to raise this question of amplifying the meaning of this paragraph with record to quantitative restrictions. You remember I went to Committee II and they referred me to the Committee on Quantitative Restrictions and. they referred me again to this Committee. I think my point will bo covered by a small alteration in the title - "The avoidance of new tariff measures and quantitative restrictions" That would be sufficient, because five lines from the bottom we have the words "and they should not seek to improve their bargaining position by tariff or other measures". If we add to the title the words "and quantitative restrictions" we shall cover my point. MR. SHACKLE (UK): Perhaps I might suggest that the obvious thing to do is to reprodue the wording of the text in the heading. In the text we have said "tariff or other measures', and we might say in the heading "Avoidance of now tariff or other measures''. MR. VIDELA (Chile): I do not think that would meet the point, because what are new measures? MR. SHACLE (UK): Well, we have "or other measures" in the; text, and we might transfer those words to the heading. TE VICE-CHAIRMAN: It does not make sense to me - '`Avoidance of no-w tariff or other measures". Every country may take measures. 56. E/PC/ T/C .II/PV/12 THE CHAIRMAN: Supposing we put in the heading, "Avoidance of new tariff or other restrictiive measures"? MR. VIDELA (Chile): Yes, that would meet my point. THE CHAIRMAN: Any other comment on this paragraph? I take it it is agreed. I suggest the meeting now adjourns until 5.15. 57. E/PC/T/C. II/PV/12 S/T1 After a short adjournment. (After an exchange of views it was decided not to meet after dinner but to continue working on Saturday and, if necessary, on Sunday for the purpose of completing the work of the Committee.) THE CHAIRMAN: We proceed, then, with this paragraph. I understand that during the adjournment further consideration was given to the suggested amendment put forward by the Rapporteur to meet the problem submitted by the Czechoslovak and Brazilian delegates in relation to changes in the form of customs tariffs. It proved on examination to deal with the problem somewhat incompletely. The Rappor- teur has therefore suggested a second version of that amendment which he feels will meet the points put forward rather more adequately than the first version. I will read this to the delegates and after that I shall ask for views on it. There would be this addition to the paragraph at the end: "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. That appeaars to meet the point of the Brazilian and Czechoslovakian delegates. Is it agreeable to the rest of the Committee? I takc it, then, that the paragraph beaded "Avoidance of new tariff or other restrictive measures" is adopted. (Agreed.) "Principal Supplier Rule." (The report was read as far as the words "created by the war.") Are there any comments? . . . (Agreed.) "Form of Tariff Schedules." (The repport was read as far as the words "by a third country.") Any comments? MR KUNOSI (Czechoslovakia): Mr Chairman, I have some points but I do not know at what point it would be proper to put them forward. I would refer at the same time to the opinion of the Indian Delegation concerning the preference for bilateral procedure because of the possibility of changing certain tariff concessions. In the general discussion the Czechoslovak Delegation has already asked for the inclusion of a clause allowing for revision of some concessions on tariffs through negotiations between the parties directly concerned. We believe very firmly that this would give a greater flexibility and espeially would help to avoid giving notice of withdrawal from the whole agreement in the event of substantially changed circumstances concerning one or more tariff concessions. We would like to stress this point. As I said, Mr Chairman, I do not know if this is the right time and the right place to put forward this suggestion, but it E/PC./T/C.II/PV/12 T2 is an important point, and I would like to have your opinion and the opinion of the Committee on how we should deal with it. THE CHAIRMAN: Is there any comment on this point raised by the Czechoslovak delegate? THE RAPPORTEUR: I think that the point raised by the delegate for Czechoslovakia might in part be met by the proposal that the proposed tariff arrangement have an initial period of two and a half years; that is to say, at the end of two and a half years notice could be given of the termination of the agreement at the end of three years; and this would provide an opportunity for revising the agreement in any way which was considered to be appropriate at that time. I wonder if the relatively short period of the arrangement would not take care of the point raised by the delegate from Czechoslovakia. MR KUNOSI (Czechoslovakia): I raised the point just because I do not find this period short enough and I should cephasisc again the point I made that we are living in a period of economic reconstruction and very big economic changes in the economic organisation and the economic life of different countries. I know that quite definitely about my own country, and that. is the reason why I would like to see a clause which would allow for renewal of negotiations for certainly one or more tariff concessions, without any country being obliged, even after two or three years, as the Rapporteur said, to give notice of withdrawal from the whole agreement just because substan- tially changed circumstances would not allow the country to continue to give the one or more tariff concessions in question. 59 E/PC/T/C.II/PV/12 I would ask the Committee to consider this point all the more, because I think that the point about flexibility mentioned in the proposal was not dealt with adequately either because there might be new articles coming along in the economic organization of a country, for which one or other country might like to see further concessions or further negotiations. In our own country we are stopping the production of certain articles continually and we shall be obliged to go on producing, now categories of articles; so that I think it should be considered quite seriously. THE CHAIRMAN: Would the Czechoslovak delegate suggest a form of words which might cover that? MR KUNOSI (Czechoslovakia): Mr Chairmian, we raised this question in the general discussion, and I assumed this morning, because I have not seen the report, that the Committee that has been dealing with these problems would take some notice of it. THE CHAIRMAN: I presume they did, but apparently they decided not to accept it. But the only point I am making here is that it would assist the rest of the Committee if we could get your suggestion in a precise form. MR GUERRA (Cuba): Mr Chairman, in the discussion in the Drafting Sub-Committee this question of flexibility and the possibility of revision was discussed at great length; and I would like to ask the delegate of Czechoslovakia whether the Article, not drafted but contemplated, article 6 of the Draft Convention, which would provide for the revision of the agreement, will meet his point. THE VICE CHAIRMAN: Mr Chairman, I think we discussed certain points when we had Articles 29 and 30 before us. They were all, let me say, enforcing developments and then an increase in the import of certain articles. I think that was our safety clause. I must confess that we did not discuss the other point, that perhaps a country, owing to internal reconstruction, should not be able to fulfil certain obligations, but then I think we always felt that you could not foresee everything here, and that Article 55 paragraph 2, should then be applied where the Organization could set up rules and procedures to waive certain obligations, and we left it at that, with most of these things. 59.a U2 E/PC/T/C. II/PV/12 MR ADARKAR (India): Mr Chairman, the need for raking some provision whereby changes in the commitments undertaken by the negotiating countries, to start with, could be facilitated was considered in the Drafting Committee and the suggestion put forward on behalf of the Indian delegation was that instead of aiming at a multilateral instrument which would cover seventeen nations to start with and eventually all the nations of the world, amendments in which will accordingly require the concurrence of each and every one of the signatory nations, it would be much better that a more flexible and less unwieldy plan should arrive at the same goal through a series of bi- lateral agreements or agreements embracing a smaller group of countries, the benefits of which could be generalized under the most-favoured-nation clause, the provisions of which it would be possible to arrive at by consultation in a small group of countries. This suggestion was discussed, but the majority was against it, and as a result of that a reservation to this effect has been entered in the report of the Sub-Committee and I would draw attention to the last paragraph of the report as amended by the last paragraph one one in the document E/PC/T/C.I1/57, Corr. 1. Mr. HELMORE (UK): Ur Chairman, I think I appreciate the point which has been made by the delegates for Czechoslovakia and for India and I think it would be right to remind them that while it is perfectly true that the Indian delegation has entered a reservation to the Report of Committee II as we have discussed it this morning, there is, nevertheless, something extremely relevant to this in the report of the Joint Committee which was approved the other day. But there we were considering the position of a country which wished on good and sufficient grounds to increase a particular measure of protection where appropriate, a procedure by which it goes to the Organ- ization, find if the Organization thinks a good case has been made out there is consultation with the countries substantially interested and the Organization sponsors negotiations with those countries, as a result of which the Oranization is empowered to grant a release to the applicant country. This procedure does not only apply to the underdeveloped countries I think I am right in saying, but also to countries which have a particularr reconstruction problem. Now, in this document it seems to me that we are U3 E/PC/T/C. II/PV/12 in a difficulty simply in relying upon that or on the reservation, since this document relates to negotiations which are to be undertaken, though not have their results accepted before any of the rest of the Charter comes into force; so that we are really bound to try to settle here our ideas about the objective we are seeking to reach. But I would like to suggest that we need not absolutely slam and bolt the door in this particular paragraph. We argue in this memorandum that the multilateral from is right, and I think that my delegation would agree with that view, since in tariff negotiations one cannot just say that a particular con- cossion by one country is the exact counterpart of a particular. conceession by another. When one is engaged in these multi-angular talks one takes into account all the small benefits one is picking up from all the con- cossions made by other people, and it is extremely difficult to say that in some cases there is no benefit to be obtained by a concession negotiated between two other countries. So that when you put the results all together and you say that this is a mutually satisfactory arrangement to all the countries concerned, it does seem reasonable to say that the results should be embodied in an instrument to which all the countries are parties. But, as I said, I do not think we need slam the door completely, and it is not a matter which vitally affects ones preparations for the negotiations, nor indeed one's conduct of them in the early stages. So that if it would. satisfy the Delegates of Czechoslovakia and India I would be prepared to see it go in at the end of this paragraph in the form of another sentence which might read in this. way: "This point, however, can be finally settled when the negotiations have proceeded sufficiently to enable all the varying factors to be taken into account." That is, towards the end of the negotiations, when the possible concessions and possible benefits are beginning to take shape, because it is very much easier for a country to decide finally whether it is prepared to accept the multilateral way of expressing this or whether in one or two particular cases it wants to undertake a more limited commitment. THE CHAIRMAN: Would the addition of that sentence meet the point raised by the Indian and Czechoslovak delegates? 61. E/PC T/C. II/PV/12 MR KUNOSI (Czechoslovakia): With a small addition - if we could mention in this connection that we are adding this sentence in view of the desir- ability for flexibility of the agreement, especially from the point of view I have mentioned on the revision of one or more concessions. But it is quite easy, I think, to put it in in the form suggested at the end of the sentence. Do not you think so, Mr Helmore? MR HELMORE (UK): I would very much sooner leave it as it is. I said deliberately "varying factors, " and I meant "all" - which obviously includes the one just mentioned, and I said varying" because I think they will vary very much from country to country, but I think also that they will vary from each according, to the nature and extent of the con- cessions and. benefits required. I would very much prefer to leave this as a perfectly general qualifying phrase. Since it is in a sense saying that this is not a final decision that it should be multilateral, though I make no secret of the United Kingdom's preference for the multilateral form, I would hope that when the negotiations have proceeded sufficiently to enable India and Czechoslovakia to take into account all the varying factors they will agree will us to keep the point open in this way. MR KUNOSI (Czechoslovakia): I think what I said was quite clear, that I have not said a word against the multilateral form of agreement. I merely stated that it appears that perhaps the bilateral way would cover another point that I made concerning the revision of the negotiated concessions, and I emphasize that we makd this suggestion exclusively and only because we would not like to see, as we can imagine and visualize happening, countries withdrawing from the whole agreement because they cannot just go on to accord certain concessions concerning, one or more commodity. This is the reason why I finally would accept and would not insist further in adding to the remarks I made when I opened this discussion, and that they will be recorded in the verbatim report. V. fols. 62. OM VI E/PC/T/C.II/PV/12 MR. ADARKAR (India): Mr. Chairman, the Indian delegation would certainly feel Very much gratified to see the senteen suggested by Mr. Helmore included at the end of this paragraph At the same time, they would like to emphasise, sir, that we are in danger of running into a vicious circle or getting into a process of circular reasoning if we do not take account of the fact that the type of concessions which each country would be prepared to offer wiil exert a vital influence upion the form of the agreement which will ultimately emerge. If a country feels that a multi- lateral form of agreement is going to be excessively rigid and is going to put it into a strait jacket from which there will be no escape for three years, then it is very likely to take a more cautious line and put into it such items as are not likely to need any revision during that period. I suggest that, in order that such factors may not be lost sight of, the reservation which the Indian delegation has already made in the Report may be allowed to stand, and, in addition, that/this particular sentence suggested by Mr. Helmore may also be added at the end of the paragraph we are discussing. MR. HELMORE: I did not suggest any alteration in the reservation. It was simply that I referred to it in the course of my argument. THE CHAIRMAN: Is the paragraph agreed, then, with the addition of the sentence suggested by the delegate for the United Kingdom, on the understanding that the views of the Czechoslovakian delegate as stated at this and previous meetings are recorded in the verbatim report? Is that agreed? My attention has been called to the fact that in the previous paragraph it refers to the multilateral form of tariff schedules agreed to among members of the Preparatory Commission. That may rather overstate the case, in view of the fact that ther are some differences and departures from that view. I think, just looking at it quickly, that for the purposes of the paragraph it 63. E/PC/T/C.II/PV/12 is probably sufficient to say "the multilateral form of tariff schedules is designed to provide. Would that be acceptable? Delete the words "agreed to among members of the Preparatory Committee"? Anything else on these paragraphs? Can we take now the next section, "Status of Preferential rates of Duty". Time is Fetting on, and reading these paragraphs does take some time. Would it be a satisfactory arrangement to the Committee if we took them without having them read by the Rapporteur? The paragraphs under the heading "Status of Preferential Rates of Duty": any comments on these paragraphs? Then I take it that is agreed. "Procedures for conducting negotiations among the members of the Preparatory Committee". Any comment on the First Stage? MR. KUNOSI (Czechoslovakia): In the procedur?s for conducting negotiations the Czechoslovakian Delegation regrets to say that it will be quite impossible for us to transmit to the other members a preliminary list of concessions by the 13st December 1946, because, first, the Czechoslovakian tariffs will not be ready and published before the beginning of 1947, and, secondly, in view of the far-reaching or-anization of the Czechoslovakian economy it will be impossible at this very early date for us to prepare a detailed list of concessiong which we prepose to request from the other countries concerned. THE CHAIRMAN: You will notice that in the third line of that para- graph it says "as soon as possible and preferably not later than 31 December", so that if it is not practicable -- MR. KUNOSI (Czechoslovakia): Yes. I merely wished to make that statement, Mr. Chairman. THE CHAIRMAN : Any other point on the first stages "Second Stage" any comment? 64. V3 E/ PC/T/C. II/ PV/l2 MR. JOHNSEN (New Zealand) I would like to raise a point in connection with the conditions under which these negotiations are to be conducted. The point to which I wish to refer is the matter of secrecy in connection with these tariff negotiations. It seems to me that unless secrecy is observed we are going to run into all sorts of, difficulty, if public information is given as to the requests we make for concessions, or offers which we propose to make. I think if that information is made public it will hinder very much the trend of negotiations. I do not know whether it is the general view of the Committee that secrecy should be observed, but if tlhat is the case I would suggest that we might well insert a paragraph somewhere in this document to the effect that it is to be understood that members will observe secrecy in connection witlh the tariff negotiations and will use every endeavour to ensure this. THE CHAIRMAN: Thank you. I think this matter was discussed in the Sub-Committee. Would the Chairman of the Sub-Committee care to comment on it? THE VICE-CHAIRMAN: Yes, Mr. Chairman. We all shared the w ish for secrecy, only did not wish to put it in this document, because this document is to be published and wrong conclusions might be drawn. That is to say, interested circles in different countries might think "Here again there are some people dociding about our interests in secret", and so on, so we thought it would be better that the Committee itself, once it meets in Geneva and also before, should instruct the Secretariat to deal with these things as being very confidential papers; and, furthermore, each country would be expectecl to respect the wish of the other countries in this respect. But to put it in this document we thought would not be very wise. MR. GUERRA (Cuba): Mr. Chairman, I wish to add in that connection that in the discussion in the Drafting Committee it was considered that the part which a country may be more interested 65. r4 E/PC/T/C. II/PV/12 in keeping secret is the concession it is going to grant. That is bound to raise discussion in their own country among, the people interested, and, taking that view, it must be taken into account that the concessions which are to be requested are to be handed to the Secretariat, and it is contemplated here that the concessions which are to be offered are to be given at the beginning of the Geneva Conference, and not before. THE VICE-CHAIRMAN: We shall have to see to it later on in this Committee that we deal with them as really confidential papers. THE CHAIRMAN Does that meet your point? MR. JOHNSEN (New Zealand): I should like to observe that I think it is the general practice to observe secrecy in connection with tariff negotiations, and I do not think there would to any re- action from the Public if a statement was included here to the effect that it was proposed to observer secrecy, However, I am satisfied as long as arrangements are made or are proposed/to be made to observe secrecy. I take it that/should apply also to lists of requests, because I imagine if interested parties get to know what requests are actually being made, well, we will have extreme difficulty in coming to a point where we are in a position to say just what concessions we might make. THE CHAIRMAN: Any further comments on the Second Stage? The Third Stage. MR. VIDELA (Chile): Mr. Chairman, I do not think my point is covered again here. I suppose a country may ask more than tariff concessions? It may ask for elimination of quotas - or not? THE CHAIRMAN: I thought it as understood that the method of dealing with the two things was different - that the quotas would be dealt with by general provision, which would come into operation at the same time as the agreements about tariffs, but that they "would not be part of the same negotiations. It would not be proper, therefore, to include references to them. 66. V5 E/PC/T/C . II/PV/12 THE VICE-CHAIRMAN: We would negotiate on quantitative restrictions as envisaged in the other Articles of the Charter. That is one of the basic suppositions when we negotiate, and that we will not terminate our negotiations before the other Articles of the Charter in question have been agreed upon, because they have to be embodied in the agreement that is attached as an addendum to this paper. MR. VIDELA (Chile): I do not understand. I am defeated, really. The phrase " vice versa" has some, meaning? THE VICE-CHAIRMAN: If that supposition does not come true, then you are free to say "Now I change my attitude tovvards these negotiations", but you will not terminate your tariff negotiations before you have satisfaction with regard to quantitative restrict- ions, and vice versa. If guantitative restrictions stay, countries which, like my country, have, given concessions, would say ''No, I want to review the whole situation" , and every other country would do that. MR. VIDEL.A (Chile): But supposing my country, for instance, has to present a list of requests on the 3lst December, is it allowed to include tariff concessions and the reduction of quantitative restrictions? THE CHAIRMAN: There would be no point in placing such a request on the list, since the quantitative restrictions would presumably, when the relevant section of the Charter became operative, be ruled out. There would be nothing to negotiate with or for. It is no good nogotiating, about quantitative restrictions if quantitative restrictions, are going to be abolished at the same time as the tariff agreement comes into effect. If, for instance, you have a quota imposed upon a product of your country in, say, the United Kingdom market, if you ask 67. W-l E/PC/T/C .II/PV/12 you ask the United Kingdom as part of your negotiations to eliminate that quota or to increase the quota, you are asking some- thing which is of no value, because on the date when your part of the deal comes into operation those quotas would be eliminated any way. Mr HELMORE (UK): Mr Chariman, I think perhaps the Chilean delegate may be thinking of one or two particular quotas which are dealt with in that famous report which has changed its form so many times and of which I am glad to say I have now given him the final form, and I have also given copies to the secretary and asked him to distribute them. By a curious coincidence, at this very minute they are now being distributed. There might exceptionally be a quota on which some concession could be asked, and I think it is perfectly open to any country when it transmits its list of concessions that it wants, to call attention to anything under the sun that any country does, including the particular points covered in this piece of paper which is now being distributed. Mr VIDELA (Chile): I am more confused now. I confess I do not under- stand. Mr TUNG (China) : Mr Chairman, another point of information: when we say that quota restrictions may be considered as a sort of bargaining counter on tariffs, does it include a licensing system with regard to a product? Mr HELMORE (UK): Mr Chairman, with your permission, I will have one last shot at explaining this. Two things are going to happen next Spring. One is a series of negotiations on a selective basis between the 18 countries dealing with each individual item in their tariffs, including their preferential tariffs. Those negotiations will proceed by a process of each country asking for concessions that it wants, and in turn the other countries asking for the concessions they want, and then the process of bargaining by which selectively a result is reached which is in effect a new or a revised tariff. At the same time we shall be considering certain other Articles in the draft Charter which are particularly relevant, and the one which is in many ways most relevant, as has been pointed out, is that dealing 68. W-2 E/PC/T/C.II/PV/12 with quantitative restrictions. We have used the word "quotas'' , but we really refer to the Article which deals with quantitative restric- tions. There there are certain general rules suggested about quanti- tative restrictions, and the essential part of the final bargain is that each country should be satisfied that there is a basis of agree- ment in respect of the tariff concessions it is being asked to make, the tariff concessions it has asked other people to make, and the general rules to which everybody subscribes in connection with quotas, I could explain quite easily how fer the United Kingdom the quotas come into the bargain. It is no secret to anybody here that we have been persistent in our opposition to the use of quotas for protective purposes, and if there were to be rule that quotas for protective purposes were to be allowed, I very much doubt whether we should find the result of the negotiations satisfactory. That is one way in which it might work. Another way in which it might work is that there are three or four quota arrangements operated by the United Kingdom under previcusly existing international arrangements. Those quotas are not protective as far as the United Kingdom is concerned, They are part of a bargain we made some time ago, and if an exception is allowed to allow those quotas to continue, then it will be for other countries to decide whether the whole of the bargain is satisfactory to them; and while we are at Geneva it will be perfectly open for us to say that we do not like the protective use of quotas, and it will be perfectly open for other countries to say that they do not like the protective use of quotas by us; and in the process of discussing all that a satisfactory bargain will or will not be reached covering the whole of the field. Mr TUNG (China) : I do not think I understand. What I asked is whether a licensing system, would be considered in the bargaining of tariff reductions. I do not think my point is met. THE CHAIRMAN: The Articles of the draft Charter which deal with quantitative restrictions cover both quantitative restrictions in the form of global quotas or other quotas and also quantitative restric- tions applied through a licensing system. So that in so for as quotas were part of any of the negotiation involved in this, then 69. E/PC/T/C.II/PV/12 similarly quantitative restrictions imposed through licences would also be. Does that meet the Chinese delegate's point? Mr TUNG (China) : Mr. Chairman, I wish to refer you to the document of this morning. That is document 57, dealing with this quota system and quantitative restrictions. It is pages 8 and 9, starting at the bottom of page 8, I just want to know whether this also includes a licensing system or only a quota system. Mr HELMORE (UK): If I may say so, I think the Chinese delegate is now on a good point. The word "quotas" in the passage to which reference has been made and in other places in that paragraph is rather what I might term a slane use, of the Rapporteur will not go for me when I say that. I think it would be better if we could are to change the word. "quotas" there to "quantitativerestrictions'', Then we could refer to the definition of, "quantitative restrictions", which is in the draft Article 19, which is, a prohibition on or restriction made effective through quotas, import licences or other measures. THE CHAIRMAN: Would that meet the Chinese delegate's point, if in the paragraph beginning at the bottom of page 8 and continuing on page 9 we substitute "quantitative restrictions" for "quotas" in each case, on the understanding that "quantitative restrictions'' is used there in the sense that is defined in the main Article to cover both quotas and licences? Mr TUNG (China) : That is right: the expression "quantitative restric- tions" will be substituted every time for the word "quotas''? THE CHAIRMAN: That is right. Is that agreeable? Mr VIDELA (Chile): Mr Chairman, the more I try to understand this, the more I do not understand it. I apologize to you; but during all the process of discussion in the Subcommittee on Procedure I was told that Article 18 has nothing to do with quotas, and now I see here a paper spoken to by the United Kingdom delegate and it says: "Changes recommended in Article 18". What is the meaning of this? I do not understand It. I think the only thing remaining in my soul now is an English saying: "Live a day one by one; yesterday is over and tomorrow not even begun". I think this is the only thing I am feeling now: that we are discussing, here not for three years 70. W-4 E/PC/T/C. II/PV/12 ahead and the question is very clear: does Article 18 refer to quotas or not? Does Article 39 refer to quotas or not? Does this paper refer to Article 18 or not, I think it is something to discuss, but also to make me clear and to make me understand what I am discussing. THE CHAIRMAN: The paper just circulated is not before the Committee at the moment, and I suggest for the consideration of the Committee that we do not consider it at this stage. When it does come before the Committee, we can consider then whether it is appropriate to deal with the subject matter in relation to Article 18 as recommended by the Subcommittee or whether it is appropriate to deal with it else- where. Shall we continue? Are there any further comments on the Third Stage? Does the delegate for Chile wish to add anything to his previous comments on this, or can we adopt this section of the report, bearing in mind that the delegate for Chile is not clear in his mind as to the relationship between the negotiations of which this Third Stage is a part and discussions relating to quantitative restric tions? We hope that point will become clearer later and the delegate for Chile can then perhaps re-open the question, Is that agreeable? Mr VIDELA (Chile): Mr Chairman, I would like to make a reservation on behalf of Chile on all this paragraph on the procedure for conducting negotiations among the members of the Preparatory Committee. You are then free to discuss it and I will reserve my position until I clear my mind., THE CHAIRMAN: I am sorry I am not able to help the delegate for Chile just now, 71. X X1 E/ PC/T/C.II/PV/l2 THE CHAIRMAN: I can assure the delegate for Chile that the Committee is most anxious that this confusion, this uncertainty, should be clarified. The delegate for the United States, Mr Hawkins, and the delegate for the United Kingdom, Mr Shackle, who have been associated with the preparation of the report relating to quota preference, and who are femiliar with the contemplated procedure here and the relationships between the tariffs on the one hand and the quotas on the other, have suggested that they would be happy to discuss this matter in detail personally with the delegate for Chile tomorrow morning at ten o'clock, if that would be convenient to him, and in the hope that it would be possible for a clear understanding, of this to be established. Would that be agreeable? Mr VIDELA (Chile): Yes, thank you. THE CHAIRMAN: I would like to than the two delegates for their assistance in this matter. With the reservation which the Chilean delegation has made, can we accept the contents of the report covering the Third Stage? (Agreed.) "Fourth Stage" Any comments? May I take it the report covering the Fourth Stage is agreed? (Agreed.) "Result of negotiations". Any comment? (Agreed.) "General agreement on tariffs and trade". Any comments? MR KUNOSI (Czechoslovakia): I have one point here. We submit here that the provision of the freedom of transit should be expressly mentioned in the general agreement. THE CHAIRMAN: Is there any comment on that suggestion? MR SHACKLE (U.K.): I should like to say on that that it does seem to me that there are a certain number of provisions in this chapter which we were discussing the other day - the general commercial provisions - which it may be necessary to include or bring into this agreement by reference in some form or other. We clearly cannot attempt to decide at this stage precisely which matters should be so brought in, nor exactly what provision should be made for then. It seems to me that the matter of transit which the Czechoslovak delegate has mentioned is one of those matters which will call for further consideration. Other points one might think of in the same connection are some provision about tariff valuation, possibly some provision about tariff classification, and so on; but those, it seems to me, are matters that have got to be thought about at a later stage as to what extent we need to provide for them as part of this general agreement on tariffs and trade. 72. X2 E/PC/T/C. II/PV/12 THE CHAIRMAN: The Czech delegate will note at the end of the list of specific articles referred to a phrase "and such other related provisions as may be appropriate". It would clearly be possible under that provision to bring in the freedom of transit provision. MR HAWKINS (USA): I would just like to say that the American delegation, when the time comes, would be glad to consider very sympathetically the inclusion of such an Article, because of its very real importance to some countries. THE CHAIRMAN: Would that meet the Czech delegate's point? MR MUNOSI (Czechoslovakia): Mr Chairman, I will be satisfied if it is recorded that, in view of the geographical position of Czechoslovakia, the question of free transit is a causa sine qua non for our foreign trade, and therefore we would and consider now that it is one of the appropriate subjects/for our country in its foreign trade it is of vital importance. THE CHAIRMAN: The Secretariat note that comment and it will be adequately recorded. Are there any other comments on this section? MR JOHNSEN (New Zealand): In connection with the paragraph at the foot of page 13, that is, in connection with the signature and publication of the Agreement at the dose of the tariff negotiations, I think there may be some difficulty concernirg certain countries in giving effect to that provision. I take it that it is just general statement that this should happen and that it does not necessarily at this stage require to be a commitment - I take it there will be an opportunity to discuss this further? I would just like to record that observation. THE VICE-CHAIRMAN: We have stated here "made public at the close of the tariff negotiations". If we said "immediately at the close of" it would have a much stronger wording, but we have simply said "made public at the close" That may take some time, and we always envisaged that after the negotiations in Geneva the countries concerned would make a special resolution or a special agreement with regard to the way it will be published, and then all these points would crop up. MR JOHNSON (New Zealand): I would interpret those words "at the close" to mean immediately the Agreement is made, generally speaking. THE CHAIRMAN: If we inserted "as soon as possible After" perhaps that would meet your point? THE VICE-CHAIRMAN: There is no difficulty from our side in saying that. THE CHAIRMAN: Then shall we say "as soon as possible after" instead of "at"? 73. X3 E/PC/T/C. II/PV/12 MR JOHNSEN (New Zealand): Or "in due course after the close"; but I think "as soon as possible after" would meet my point. MR SHACKLE (U.K.): If it is not pretty soon after the newspapers will get it anyway. THE CHAIRMAN: Are there any further comments on this section? MR KAFKA (Brazil): There is a point which has some importance from our point of view, and it is. this. Apparently it is not envisaged that in the general agreement on tariffs and trade, reference should be made to the chapter on Industrial Development developed by our Joint Committee. Now, this chapter on Industrial Development contains certain escape clauses for countries who wish to protect industries which they are creating. It is possible that the ITO will come into being very soon after we have signed this agreement. In that case we should not need those escape clauses On the other hand, if by any chance this ITO should not come into being, so that the escape clauses which form part of this Charter would not come into being either, then there would be an interval of time curing which we would not be able to make use of those escape clauses. I would therefore suggest that among the Articles which are brought into force in the Agreement should be included the relevant provisions of this chapter. THE CHAIRMAN. The Rapporteur suggests that this point might be met by including an appropriate provision in article 1 of the attached tentative Draft Agreement. At present it says, "Functions entrusted to the proposed International Trade Organisation under any provisions of the Draft Charter incorporated in this Agreement by virtue of paragraph 1 of this Article shall, pending the establishment of the Organisation, be carried out by a provisional international agency consisting of delegates appointed by the signatory governments." The Rapporteur suggests the inclusion, after the words "paragraph 1 of this Article", the words "and functions parallel to those provided for in Articles (so-and-so) of the Economic Development, chapter of the Charter". MR KAFKA (Brazil) : I do not think that suggestion is quite clear, because on one hand we do not include that chapter in the Agreement and on the other hand we bring, it into force somehow not quite clear. I think it is more a legal point than anything, but if the Rapporteur thinks that it would actually unable us to make use of these clauses; then the solution would be perfectly acceptable to me. THE-CHAIRMAN: I think the point is that it would be necessary for the countries concerned, when this matter comes to be dealt with, to argue that the provisions 74. relating to Industrial Development in the Charter were - to use the words here - "essential to safeguard the value of tariff concessions granted''; and then to include the relevant Articles relating to Industrial Development in the provisional Agreement. That is not precluded by the present draft. There are certain illustrative Articles quoted, and then it finishes with "and such other related provisions as may be appropriate''. MR KAFKA (Brazil): I think that would be perfectly acceptable, in that case MR ADARKAR (India): Mr. Chairman, during the discussion in the Sub-Committee of this portion of the report it was pointed out, on behalf of the Indian delegation, that there was some irregularity of procedure in the Sub- Cormittee rocommending the inclusion of those various Articles without knowing their contents. There are certain Articles included in this list on which it has not yet been possible to reach agreement. In agreeing, therefore, to the inclusion of the particular list given here, it should not be assumed that the members doing so agree to their inclusion in whatever form they may emerge in in the last analysis. Although the last portion of the sentence in question here, namely, "such related provisions as may be appropriate", allows a certain amount of scope for including new Articles, nevertheless, the provisions dealing with industrial and economic development are regarded by certain countries as so fundamental that it is necessary from their point of view and for the purpose of safeguarding their interests that those provisions should be included in the list given in this paragraph 75. I would, therefore, strongly endorse the suggestion made by the Delegate of Brazil that provisions relating to industrial economic development should be included in this list. THE VICE-CHAIRMAN: Would it meet the point made by the Indian Delegate if we said here "and such other related provisions, for instance, those with regard to economic development''? MR ADARKAR (India): Yes. THE CHAIRMAN: May I make a suggestion: I think some of the difficulty here arises from the fact that some Articles are referred to in particular and others are lumped together in on general, I wonder if this is a point/which the Chairman and the Rapporteur of the Sub-Committee might be able to help us? Would there be any objection to saying something to this effect: "These provisions would include Articles relating particularly to commercial policy provisions and such other provisions as may be appropriate", wthout specifying Article 9, Article 19 and so on. That would mean that both groups of Articles would be completely generally stated here, and the determination of the precise amendments contemplated would be a matter for further consideration. There is just a possibility that by referring in detail to one group and not to the other, it would imply that there is some distinction which perhaps we would not agree to. THE VICE-CHAIRMAN: I do not think, Mr Chairman, that there would be any objection to that. The reason why we mention that here is that, if we are sure about it, it would have to be put into it. These matters are all related to the commercial policy provisions. With regard to the other Articles, we thought that that should be more or less decided upon in Geneva, and, as this whole agreement will not come into force before we have concluded, therefore, we thought it more convenient for the Governments concerned to see these commercial policy provisions already mentioned and also to see that there is no point of principle involved here. I think it helps to understand that that has been our idea. 76. Y.2 E/PC/T/C. II/PV/12. THE CHAIRMAN: Would that help the Delegates who raised this point relating to industrial development and so on if we dealt with it in that way and said: These provisions shall include appropriate Articles dealing with commercial policy and such other relevant provisions as may also be appropriate". MR ADARKAR (India): Do I understand you to say that no reference will be made to the Articles on economic development? It seems to me, Sir, that more suspicion will be created than set at rest by resisting that reference to the provisions on economic develop- ment. By common agreement, if it is inserted in the Charter, it would appear that members who have subscribed to the inclusion of these principles have done so with certain mental reservations. THE VICE-CHAIRMAN: Speaking for myself and I think also for the Rapporteur, we would prefer to have these Articles mentioned as such and then add something to the effect that I have just proposed for instance, those with regard to economic develop- ment. MR ADARKAR (India): There would be no objection on our part if there is some reference to the chapters on economic development. MR HAWKINS (United States): In an endeavour to solve the problem, could not you make it read: "those general principles of chapter IV of the Charter" and then insert "and other interests of members", and then you could put a footnote about those Articles with a description at the bottom, and give the reference of the chapter, whatever it is, the one relating to industrial development, in this THE CHAIRMAN: Would you give us those words again more slowly? MR HAWKINS (United States): The difficulty with this seems to me to be a matter of interpretation, because it is limited to concessions to safeguard the value of tariff concessions. Now I would insert there "and further interests of members", just to broaden it a little, and then, to avoid the enumeration here, you could put footnote below: "for example" and then list the ones that are listed here, but also referring to the chapter on industrial 77. Y.3 E/PC/T/C. lI/PV/12 . development, giving those as examples only, because there may be other things which it would be desirable to insert. you MR FLETCHER (Australia): Could/also consider including some refer- ence in such a paragraph as may be appropriate to the employment and economic activity Articles? If you refer to industrial dev- elopment and leave the others out, I think you will still remain in the same invidious position. THE VICE-CHAIRMAN: Every delegation will be in a position to indic- ate to its own Government what is meant there, so that, if there is no objection, I suggest we should leave them all out. THE CHAIRMAN: It does seem, gentlemen, that there would be some advantage in not referring specifically to any particular Article. Precisely what Articles it will be necessary to include will obviously be a matter to which Governments will give very careful attention in their preparatory work, and the inclusion of some and the omission of others, as the Indian Delegate has pointed out, would lead to a possible misunderstanding. I would, therefore, suggest for your consideration that we make the change suggested by Mr Hawkins at the end of the sentence which finishes up at present "tariff concessions", so that it would red: "those general provisions of Chapter IV of the Charter considered essential to safeguard the value of the tariff concessions and other interests of members", and then delete the whole of the following lines down to the word "appropriate". I think it would be a little easier if, instead of the precise wording suggested by Mr Hawkins, we said those general provisions" and so on and then add "and such other provisions as may be appropriate". Would that be agreeable? Would that be acceptable to the Delegate of India? MR ADARKAR (India): Yes. THE CHAIRMAN: Is that agreed? (Agreed). Is there anything else on this Section? (After a pause): "Creation of Provisional Agency Pending Establishment of International Trade Organisation". Are there any comments on this paragraph? If not, I take it it is agreed. 78. Y.4 E/PC/T/C. II/PV/12. Relation of the General Agreement on Tariffs and Trade to the International Trade Organisation after the Organisation is Established". Any comment on this Section, taking the interim tariff section first? I take it that is agreed? (Agreed). "Procedure for Broadening Membership in Interim Tariff Committee through Additional Tariff Negotiations" . Any comment? Is that agreed? (Agreed). Can we now lock at the "Tentative and Partial Draft Outline of General Agrement on Tariffs and Trade'. This is, of course, merely for the purpose of illustration, I presume, and to assist Delegates in explaining this matter to their Governments. Would you like to make any comment upon this, Mr Rapporteur? THE RAPPORTEUR: Only one point: it was thought that the Drafting Sub-Committee, which will meet in January, might usefully attempt to elaborate this Draft Agreement. I think that perhaps that raises a question as to the action we have just taken in eliminat- ing all reference to particular Articles which may be included in it, but perhaps it could be taken care of on a special instruction to the Drafting Sub-Committee. THE CHAIRMAN: We will take the preamble first, the section which is before Article 1. Is there any comment? (After a pause): I take it that is agreed? As regards Article 1, it would be necessary now, in view of our previous decision, to delete the sub-paragraphs (a), (b), (c ), etc . down to (g) . 79. ZI ON E/PC/T/C . II/PV/12 Is the second part of Article I agreed? Article II: any comment? MR. SHACKLE (UK): I wonder whether the addition, we made earlier to this paragraph 2 of Article I is now necessary? It will all hinge on that is included in the (a), (b) , (c) , etc . THE VICE-CRAIRMAN : We have taken that out already. It reads as stated here, without any addition. THE CHAIRMAN: Anything else on Article II? MR. JOHNSEN (New Zealand): Except that it would be necessary for the Rapporteur to check up on the numbers of the Articles in relation to State Trading. THE CHAIRMAN: Anything else on Article II? Article II is agreed. Article III? Article IV? Article V? Article VI? .Article VII? Note? THE VICE-CHAIRMAN: Mr. Chairman, I may only make one remark here. That is, that this agreement as we envisased it in our Sub-Comm- ittee must be a guiding paper for the Secretariat in preparing for these tariff negotiations, so perhaps you might give some thought to whether we should provide for an carly answer from the governments concerned as to whether they agree with this paper, Yes or No. We have agreed it provisionally, but we have not committe our governments. On the other hand, the Secretariat will have to so on with its preparations in the near future, THE CHAIRMAN: The Chairman of the Sub-Committee suggests we might request delegates to ensure that early consideration is given to this procedural document by their governments, and that the Secretariat should be advised of their governments views so that any necessary changes in the arrangements/that they will be called upon to make could in fact be made in time MR. MELANDER (Norway): Mr. Chairman, I think it would be very difficult for governments to considered accepting this draft agreement as binding before they have considered the whole aspect of the reports from this Conference. I think, therefore, 80. E/PC/T/C. II/PV/12 that it would be better to leave it to the Secretariat to work or the basis to which we have just now agreed and to take that as a starting point when we assemble again in Geneva. THE CHAIRMAN: I think you will find it was in relation to procedure that the Chairman of the Sub-Committee was concerned. If the governments have views about procedure which conflict with the suggestions here it would involve changes in the proparatory work of the Secretariat, and it would be as well for them to advise the Secretariat as early as possible. THE VICE-CHAIRMAN: Perhaps I might clarify what I said. If there were many things that could not be settled by the Secretariat it might be that before we met in Geneva there should be in one way or another an opportunity to discuss those further and to get a real ground for negotiations, otherwise we lose time in Geneva. MR. JOHNSEN (New Zealand): I take it some formal notification will be sent to governments, with a request for some early indication; that a copy of the Report will be sent? THE CHAIRMAN: The Secretariat will look after that. THE VICE-CHAIRMAN: Before we end this meeting I Would like to make special mention here of the very valuable work of our Rapportour. He did his utmost to get us through very difficult substantive matter and I may say without him we should not have succeeted. Thank you. THE RAPPORTEUR: Thank you very much. THE CHAIRMAN : I think it is necessary for us as a Committee to record our thanks to the Sub-Committee, to its Chairman and to the Rapporteur. They have indeed done a very valuable job on very difficult material. Thank you, Mr. Speekenbrink. Before adjourning the meeting the Secretary has advised me that the projected programme is that Committee II will meet at 10.30 and 3 p.m. tomorrow, and if necessary at 10.30 and 3 on Sunday. The meeting is adjourned. The meeting rose at 7.6 p.m. 81.

GATT Library

hb110kg7343

Verbatim Report of the Twelfth Meeting of Committee V : Held in Hoare Memorial Hall Church House, Westminster on Tuesday, 12 November 1946 at 10.30 a.m

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

https://exhibits.stanford.edu/gatt/catalog/hb110kg7343

hb110kg7343_90230018.xml

GATT_157

E/PC/T/C.V/PV/12 . I . .. U7IMD nXTIONS , . . . I . . ECOuN-OC 'SOIA COUNI i~-~ATOP.YulzalI'm of the E AND EMPLOYMENTIlT=QN.L ' ONiiZ UJD E1~LOUZVWT V ±-'- teprt c: the wrE; M;ID1c, CC .2T= V he1W in Hnc=e Ye:orialHal Churci H-use, Westninster or Tue21 1veer. 9i at 1C ° a C.I.iCTn R ~~dmLyr. P. EniLn.ter (Urdted States) (Froz thcshorthand notes of ..3.GUR EY,NNELLS & FUINTS, 58Victcria St., V _tWirster S.r.1.) Correction: Ref. Veebatom Repor t cf NinthMeeting of Committee V (E/V/T/C.V/Pv/W), for ",,dnesday, 7th,November, 194." re-d "Thursday, 7th Nov4mber, 19.6". .. .- I 2 E/PC/T/C.V/PV/12 THE CHAIRMAN: We are very late getting started this morning; I think the reasons are very well understood, with the convening of Parliament, the large crowds, and the blocking of the streets it has been very difficult for some of the Delegates to get here. We are still not aIl present, but I think we can proceed with our meeting anyhow. This morning we are going to use the simultaneous translation apparatus, and this afternoon we shall have successive translations. Those in the translating part of our service who are affected by that decision can take note accordingly. The report of the Ad Hoc Drafting Sub-Committee on Article 76, Article 78, paragraphs 3 and 4, and on Article 2 is being prepared, and we hope that it will be ready at about 12 o'clock. As soon as it is ready I shall call upon that Sub-Committee for that report. It will be the first order of business. Meanwhile, I propose that we take up for discussion Article 50 on Functions of the Organisation. I hope the Committee will not be unduly alarmed from time to time when I allow a few moments' silence to take place. I am quite deliberate in that. It is to give the members of the Committee an opportunity to look at the text and make up p eh;im ndsas as to whether thewa .nt -o bring up a point. Quite frequently I asmu-e there is nothgng. ogn; tb te brouht up oa parag raph, and then when Ima on the ocintocfgoing to the next pargErp-h, a barrgre of cmm;ents breaksocut. I find frmz ep-erience it is a little better to have a Linute of prayerful silence untilmzmzbers make up their minds whether oc brngu up smoethigi or not. Is there anycCmm,ent onp aagrrpbh 1 ofAarticle 50? R2. HOUMANL Balg imr-Luxmubougr) (Interprettiocn: I should not wish to cgtin this attack of fire you have us_t mentioned,M,r. Chaim,an. Iw-ant only to ask you to add a phrase to te: pargLraph, after the sentence "collect, analyse and publish infomoationrielatigL to international trade," the words "irfoma~tion reIatigL to mprlomaent policy." You E/PC/T/C.V/PV/12.* wil ot~ie chat-paragraph 1 Iamsi - putting together infocmation regarding the work of all the Committees, excepting any allusion to Committee I, that is, work regarding employment policy. There- fore, I suggest that the amendment I have mentioned should be MR. KELLOGG (US : I have the impression that in the report of Committee I dealing with this subject, they have recommended that the function of gathering information regarding employment be lestowed on the Econimic and Social Council and its Sub-Commissions. I believe they make that specifically clear in their report, and I do not suppose we would want to set up this Organisation in competition with the Economic and Social Council. My comments, of course, must be checked against the final report of that Committee, which I have not seen. 3. C fels . C.1 Mr HOUTMAN (Belgium-Luxembourg) (interpretation): It is clear that if the Plenary Meeting really would give all policy problems to the Economic Development Committee, as the Delegate of the United States has just mentioned, I should not insist on this point. THE CHAIRMAN: Are there any more comments on paragraph 1? Mr PALTHEY (France) (Interpretation): I do not wish to make any special intervention merely in regard to paragraph 1. I would d like to enquire of the Committee if it would not consider that one of the terms of reference of the future organisation which should be forseen might be the exchange of technical experts and the establishment of a system which would make it possible to facilitate sending technicians from several countries into other countries less developed. This problem might later be revised when we knew the final decisions of Committee I, but it seems to me that we might even now keep this idea in mind if the Committee sees no diffic- THE CHAIRMAN: The point raised by the Delegate for France seems to the Chair to be more related to paragraph 2 than to paragraph 1. Mr PALTHEY (France) (Interpretation): Yes, that was it. THE CHAIRMAN: I take it that we have passed to paragraph 2, which is quite all right as far as I am concerned. Is there further comment on paragraph 2? Mr HOLMES (United Kingdom): Mr. Chairman, I was intending to propose that in paragraph 2 it might be useful to add at the beginning some such phrase as the following: "In collaboration with any other international agency which may be concerned", and that a similar phrase might be added at the beginning of sub-paragraph 5. THE CHAIRMAN: Will the Delegate of the United Kingdom repeat that suggestion?, I missed some of the phrasing. Mr HOLMES (United Kingdom): At the beginning of paragraph 2, and the same would apply to sub-paragraph 5 of this Article when we come to it, that the following words might be added: "In collaboration with any other international agency which may be concerned". Perhaps for the word 4. C .2 E/PC/T/C.V/PV/12 . - "intern mtgonal" I iinht, conformitnk withwhan1I tihc has. bee. d-cidedmbefore in the sare connection, substitute the word "inter- goveriental". T;S OH.J;L;~: The proposalei s to insert aftorthe wore "provide" in th. first line - Mr HOL.ES (United Kingdom): Or before it, perhaps,- THE CTaL^M: - the words "In collaboration with any other inter-govern- mental a enoy which may be concerned" - t"to en a comma - .provide technical" - and so forth. Mr HOL2S (United Kingdom): Yes. THE CHJRM?N: Is mhere any corment? irIQURESHL.IM(:ndia)m Tr. oairran, I w.uld like to know, exactly how this omerdment whichohasebeen preposod by the Delegate of the United Kingdom will rely operate, and what it will mean. To me paragraph 2 seems vera clear, nzmely that it sheuld be ono of the functions of this organisation to phnvide aecllical -ssistance and render other help co economitally backward countries, and it was perhaps with that sug- gestin --at this has been incorpurated; bla if we addthe words !Tn coolaboratian with otheo inter-gevernmental ageucies"n srpposirg here are no other inter-governmental agencies which could be called -eod to r.nler such help, what would happen? I personally would prefer that paragraph 2 be retained as it is, because its meaning is clear to me, but if in certumn circ= stances ie isrnecossaxy to get the help of any other inter-governmgntal or-anisation I do not think it wouLd debar us from aey of thc general provisions as have been set out in the Charter. It must be one om toe ains Of an inter- governuental agency to provide such hclp, otherwise by adding those words here they cannot be called upon to render that assistance., I think it was the main function of the I.T.C. to render such assist- ance. I would like to know the meaneng of thz words which have been introduced by the Delegate of the United Kingdom. Perhaps I have not graspuld them fLly. ~~5. C .3 E/PC/T/C.V/PV/12 THE CHAIRMAN :. t 'is no fo toe x a hehr mc he Deplcin wha tic Delegate of" the United Kin;dom has en mind, but it doas hecur to me that tll difficulty you speak of arising in the matter of drafting may be involvee. You seem to fool wh.t 1' thee hrase. ;ich ihe Dclegate o. tug United Kingdom sx-gests is ddea, it would be interpreted et meaeing that th b IntErnational Trade Or-z,isatiop should nov undertake to proVide such assistance unless it is done in colleaboration with Dthr agencies. I would assume that the idea -ould be that wherever it is feasible add practicable, an wherever tno situation warrants, it should be done in colleboration with othor aoncies, bndeit is not internad to eeaa thaal the Intornztiorl Trade Oranivetion shoake nevor undert:dIwto provide such assistance by itself. I 4o not inow whether the Chair has elucidated er merely confusod the matterh, but aty-ow I trow thl arge. free of ch_,. Or E.- nited Kingdomr): Ig eetiwely wracc -ithie-t dou Mav- si., .Ir. Crairman. e Our propos1d addition, I can assuae the Delegote from India, was really ientended to b helpful. It certainly was not intended to act as n brake in aty way on the functhioning, of oe Interdati~nal Trane ^, ,i-sation. It was intended rather to prevent the possibility of overP'pping, ow, ef teere per- ovorlap-ing functions in some way or other, to prevent the possibility of confusion.o The sort cf case we -ad n-m3nd was that supposing some questien had arisoon'in thl curse of the InternationglnTrade OrXawisation's vork about double taxation, ,e ought to be careful to see that all sthx opinion eCpressed by the Iternationel Trade Orgwnisati n.vere iL'harmony or reconciled -ith opiniminstwhich prgh~ be exressed by the Fiscal Commission of the Fconoric and Social Council ehicv, I bolieoe, has that subject allotted <eo idt. As o~gars the exact wordig-a f of ome phr ,.a thc sort which I have suggested, we are entirely n the hanmds.ofethe Comittec, or of any Drafting r-mjmittee, but I st- wantewhto sy, thae agr'e.ile I qi-c re with wMat you said, IrceChairma wi .we tcrteadmnly-vsh the amnment not to nc liyiting ih' p"u wa h bug telfil, and desi~nd. primarily to avoid con- fusion or overlapping. -- hrgXt WC (UJ.S ;.: I Would like to su-gest that since many of the functions 6. E/PC/T/C.V/PV/12 through which the I.T.O. might overlap other agencies will be performed by the United Nations itself, Mr. Holmes' proposed words be changed to read: "In collaboration with the United Nations and with any other inter- governmental agency which might be concerned". THE CHAIRMAN: That is an amendment to this proposal, but it does not appear to the Chair how that takes care of the suggestion of the Delegate of India. Mr QURESHLAI (India): I think that suggestion meets us better. I prefer the United States' proposed amendment. THE CHAIRMAN: If it is satisfactery to the Delegate of India, it is certainly satisfactory to the Chair. Mr BAUCE TURNER (Secretary): If I might revert to the point raised previously by the Delegate for Belgium and replied to by the Delegate of the United States regarding the responsibility for cellecting information concerning employment policy, I have just secured a copy of the draft Report of Committee I, which is still subject to some miner alterations, but it does say quite clearl, if I may quete, that "The functions which the Economic and Social Council should either perform itself or sponser through arrangements with appropriate international specialised agencies cover (1) the regular collection, analysis and exchange of relevant information, (2) the organisation and consultation with a view to concerted national and internationl action in the field of employment". I just draw the Committee's attention to that reference in the Report because I think it makes the position clear. Mr DAO (China ): I want to raise a point of drafting in connection with the points raised by the Delegate for the United Kingdom. If you refer to paragraph 6 of Article 50 reference is made to co-operation with the United Nations and with other specialised international organisations, and so forth. I think that point is covered by paragraph 6 of this Article. Furthermore, if we refer back to Article 71 with regard to relations with other organisations, the points will be found to have been covered by both references in the Charter. Is it necessary to provide any specific reference in the separate paragraphs, such as in paragrap 2 C. 5 E/PC/T/C.V/PV/12 and paragraph 5? As a matter of fact; I feel that if we were to make any specific reference in a particular paragraph we might miss some reference which we would like to see; for instence, "to collect information relating to international trade" and so forth. In this field probably the ideal would be to have co-operation with other bodies. Therefore, I think the point is covered in paragraoh 6 and in Article 71. It is a matter of drafting. Mr HOLMES (United Kingdom): I would entirely agree that it is a matter of drafting. Perhaps just the warning note might be sounded in paragraphs 2 and 5 by some reference there to paragraph 6 of the same Article and to Article 71, as the Delegate of China suggests; but as the references to which he has referred appear later, after the two be paragraphs to which I have been referring, it might/well to say that with regard to paragraph 6 which follows, and to Article 71. It is not a point to which I wouls wish to attach very great importance or on which I wish to delay the proceedings of the Committee very long. . 8 . D follows D.1. E/PC/T/C.V/PV/12. -. p thipk shmt _erhaos pore instruetion might bo given to our own Drafting Comnittee to look at this and to see whether some reference of the sort at any rate might not be helpful. THI CHAIRLA: The delegate of South Africa. oR. NAfUE (&cuth .rica): It is hardly worth while saying what I had in wmindwin vie oHelmet Mr. aiclrs has just saed about thc Drafting Co.i-ttee. THE CA1IJ3hN: Tho delegate cf Canada. IS ?AN (Canada): I would like to ask a question about -thegeneral beidg ern mn-aing of this- art of the Article, and I think this is really a question for the U. S. delegate. It is laid down en tho sepaond art of the Aeticlo that one of the functions of the Organis- ation ip to -eovido technical assistance and adviceeto mcmbers - at least, that is a part iof ths section of the Article. Now is it intended that the IO T. Ce itsolf shompld e~loy a largf sta'f, capable of orogidiez th, technical advise that would be required, or is it si;-ly enedisago that the IO TwoC. v;uld act as a clearingehousc which wculd be ablp to .ut members needing such adaice end technical assistanceoin ccnta_t wxph e:;artst tnd hat technocal crganosaticn ie cthor countries? eIt soems to me, and to the Canadian delegation, that we ought to br faizear ab- %c~out this, because if, in fact, theCI.Ti,. smplo e=Lla a Lerge staff itself, tmeyre a bo a ccn- siderable financial burden on the organisation. It is arguable that the I. T. C. would be well-advised to incur that, financial burden, but at least we ought to be perfectly clear as to the sort mmifm contents into whicm we nay be entering. HAIRMA i 'N: The delegate of he 'United States. . G HOG& (United States):e The issuc raised by the Canddian .elegatc is stdll unaer discusnion ir a jomnt cc=mittme, Co~mittees 1 and 2. Amnog the problems which they must settle is the problem cf just how machecf those ouncticns should be oeftetE tho Bconomic Development Sub-Commission of the Economic analSocinL Council, and tB the 3ank - 9 - D. 2. E/PC/T/C.V/PV/12. and to other organisations. That matter is definitely not settled at this time. The reason for the wording of this Article is that we want to make it possible for the I. T. O., in case it should find it desirable and necessary in view of the possible failure of other organisations to carry out their duties in this field, to assume such functions as may become necessary in the future. There was not any decision made, either in the U. S. or, I believe, so far in the Joint Committee, as to precisely what functions in this respect I. T. O. should carry out. That we shall soon find out about, I take it. THE CHAIRMAN: The Chairman would like to add that, if you look at Article 16, to take one illustration - I am thinking of paragraph 1, not paragraph 2 of Article 50 so perhaps what I was about to say would not be pertinent. I understood the delegate from Canada, however, to have some question as to the amount of burden to be assumed by the I.T.O. with reference to the collection of inform a.nt.nd sta _at_ntistics,oand sb onpeout ocr- hams I e isondrstcod him? PLNTR ?A? (C:nada) M No, ir.mChairzan, I wes rngorripa tg apha-rnon 2 which deals with tde pronuofctir. tel nicaLs asse-t.nco. ATHMANC:-IR_ : .hat is qoite rncther-matter, and teer amr_ I rather out of order. Is there further discussoonpan -orpgra-h 2? LE. :Z PAan(Czmada): As a semepplontarey qunstio, as they say in Parliamentary usage, may q encuiretof 'he U. S. gele3ate further if it is the intention of the deaftors -e tha ter, should it be decided thae t.o I O.* T. should havlarg 1-te s aff which wcbld 'e aboe tc pdevirc this technical advice and Cssistance, that the advice and assistance should be pfoidb_r oy mhm re:ber roveenments requiring the advice aed tcchnical assistance? IRLLKEM-OGn (editcr States): I do not khinr the answer to tqat aues- tio. has yetbeen determ.ned I think anm rk.ar-s which the -10- Canadian delegate might wish to make on that subject would be of value, and could be put into the record. However, I am perfectly sure that so far no decision has yet been taken on that matter. - 2 - -. TE,wIKN: Iemcels likG to yvmrin he,mciibcrb of the Cou imt- (includiag tho ehmoaimanowto sWeak e littI& re slxhly. Te arC s-Oaking a lettle eapidly for our intcrprotors. Is there fpurther coient or.paragrah 2? - * .MLE F.N (manada): I thinall Nr. Chair:'n, probably '1 that there eoGgine fcu c. to say on Ihis Cencral point is that T am well awaresthatbethis whole Sroblem hae to c considered a great dcal :'rkeer, and I would sL-rly liic to enter a caveat now, at this -rclLaar;; toae, thot certainly the wcrding c±fthis second - ra=Q -fome 50rtle 5 should, at scac stage, b -put into such shxae th-t it is ierfectly clear what is intended, and .. as io which te- o Plnernat vemem ha-e becn chose. by the b:rs who ara re rcs:nted Iere. To Cio-kU:AfThe delgnte. -- Sth .2rica. Ma NYLDE (Scuth ica): oWih reference to "cther international canozad-irs" ` r.ntic-nE insthnde draft as it _tas now, 'i that dnteoed tcvencme-' bcth goZ rnvcrtaI and non-governmental ~~c rgaiizatizns? C C.1 i;rJ: The delegate of the Uniited States. 2 MEL:GG (Urdt a States) S. Afe delegate of & Jrica has asked a very difficult - question.n m tdink what was ir vin' there was to cover both the J. N. and specialist agencies, and possibly rcnsgovern~ental organizations. I suspect, however , that suficient attention wrs not given to thme problem at the tie and I wcrua begglad to hear a sug-estion on the subject. A1 N1DE (Soutv friga): I hare no suZMestions at all, 2ir Chairm-a. T *as tryin, to Onvisegn how a oon-govcrrmental Organisation would rmceiNeOad-ice spor I.T. . un a a-epioic indastri-l -rcject. - ii - D. 4. E/PC/T/C.V/PV/12. I am not suggesting that it should be written into governmental international organizations, but it has been suggested that a drafting committee would be going over these things, so I will not pursue the joint. THE CHAIRMAN: It seems to be that the drafting committee would wish to consider it, and it would be a debatable question whether the wording of paragraph 2 should be such that if a non-governmental international organisation really should ask and welcome the technical assistance or advice of the I.T.O., the I. T. O. should be free to give it That is a question which should perhaps receive some consideration. Should this be drafted in such a way as to preclude that, or should it be boldly enough drafted so that that would be possible? 'I do not knew whether this is a matter for a sub-committee to consider further, or whether it o cldi be settlenrn paeliminaiyrxr way here.Pe _pa-s -u sab- mi;4.ttee shoulo c.neid~retmS -ettcurth-- and_de ideran ewhEther the deer should be lcopec-un eid whethenoot i uhoCld beoclcsed so far ao nco-gcveenmaltanJe itrnotai;ong roanisatioas rre concerned. If there is no further discussion onetpo ' int, I suggest that ab sommet ete cougd _ive further codeiacration to it. agrap aoh 3. That is a rathlr iopg :arapranh, witubsai- paragraphs, and Iallsho nct ampeift to hurry thommia-seteo in decidingewhethor wt vishes bou'ginp uomschetgin-.e Peprhas we night best proceed by tagin; it sub-pgraarrph by sub-paragraph. ;AUDE o(ScuAh fri :caef Boore ydu ao thaM, mr. Crman-' , I think it is a bad thing, in drafgin intaerntilna insmeuzonts, to specify by using the wo"rd including". It is a dangerous ngi.- and it meeus to meath.t these first terec lines should be adequatM. Iay I ask why wt las thhugre nccars-=o tp sDeyiff a~b.cn add I? Is it that t aeyare fmooe rcpor3cztant nhal cther things on which the I. O. m. zay consult amd eakc rmmon er- doticns on?Wh t-y wat i- necass=ro tpeszcycifemthz? - 12- THE CHAIRMAN: The delegate of the United. States. MR. KELLOGG (Uniteod States): In reply tc the question of the delegate for S.Africa, I believe the reason for spelling out the sub- paragraphs here was the desire to make it perfectly clear that the Organization had four powers to cover anything, which night arise in these four major categories of activity. It is quite 1)possible that we might got that idea across 'equally effectively by other language. It was put in, I think, from the deire to be abundantly cautious and to make it quite clear that the Organiz- ation had all the necessary powers. THE CHAIRMAN : Assuing, for -purposes of further consideration, of this paragraph, that the sub-paragraphs should be retained that is, sub--paragraphs that specify certain types of recommendations and reports which the organization would be autherised to deal with, what comments. if any.., are there on those specific points of enumeration? Is there any comment on sub-paragraph(a) The delegate of Canada. MR. LE PAN (Canada): Under sub-paragraph(a)it seems to us that it might be useful, and an improvement, if the words "or of the members" were included after the words "of the responsibilities of the Organization"; in other words, that it would be a function of the Organization to make recommendations or determinations relating to the discharge of the responsibilities of the Organization or of the members of the Organization. MR. KELLOGG (United States); I support the suggestion of the delegate of Canada. THE CHAIRMAN: .Are there further comments on sub--paragraph (a)? On sub-paragraph (b)? On Sub-paragraph (c)? E follows - 13 - E. I E/PC/T/C. V/PV/I2 MR. LEENDERTZ (Netherlands): In sub-paragraph (c) I see that the last words are "in the general interest", and without wanting to say that the recom- mendations sho ld not take into account the general interest, I wonder if it is important to include those words, because the recommendations, if they are based on the cmmodity principles, will always be in the general interest. I am afraid that perhaps another criterion.will be introduced here. I do not attach particular interest to this remark, but I wonder whether "on the commodity principles" would not be sufficient. THE CHAIRMAN: Is there any comment on that suggestion? ' MR. NAUDE (South Africa): There. seems to be something to be said for leaving it as it is. There was no doubt a good reason for it s. going in, and there may be considerations of general interest, which do not fall within the commodity principIes. THE CHAIRMAN: The point is one wich, it seems to me, could well be given further consideration by the Sub-committee. If there is no further comment on it, we will pass on to sub-paragraph (d). MR. QURESHI (India): With regard to this sub-paragraph, I would only say that the question as to its particular position in this Article might be considered by the Interim Drafting Committee in the Iight of the d iscussions that have taken place at these meetings. We from India feel that economic and industrial development must play a very b ig part in the general purposes of this Organisation, and therefore it is' for consideration whether this particular sub-paragrch ... should not come a little earlier. We have -taken the attitude that we look upon industrial andeconomic develop- ment as the principal means of raising the standards of living:and increasing the purchasing power in the undeveloped countries, and we foel that industrialandeconomic development generally will play a very important part in the general expansion of world trade and employment. I believe also that in countries like India the Charter, as 'fina.lly drafted, will possibly receive readier acceptance if it is brought out prominently in its -14.-- /PC/T/C. 'V/PV/1 2 Articles that one of the main purposes of this Organisation will be the encouragement and devolopment of industries and economic expansion. THE CHAIRMAN: With reference to the suggestion made by the Delegate, of India, the Chair would like to make this comment, subject to correction: -it is my understanding that, as a result of the work of the other Committees, partcularly the Committee on Inadustrial Development, provision would pro- bably be made elsewhere in the Charter for a c lear statement of this function. The idea would be featured at other points in the Charter, perhaps very prominently at one particular point if there is to be, for instance, a separate chapter on industrial dovelopment. That would, I suppose, be the place for it, but it would a ppear that with reference to article 50, in paragraph 3, there is simply an atte mpt to summarise very briefly some of the types of recommendations or determinations which are to. be among the functions of the Organisation. This would merely be a brief reiteration of a function which would be f'eatured probably elsewhere in the Charter. I am act sure that I have sp oken accurately, but that is my impression. If anyone has a different idea, please make a point of it. (Interpretati on) MR. HOUTMAN (Belgium) I second your remark, and I feel that one should say to the Delegate of India that thc Conference has perfectly understood the imp- ortance of encouragement and aid for undeveloped countries, since the first Article of the Charter, paragraph 3, considers that this help to undeveloped countries is one of the principal duties of the Organisation. Article 1, paragrarh 3, says that the aims of the Organisation w ill be to help and aid the industrial and general economic development of member countries, particularly of those still in the early stages of industrial development.. I suppose, then, that the Delegate of India will be satisfied if sub-paragraph (d) only .summarises the recommendations which have to be addressed by the Organisation on the subject of the different aims. MR. QURESHI (India): I have no desire to take up the time of the Committee on this but I feel that I should make it clear that we do attach a certain amount of importance to this, because of the general background or history, - 5 E. 2 E.3 E/PC/T/C.V/PV/1 2 of this particular meeting. In the original proposals made by the United States and the United Kingdom,this question of economic development and industrial development was not included at all. It has been included in the Draft Charter possibly as a result of reconsideration in the light of the arguments put forward by certain countries. I do not want it to be thought that this particular quetion is just a.n after-thought which has found a place in the Charter at the last moment. It has therefore a certain amount of importance with regard to the emphasis that is to be laid on this par- ticular function of the I.T.O. THE CHIRMAN: Of course, if it would hel. the Delegate of India any, sub-para- graph (d) might be sub-paragraph (a). That would just be a matter of changing the order. MR. KELLOGG (United States): Assuming that it is decided at this Conference to put a next chapter into the Charter covering industrialisation, I would suggest that the order of these sub-paragraphs be made to follow the order of the chapters, whatever that may be. THE CHAIRMAN: If there is no. further discussion on sub-pa ragraph (h), I will ask for comments on paragraph 4. MR.HOLMES (United Kingdom): It occurs to me that perhaps paragraph 4 may' require a cross-reference in some way to paragraph 2 of Article 76. We shall be coming to certain amendments to that paragraph on the report of the Sub- Committee, which will be ready shortly, and it is-true that that paragraph 2 of Article 76 is'rather more specifically addressed to a particular type of difference or question than paragraph 4 of Article 50 whichwe are discussing at the moment, Paragraph 2 of Article 76 is prefaced by a limi tation on. the interpretation of the Charter, but. of course a dispute about the inter- pretation of' the Charter. is one which grows out of the provisions of the Charter and we should, I think, remind the reader or the. Organisation, in attempting to apply this very long and complicated document, that some specific directions about certain disputes are given in paragraph 2 of Article 76. . . E.4 E/PC/T/C.V/PV/12 THE CHAIRMAN: A.ny further comments on paragraph 4? MR. LEPAN (Canada): Here is a general suggestion which I put forward .very tentatively: I wonder whether it might be wise to set out somewhere in the Charter - it might be here - that the ITO might make a provision for arbitral machinery, and might even set up a panel of well-qualified arbitrators? THE CHAIRMAN: The Delegate of Canada has made a very interesting suggestion. Is there any discussion on it? I missed some of the context of the Dele- gate's remarks; was he proposing that the matter simply be made a matter of record, or did he actually propose that some consideration be given to a draf ting change? MR. LEPAN (Canada): I confess that my suggestion is not sufficiently clear for me to move an amendment or to suggest any change in the drafting. I would be grateful if we could. have an expression of views on thispoint from the Delegate of the united States, as representing the drafters of the Charter. THE CHAIRMAN: I have been looking hopefully towards the Delegate of the United States, but he has not volunteered, so I will call upon him. F fols - 17 - F.1 E/PC/T/C.V/PV/12. MR.KELLOGG (US): I think that when this Committee comes to the considera- tion of Article 76, as it has been altered by the Sub-Committee, we should take up this - matter, which I think is a very desirable suggestion. THE CHIRMAN: Again, I should like to warn members of the Committee, and particularly my owm countrymen, to speak a little more sl owly. We are getting distress sig nals here. MR. KELLOGG (US); With. regard to the suggestion of the Deleg ate of Canada concerning the possibility of setting up arbitral procedures, I would. suggest that that is a very interesting suggestion, and that we should consider it at the time that this Committee consi ders the report of the Sub.-Committee which worked on article 76. MR. NAUDE (.Union of South Africa): In the Fund and the Lank Agreement, Provision is also made for an , itral board. This might help us to clear our minds on the waiter. THE CHIRMAN: If there are no further comments on paragraph 4, we will pass to .paragraph 5. MR. HOLMES (UK): I have already made my comment on paragraph 5. THE CHAIRMAN: After a considerable period of deliberate silence, I am assuring once more that silence gives consent. we will pass to paragraph 6. MR.KELL OGG (USA): Possibly a. word of explanation is called. for as to Paragraph .6. At the time that the UnitedI Nations entered into a contract of relationship with the Food. and Agriculture Organisation, the question was raised. as to the relationship between the FAO and the Security Council. It was felt desirable that the FAO should cooperate with. the Security Council, but at the same time it was felt that there night be some question as to wether the FAO had constitutional power to do so. Hence, we wanted to be perfectly sure, in drafting this Charter, that there might be no question of the authority and. power of ITO to cooperate with the Security Council, if the need should 18.. F.2. E/pC/A/C.V/PV/12 THE CHIRMAN: Are there any further Comments on paragraph 6? MR. QUESHI (India) I have a draf ting suggestion to make. I do not know whether the United Nations is a, specialised international or anisation, because this paragraph sakes it out to be one. MR. KELLOGG (USA): I think the point made by the Delecate of India is a very good one, and that we should conform our lan uage to wha t we have in article 71, THE SECRETARY (Mr. Turner): I take it that it is the idea of the Delecate of India that the word "other" be-deleted. THE CHIRMAN: If there are no comments, we will pass to paragraph 7. MR. FRESQUET (Cula); I think the same drafting question arises here in the reference to members of international organisations, I think the word "other" has to Le dele ted here, too. MR. KELLOGG (USA): I think that maybe I should make our position a little sore clear. As to paragraph 6, I would not want to take out the word "other", because "other" refers to the org anisations other than the ITO. Similarly, in paragraph 7, "other" refers to organizations other than ITO. MR. FRESQUET (Cubaj: I raised the point because of what I thoug ht it was decided to do in paragraph 6. MR. KELLOGG (USA): As to paragraph 6, I agree with. the Delegate cf India that we should probably change the words specialised inter- national organisations" to read "other inter-governmental organisations" in order to conform with the language used elsewhere. THE C HIRMAN: I do not want to prolong this drafting discussion, except to say that I understood the point of the Delegate of India to be rather on the question as to the English there, and what is the meaning when we refer to "other specialised international organisations" and use the word "other" when we have just mentioned the United Nations, thus implying that .the United -Nations is' one specialised organisation, and that then there are some others. It is a mere matter of English . E/PC/T/C .V/12 . which we oug ht not to waste time over. I think the point.of the Deleate of India is well taken and ought to be included. MR.MLIK (India): I accept the suggestion of the Delegate of the United States. THE CHIRMAN: I notice that the Delegates of Australia and New Zealand have just entered the Committee. I will sa.y to them that we have just completed discussion of Article 50. There have been various comments on various of its provisions. I think tha.t before we leave that Article, we should afford the Delegates from these two countries an opportunity to bring up any points they may have had in mind on this part of the Charter; so that our record may be complete in regard to this part of it. MR. LURY (.Australia): The Australian Delegation has only quite minor points to raise in relation to paragraph 3, that in the recomm endations or .determinations relating to the discharge of functions under the various chapters, there shouId be some additional reference there in relation to employment and industrial development. That is the only point we wish to make in regard to the functions. MR. LAURENCE (New Zealand): As far as this Article is concerned, we have nothing, specffic to bring forward but.we held a tentative view of the final form it should take until the outcome of the proceedings was known. Our feeling is similar to that of the delegate of Australia, that if as a result of the discussions here some change in specification is called for, we take it that the .new specification will fellow as a normal consequence of these proceeding s. THE CHAIRMAN,: Are their any further comments on Article 50? MR.HOLMES ((UK.): I wonder whether I might have your permission,Mr. Chairman, to raise a rather more general point on paragraph 5 of Article 50? I. shall, of course, immdia tely bow to your decision if that is out orde r a t this late date. The point is this. Paragraph 5 of Article 50 suggests that there will be, or there ought to'be, verious international agreement dealing with rather speciaised subjects, F.4 E/PC/T/C.V/PV/12 no doubt cumulatively, at any rate, of considerable importance to the objects for which the International Trade Organisation is to be brought into being, but there is, of course, as it stands, no sort of provision or even recommendations that the countries which are Members of the Organisation should adopt those international agree- ments. I just wondered whether.the Committee might feel that it would be useful to have some provision, or to give some encourageme nt to Members, when they have had recommendations from the Organisation that there should be other international bodies called into existence, to join those international bodies. I think this point is one which might perhaps be called to the attention of the Drafting Committee which is to follow this session. of the Preparatory Committee, and that in any such reference to them, one might perhaps quote to them Article 11 of Chapter V of the Agreement setting up the International Health Organisation. I do not wish to make too much of this point, but it might perhaps be convenient if I read out the Article of the Health Organisation, to which I was referring. It reads: "To adopt conventions or agreements .... The Health A.ssembly" (that is, the corresponding body in the Health Organisation to the Conference of the proposed Interna tonal Trade Organisation) "shall have the authority to adopt conventions or ag reements with respect to any matter within the competence of the Org anisa tion. A two- thirds vote of the Assembly shall be required for the adoption of such conventions or agreements which shall come into force for each member, when accepted by it in accordance with its constitutional processes. Fach member" - and this is the point - "undertakes that it will, within 18 months after the adoption by the health Assembly of a convention or agreement, take action relative to the acceptance of such convention or agreement. Each member shall notify the Director-General of the action taken, and if it does not accept such . 21s F.5 E/PC/T/C..V/PV,/12. convention or agreement within the time .limit, they will furnish a statement of the reasons for non-acceptance." I think that is the relevant passage of the -rticle, and will explain the point that I was a ttempting to make, but I think this is a matter which could be best dealt .with if the Committee agreed that there should be some reminder to the Drafting Committee which will succeed this session of the Preparatory Committee of the existence of this ,Article under the Health Organisation's agreement. .~~~~~2 E,/PC/T/C . V/PV/12 Mr KELLOGG (U.S.-.): I would like to support the suggestion of the Delegate for the United Kingdom. THE CHIRMAN: If there is no further comment on article 50 I shall con- tinue with the suggestion that I was about to make when we reverted to this point with reference to paragraph 5 of article 50; namnely,: that we pass on to Article 51, "Structure of the Organisation". That is a very short and broad sort of Article and we ought to be able to dispose of it very quickly. Is there any comment? Mr BURY (Australia): The only point which-seems to arise is whether it may become necessary to insert another Commission. THE CHAIRMAN: It might be pertinent in that connection to ask the Chairman of the Joint Committee industrial Development if there is any likelinood that his Committee will recommend the setting up of a Commission for Industrial Development as a part of the International Trade Organisa tion.. Mr MALIK (India): I was going to raise the same point as the Australiar. Delegate. The position in the Joint Committee is that the proposal has definitely been submitted and there has been a counter-proposal. The whole question wiIl be discussed and I am, sure, actively discussed during the course of this week. I think we shall reach a decision so far as the joint Committee is concerned, possibly on Friday. Mr MERINO (Chile) (Interpretation): Mr. Chairman, the Delegation of Chile made a proposal concerning the Commissions which must be set up in this organisation. The Chilean Delegate sent to the Secretariat these proposals, and I think they have been distributed and that the honourable Delegates have them among their papers. In agreement With the remarks formulated by the head of our Delegation at the first meeting and by many other Delegations to the effect that the International Trade Organisation must consider in an edequate manner and give its full importance to the problem of economic development and industrialisation and employment, the Delegation of Chile proposes to set up a. fourth Commission which might be called the Commission for the Increase of Industrial Production and Employment. This would complete the organis- ation and would give satisfaction to the highest aspirations of those 23 E;/PC/T/C '.V/PV/ 1 2 countries whose economic development is still in its begining. The functions of this new Commission should be determined once the Joint C ommittee has finished its tasks. The Delegation of Chile has also formulated a proposal before the Joint Committee to consider these matters and I have been told that in that Committee the ilea has been entertained of including a chapter on these matters, considering the economic d evel- opment and the industrialisation of non-industrialised countries, or those whose industrialisatio n is only b eginning. I apologise Mr. Chairman, and Delegates ,for my French, and I would ask you whether it would be convenient that I should speak in Spanish if the Simulltaneous Translation can handle it. May I ask you, Mr. Chairman? THE CHAIRMAN:_I a I .-o.mefsr.'. that- that is g ri_.rhe. Plpase szeak in Sp anish. RIhr =iC (s-eaking in Spanish: pInternetation): For Chilew, a asllas fhor ato mjcrity of the coun trwes ;hich anre udever-deloped industrially, it iffu d me naeniptal ortance that thisr Chater will facoe thse problems in such na maner thatmwe -ay, tgrou-h the help of large and rich countries,edepclo2 our industries and be ablegige -vc a higher standard. of living to ouro wrking men. Thus it isden evit that the undeve-dpcloved countriegs miht, as time passes, be able to become wealthier, to have ga hiher standard of lgiavin nd at t-ames.:c time to be consumers of merchandise and products of countrwes .hich are highly developed. Thus we would achieve wwet Vo ar e trying to achieve in this conference m- naely, to develop and increase world trade. It is on this account as I have said, that the ChileeneDclogation of the Conmittee presented a long statement submitting to thismComaittee the necessity for creating a chapter in this Charter wnich will deal with such necessary functions in order to obtain the industrial development n ths rining standard of living of small countries. The Drafting ittee of the General nommachnittee is working on thuijs sb ect. It is on th ; ^o- ~iuthat ; suggest that we await the definite result of the -_ .... .. 2 .,,,,, , ;;,; -. L J entVrenched -a the PleneXyCo=-itte meeting in order to co.sider- th- iCtroduction in IV.Charter df' =rganisation of oomrnittee No. : . .. ^ , ~n i, * ..^-........tee- No-. . . ZV_. ;- - - E/PC/T/C.V/PV/12 I want to thank tne Chairman and the Delegates who have tolerated my Spanish. THE CHAIRMAN: I thank the DeIegate from Chile very much for his remarks. Mr MALIK (India): I didnot go into any details regarding the work on this particular question of the Joint Committee, but perhaps it might clear the situation if I did go into some detail. There are two questions. One is the writing in of provisions in the Charter itself dealing with the question of industrial and economic development. On that question I am in no position to attempt any kind of forcast of what the Committee will decide, but from the discussion which has so far taken place, one can only say that provisions would have to be written in. Whether they will take the form of a separate chapter or merely put into the body of the Charter itself still remains to be decided. The next question is with regard to the creation of an organisation, either a Commission or some other body, which will be charged with the responsibility of looking after this particular work. On that there are at present two ideas before the Committee. One is that a separate Commission dealing with industrial and economic development should be set up under the I.T.O. itself, and the other is that this work should be entrusted to the Economic Development Sub-Commission of the Economic and Social Council. That is a question which still remains to be discussed and on which the Committee will finally make some kind of a recommendation, I hope,on Friday. I fully support the proposal of the Delegate from Chile that we shall have to wa.it until some iecision has been reached by the Joint Committee on the subject with regard to this Article. Mr. LEPAN (Canada): I would like to offer a more radical sugestion. There is not only the problem of what to do about a possible Commission on Industrialisation, but it may well be that in the fullness of time the organisation will find that it needs still other Commissions. After all, we hope that we are not creating an organisation only for a day but one that will last for a long time. If the circumstances change there may be a number of other Commissions required, As the Draft Charter stands at present in Article 61 provision has been made for three 25. E/PC/T/C .V/PV/! 2 Commissions, and room has also been loft for the conference to establish other Commissions. In view of Article 61, in the ,full provision which it makes for Commissions and also for adding; Commissions if new Commissions are needed, it seems to me that in Article 51 it might be possible to strike out all mention of the Commissions. Otherwise whatever Commissions are mentiond under article 51, if it proves in future that a new Commission is needed, an amendment to the harter will also be needed. On the other hand. if the only provision for the Commissions is Article 61, and the phrase that it includes about the possibility of adding new Comm- issions as circumstances may warrant, then no new amendment would be required. I would like to suggest for the consideration of the Com- mittee that Article 51 should simply read: "the orgnisation shall have as its principal organs a conference, an executive board and a Secretariat", and then Article 61 will provide that the conference will set up a number of stated Commissions and will also provide for new Commissions to be added as occasion warrants. Mr KELLOGG (U.S.A.): In reply to the suggestion of the Deleate of Canada, which I think is a very good one, I wonder if we could totally strike out Article 51. Mr. LEPAN (Canada): I agree with that, although I would not like the spirit of hihilism to go too far. Hfollows. H. 1. . E/PC/T/C. V/P7/12 S,, TMHAIRMAiZZN: The delegate of Cuba. ;E. FRESQUET (Cuba): We support the firstoprq)osald mae by the delegate cf Canada, and we think that we cannog eercc with the radical -rposam d3ae by theedicegeto of the Unetod Stescs becausew vith Article 51, we established those mmrzissions as dbescc of the Oagonizaoicn, dn they erc paro uf the structuro cf ehc Organiz- ation. If we delcteAr--ticle 51, ohcseocmm.issionmig-Aht be considered in the future as no important part ofthe Organiz- ation, and peapz)s subject to radicaalc-teration, even obclisd.&l Sc we should establish in this article that these mm.zissions wculd be a substantial' paro cf the structure of thO Crganization. THE AIRMANH.: I believe ehc deeegeto cf Australia asked for the floor a moment ago? M.BURY (Au~sralia): I was mere-l going to support consideration of the suggestion made by the U. S. delegate. THE CHAIRMAN: The delegate of India. MR. MALIK (India): In support of what has been said, Mr. Chairman, may I suggest that it would possibly meet the difficulty forseen by the delegate of Canada if we merely say, here "that the Organiz- ation shall have as its principal organization a conference, an executive board.. .commissions set up under Article 61... and a secretariat"? MR. LE PAN (Canada): It sees to me that that would meet the point very satisfactorily, Mr. Chairman. THE CHAIRMAN: Is there any objection to that last suggestion? Then the Chair will say that he was about to make a gratuitous suggestion along the same lines. The delegate of India, however, very properly has "beat me. to it". I take it that will be taken into the redrafting of this provision, then? This discussion on Article 51 has already anticipated to some extent Article 61. While we are about it, we may as well pass upon that article too. The delegate of Cuba. - 27 - H. 2. E/PC/T/C.V/PV/12 MR. FRESQET (Cuba) Hr. Chairman, do I understand your statement to mean that we are not going to discuss Article 61 at all when the tine comes? THE CHAIRMAN: We have just been discussing Article 51, and I thought we had completed the discussion of it. MR.PRESQUET (Cuba): No, Article 61, I was talking about. THE SECRETARY (Mr.Turner) The reference was to Article 51. MR. FRESQUST (Cuba): Thank you. THE CHILDREN: The delegate of India. MR.MA:LIK (India); I .merely want to point cut that if the names of these commissions are to be retained in Article 61, then we shall have to wait for a decision of the joint Committee before we can finally docide on the terminology of this. THE CHAIRMAN: .Are there further comments men Article 61? MR.FRESQUET (Cuba): I support the proposal made by the Indian dele- gate. THE CHIRMAN: I am turning now to the report of the Drafting Sub- Comrnittee on Articles 76 and 78, paragraphs 3 and 4, and Article 62. I understand that both the English and the French texts of the report cf that Sub-Committee have new been dis- tributed, ana I hope very much that we can dispose of the Report before we adjourn for lunch. I presume that the most expeditious manner of handling it would be for us to proceed at once to a seriatim ccnsideration of the articles and para- graphs taken up in the Report and, as we come to them, I will call from time to time on the Chairman of the Sub-Committee for any comments that he may wish to make - unless he has some preliminary comment that he wishes to make?Mr. Holmes. MR HOLMES (United Kingdom): I can confine my comments, I think, to a very few words. One is an apology that I should have had to abandon . the Sub-Commiittee whn it was only half way through, in order to attend a. meeting of Committee III in this room 7,.- . 7 .-* H. 3. E/PC/T/C.V/PV/12 yesterday afternoon, so that very little credit, I am afraid, is due to me. Hy ether comment at this stage is that I think it will be found that there are two clerical errors, out we will come to these in due course. THE SECREETARY (MR.Turner): One error is rather more than a clerical error; it is really a serious mistake on the part of the secre- tariat, and I think I had better call attention to it new. In the very last paragraph of the report, on page 4, under Article 2 it says "that the recommendation of the Sub-committee was that paragraph 1 of Article 2 be approved. without change". I regret to say that was not the reco.mmendation cf the Sub-Committee. The Sub-Committee recommended that the vwords in the latter part cf parargraph 1 of Article 2, the second line on page 2 of the English version of the Charter - the words "which have agreed" shculd read "which agree". Therefore we should strike out the word "have" and. make the word "agreed" rea.. "agree", so that it will then read "or in the eve. that this Charter has not entered into force by that date the countries which agree to bring this Charter into fcrce", etc. Is that correct, Mr-. Holmes? MR.. HOLES (United Kingdom): 1 must a- that it was this last paragraph of this Report which .was giving me some difficulty. That, I have n deubt, was approved at our last meeting .when I was not present, but I have no dcubt that the Secretary is right. THE CHAIRMAN : The delegate of China. MR .DAO (China): Article 76, paragraph 1, I believe has been amended at cur former meeting, but it is not mentioned in the Report of the Sub-Committee THE SECRETARY (Mr. Turner): If I might answer that, the Sub-Committee did not take up paragraph 1 because it was my understanding anyhow that the full Committee formally agreed and accepted that amendment. - 29 - H. 4. E/PC/T/C.V/PV/12 THE CHAIRMAN: To pass, then, to the consideration of the Report, Article by Article. Article 76. It is recommended that the title of this Article be amended to read "Interpretation and Settlement of Disputes". In the absence of comment, I assume that is approved. Paragraph 2. It is recommended that the words "if the Conference consents" in the twelfth line be deleted, and the following words substituted therefor: "in accordance with such procedures as the Conference shall establish". The Sub-Committee points out that in recommending the acceptance of this amendment, the Sub-Committee was of the opinion that by way of illustrating the type of provision that might appropriately be incorporated in the procedures to be established by the Conference, reference should be made in the Report of the Committee to the proposal that any justiciable issue arising out of any ruling of the Conference (other than specifically encepted in Article 76) may be submitted by any party to the dispute to the International Court of Justice if the Conference so consents by a ote of one-third (or such other proportion as may be agreed) of its members present and voting. The Sub-Committee was of the opinion also that the instructions to be given to the Interim Drafting Committee should point cut the dilemma with which the Committee has been confronted in seeking to give effect, on the one hand to the principle of unrestricted acce scto the International Court in any case where an aggrieved partm iay considert h s i good o&-and- - sufficient reasons for lodging an appeal whilst seeking to ensure, on the other hand, that the prestige of the Organization oand he apthQrity-of the Conference is upheld, by safeguarding f peai~~7a n ~ p9Cl agLiLst- possible absse in the caee of trivial yhzcomment upon this recommennt u rs recoinenidedc change in -s# 'r*''P ~. . ' . s;0. H. 5. E/PC/T/C.V/PV/12. MR. HOLMES (United Kingdom): I think it is proposed at this point, is it not, that we should resume the discussion that started at an earlier stage of this meeting of some reconciliation or cross- reference between this paragraph of Article 76 and another Article which dealt with disputes - paragraph 4 of Article 50. On that, you will recall that the representative of Canada had a proposition to make, which seemed to find favour, directed, if I remember aright, to the possibility that we had not perhaps covered sufficiently all disputes in view of the fact that para- graph 2 of Article 76 is, on the face of it, rather narrowly limited to questions or differences which may arise concerning the interpretation of the Charter. I follows. - 31 - I.1 E/PC/T/C.V/PV/12 THE CHAIRMAN: any other comments? MR. LEPAN (Canada): I entirely agree with the remarks made by the Delegate of the United Kingdom. There apparently is to be a change in the title of this Article which would broaden its scope enormously, and yet the Article under the changed title would still remain much as it was, that is, it would deal with the settlement of justiciable disputes. Now it seems to the Canadian Delegation that there will be a number of disputes which will not be of a strictly legal nature, which will not turn on legal points, and which will not be justiciable. I am very anxious to hear the views of the authors of the Charter as to how those disputes, of a commercial kind, should be settled, and also how much of the pro- cedure used to settle them should be spelt out in the Charter. MR. KELLOGG (United States): On this question I would very much appreciate the view of the other members of the Committee. THE CHAIRMAN: I had overlooked that the Delegate of the Netherlands had previously asked to speak. Sorry. MR. LEENDERTZ (Netherlands): In making this remark I apologise for holding up the work of the Committe. It is due unfortunately to the fact that I was not present last Saturday. On Saturday last I had wanted to point out another possibility of settling disputes, and I would like to know whether the Committee approves of that system. The League of Nations used to have a system of having appointed by all Members of the League of Nations certain economic experts, from whom parties to a dispute were allowed to choose their judge for arbitration. If members think that reference to the International Court will involve very long pro- cedure, they might decide to accept the possibility of arbitration. I would like to suggest that in the footnote to Article 62, paragraph2, the possibility of this system should be pointed out for consideration by the full Committee. MR. MALIK (India): I would like to support the proposal of the Delegate of Canada. With regard to the question as to the extent to which pro- 32. ; ',-"!~~~~~~3 ..'.' -t^ ,- . ;''.'.''','..'.. * ' I.2 E/PC/T/C.V/PV/12 ^ -' A .f vision should be made in the Charter itself, whether we should go into details oraLerely give pover to the Org.nisation to set up machinery, I do not 1=ow what the general feeling is but personally, on behalf of lhe Indian Dclegaeion, we fee. that it would bo best to leave the details ofe fheandMechanig.veto tem ITO itsle, just Eic thon authority. I would suggest that the proper place possibly to incorporate that would be in paragrapa s tof Article 50, where it s'y "o consult with members regarding div-utes growing out of the pro'isions of this Charter and proveme a mechnis:sfor the setWecm:ct of.such disputes." Vociight add, mepecifimcally, "to provide ang zchanis including the setti-up of arbiteation machineap"* or whatevor wording is o>proved. TIE CM=HZJU: Any further comments? L-. BUZI (Australia): It seemsoto the Australian DelegatiOn that the pro- visions of article 50 paragraph 4 are sufficiently wide to cover the future proble-, and most mUtters which are likely to arise will be ;=tters to be settleE by the Organisation, the Zxecutive Board, or the Conference. As for o her disputes, it is almost.impossible to forecast their exact nature at this stage, and the question is whether there is anything we can do heoe which the mpgwnisation wuuld not be ez-oWered to do under article 50 paragraph 4, which seems to us wide enough to cover whatever aay arise. 1i. 11PL (Canada): I do not want to press this point unduly, but it seems to - that it is usefiul for us to get in our mLds as clearly as possimle exactly how disputes night be settled. In the interests of precision and completenels, I would rather be incLined to suggest wording of the sort suggestea by the Delegate of Indii. 1R. DAO (China): I adhe e to the views expresded-by the Delegate of In~ia, to make a reference under Article 50 to the machinery for arbitration. M. I END :XL (Netherlands): I think the suggestion of -the Delegate of India entirely meets the pkint I raised, and I thind it is better to include the -ossibility of arbitration in Article 50 paragraph 4 than in article 76. 33- I. 3 E/PC/T/C.V/PV/12 THE CHAIRMAN: If there are no further comments on paragraph 2, the Secretary wishess to make a comment. THE SECRETARY (Mr. Turner): Before the Committee passes from paragraph 2, I must confess that I am a little confused as to precisely what is intended to be shown on the record. Am I correct in assuming that it is the desire of this Committee to leave Article 76 as it is, and is it the definite understanding of the Committee that it should have the more limited application that it has at present? The point has been made, and I think a lot of the discussion that has previously taken place has proceeded on the assumption, that Articl 7e 76 ai-lies to dp,,utes other than thos -arising strictly out of questions of interpretation. Am . I correct in assuming that the mm=aitt'eIs intention is that the narrowerpp.1lication should prevail and not the wider interpretation? Because if it is the intenti n` to give thiw Tiderp apli- citlon, mora Additionalmsnall draftingmaaemndent would clearly be required. I justawent to know precisely what the record ouccld show on tsin point. JiMAL IIK (India): Is not the wider pp-lication covered bA article 50 paragraph 4;. THE AIRHAM:N; It covers all disputes arising out of that. LT. LMILES (United Kingdom): One thing we might add with value would be, at the end of paragraph 4 oA Lrticle ,0. "other than disputes covered by article 76." That would at any rate clarify the text. MRLEINDEE1RTZ (Netherlands): There is one small objection to the United Kingdom Delega'eIs proposal. His suggestion would prevent merbers from using the method of arbitration in the cases covered bA article 76, anda my be there is a case for opening the possibility of arbitration even in those oases. iR. LME= S (United Kingdom): My point there is that a mechanism for the settlentV of disputes of the nature intended to be dealt with by Article76is really provided by thatAPrticle. I do not wish to limit the first part of paragraph ;4 I wishd my Twords merely to pyply to the pozvszion for a mechanism for the settlmen tof -suhW dispute,' but I think it is perhaps a matter largely of dasfting, and of course it does not touch on the mr±e substantial point made by certain Delegates just nwv, that the Drafting Committee, after this session. I.4 E - ' /PC/T/C. V/PV/12 - =ight be asked to consideansome more specific mechoiism for arbitration of non-interpretative and non-justiciable disputes. M. ; LK (India): It semms to me that.if the Counittee decides to adopt the recommmndations of the Sub-Co2:ittee in regard to Article 76, and in addition puts in a provision whicA has been suggested to Irticle 50 paragraph 4, it vyll ce quiAe satisfactor- be-ause article 76 will give the option to any aggz'e. I party who wishes to go to tfhe International Court o Justice. It is not -andatcry; at g ves the aggrieved pwrty. the option and both procedures, undAr Aticle 764 and under z ticle 50 (), -ill be open to him on these naxticular issues. I do not think there is any conflict there. T.- n:oiJJ£I: We hnve -ot matc a rather iLvoscesszatter, but the di-_u.;ion iill be iart of the lecord and can be m suated by the InterizLiDrdfting Cowm.ttee. I dc not know Yheoher it is profitable t_ pursue the discussion or it any further. Ia. g hoprougl that we conm ret 'h.cuh the Sub-CcmitteeIs report before lunch, and unless members wish to pursue this phase of their discussior. further, I would like to pass on to the next paragraph, if the change reconmended by the Sub-gCommittee in the languae of paragraph 2 is approved. Is there ony further discussion kn that? 35. J.1 E/PC/T/C.V/PE/12 MR. NAUDE (Union of South Africa): I wanted to put another idea into the record for the Drafting Committee to look at. If Article 76 deals with the settlement of disputes, would it not be more appropriate to include under Article 76 all provisions relating to the settlement of disputes. It is a question of whether paragraph 4, if it is to be retained, should not be transferred to Article 76. THE CHAIRMAN: That is a matter which could be considered further by the Interim Drafting Committee. THE SECRETARY (Mr. Turner): It occurred to me that I think it is understood that a Sub-Committee will look over Article 50, and perhaps the Joint raised by the South African Delegate could be considered by that Sub-Committee with reference to Paragraph 4 of Article 50. THE CHAIRMAN: Shall we pass, then, to paragraph 3? MR. HOLMES (UK): I think this paragraph contains, the other slight error to which I referred. Article 76 of the Chater of the United Nations deals with a very interesting subject, Trusteeship, but it is Article 96 that we were applying our minds to. THE SECRETARY (Mr. Turner): That is a typographical error. THE CHAIRMAN: The recommendation of the Sub-Committee is that paragraph 3 be amended to read as follows: "The Organisation 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." The point was raised as to whether the action of the Organisation in requesting advisory opinions in accordance with this paragraph might not place the Court in a position of some difficulty in the event of a question on which an advisory opinion is sought subsequently becoming the subject of an action before the Court. It was accordingly agreed to recommend that this point be referred to the Registrar of the Court in order that his views may be made available . t, . 36. . E/PC/T/C.V/PV/12. for the information and guidance of the interim Drafting Committee. Is there any discussion of this recommendation? In the absence of comments, I take it that the recommendation is approved. We pass to paragraph 4. The Sub-Committee recommends that this paragraph be deleted. The thought behind the Sub-Committee's recommendation to delete the paragraph was that provision could appropriately be made in the regulations to be approved by the Conference under Article 68, paragraph 1, for the Director General or his representative to appear before the Court on behalf of the Organisation, in accordance with Article 34, paragraph 2, of the Statute of the Court. Is there any comment on this? Apparently, this recommendation is approved. In regard to Article 78, paragraph 3, it is recommended that the words "which have already deposited their acceptances" in the last sentence be deleted and the following words substituted therefor: "represented at the United Nations Conference on Trade and Employment", and that the following new sentence be added to paragraph 3: "any instrument of acceptance deposited with the Secretary-General of the United Nations shall be taken as covering both procedures for bringing this Charter into force, unless it expressly provides to the contrary or is withdrawn." The Committee will note that the above amendments to paragraph 3 are proposed pursuant to the note submitted by the Netherlands Delegation in Document C.V/17. Although the substance of the Netherlands proposal was considered and accepted in principle by the Sub-Committee, it was agreed that the preparation of a suitable draft for submission to the full Committee should be left to the Netherlands and United States Delegates, in consultation with the Secretariat. The Sub-Committee further agreed to recommend .... I will stop at that point to get consideration of the textual change that I have just referred to. Is there any discussion? 37. J.3 E/PC/T/C.V/PV/12. MR. LEENDERTZ (NetherIands): I want to explain that I agree with the new wording of the Article as given in this document. I think it covers the points I mentioned. THE CHAIRMAN: I take it that the change is agreed to. Continuing the comment on paragraph 3, the Sub-Committee says that it further agreed to recommend, in connection with paragraph 3 of Article 78, that the suggestion of the United Kingdom Delegate that an alter- native method of bringing the Charter into force would be to provide for its taking effect when a certain proportion of the world's trade was covered by the countries which were prepared to accept its provisions, should be noted in the Committee's report for possible consideration by the interim Drafting Committee. MR. HOLMES (UK): Might I crave the indulgence of the Committee and suggest that although I am nominally, at least, the Chairman of the Sub-Committee, the word "possible" be omitted in the last line but one? THE CHAIRMAN: We Pass now to paragraph 4. The Sub-Committee recommends, first, that this paragraph be amended in accordance with the redraft suggested by the United Kingdom Delegation in Document C.V/24, and second, that the consequential amendment of paragraph 1 of Article 79 be also approved. The Sub-Committee notes that it agreed to a proposal that the report of Committee V contain a recommendation to the effect that members having inter- national responsibility for non-self-governing territories should furnish a list of such territories in respect of which they accept the provisions of the Charter, and that such lists should be incorporated in an annex thereto. Is there any discussion of that .mx thereto, poi t? In the.ammsenc of aog nt,' I tske- it tmmat the recouended aragres in peza&Eaph 4. are approved. to A-e cle nQQ, ti.e 2. mhe Sub-Co.-mttee cAnsidered articlee- ion with2noe o ,the oint raised by the Netherla.gds eleFation 38. J.4 E/PC/T/C.V/PV/12 regarding entry into force, and agreed to recommend to the Committee that the words "which have agreed" in the next to the last line of paragraph 1, be chanced to read "which agree". Is there any dis- cussion? MR. NAUDE (Union of South Africa): I want to go back to the previous note at the middle of the page referring to non-self-governing territories. THE CHAIRMAN: Could we conclude this matter, and then return to that? MR. LEENDERTZ (Netherlands): I have a very small drafting point I would like to make on Article 78. THE CHAIRMAN: Now that we have started on Article 2, may we finish with it? Is there any discussion of Article 2? If not, I take it that the sugeested change is approved. We will now return to consideration of paragraphs we have already approved. MR. NAUDE: (Union of South Africa): The reason I spoke earlier was that I was trying to figure out precisely the meaning of the note. It is still not clear in my mind and I gather that it is related to the United Kingdom Delegation's Document C.V./24. I merely wanted to place on record that there may be some dispute at some future stage as to what territories are non-self-governing territories, or are part of the metropolitan territory of a member. In that case, the South African Delegation will have to take up a position in accordance with whether such a dispute arises or not. MR. LEENDERTZ (Netherlands): The point I want to make is that in Article 78, paragraph 3, it says that when the number of acceptances equals 20, the Charter will enter into force. I wonder whether it should not say "20 or more", because if on a certain date acceptances numbers 21, 22 and 23 come in on the same day, there may not be a date when the number equals 20. THE CHAIRMAN: The record will contain your suggestion, and the Drafting Committee can take it into account. 39. J.5 E/PC/T/C.V/AV/12 MR. LEENDERTZ (Netherlands): As to paragraph 4, I would like to point out that the Netherlands overseas territories, as you may know, are in a state of reconstruction and revision, so that with respect to the paragraph, I would like to reserve the right to my Delegation to come back to tjat Article as soon as the situation in the Netherlands overseas territories has been clarified. THE CHAIRMAN: With reference to the suggestion made first by the Netherlands Delegation, I assume that there is no objection to a drafting change on those lines. 40.s R fols0 K 1 E/PC/T/C.V/PV/12 I hope that we may therefore agree now. It is now 1 o'clock, and time to adjourn. the calendar schedules a meeting of this Committee for 3 o'clock. There are, however, some complications that have set in which affect at least myself. At the time the Committee was scheduled I did not know th ere was planned to be a meeting of the heads of Dele- gations at 4.45. I am not a Head of a Delegation, but I am a Chairman of a Committee, and Committee Chairmen are supposed to be present. I do not believe that it is necessary for me, however, to be present throughout the entire meeting, and I think it would be possible for me to continue here. If not, the Vice-Chairman could take over. I think I could continue at least until some time after 5 o'clock, and if it were necessary to report on the work of Committee V at the meeting of Heads of Delegations I could probably do so towards the close of the meeting. Nevertheless, we have a large agenda for this afternoon, and there are the important questions of voting and of permanent membership on the Executive Board. I would like to suggest, if it were agreeable to the Committee, that we alter the arrangements and meet at 2.30 instead of at 3. I wonder if it would be possible for Committee members to convene as early as at 2.30. I hear no objection, and therefore I assume that it is agreeable. Or do I hear an objection? Mr DAC (China): Although I would like to comply with your wishes, I have some difficulty in being here at 2.30. Mr HOUTMAN (Belgium-Luxembourg) (Interpretation): It is already five minutes past 1, and it will be difficult for us to be here at 2.30. THE CHAIRMAN: I hear some objection, so perhaps we had better go back to our original plan of 3.o'clock. I am very much concerned with getting through this Committee's work this week, and it is difficult to do so if we begin work in the middle of the afternoon and then stop working shortly after the middle of the afternoon. We will reconvene at 3 o'clock. (The Meeting rose at 1.6 p.m.) (For Verbatim Report of afternoon session, see E/PC/T/C.V/PV/12, Part 2.) 41. L follows. E/PC/T/C.V/PV/12 - PART 2. The Meeting resumed at 3.10 p.m. THE CHAIRMAN: It was agreed this morning that we should have successive translations this afternoon. I assume that preparations have been made for that system. I wish first to invite the Delegates of Belgium and the Netherlands to comment on their joint proposal which was circulated to this Committee as No. 21. I leave it to the Delegates to decide between them which one shall start. Mr HOUTMAN (Belgium-Luxembourg) (Interpretation): Mr. Chairman, the Belgian and Netherlands Delegations think that the question of voting is a very important question for the future success of the Organisation, be and should/selved with good will and understanding. I have been greatly impressed by the vigour with which the various Delegations have supported the various contradictory views on this question, and while paying tribute to this dynamism which speaks well for our interest in the Organisation, I would be happy if our modest proposal drawn up in a spirit of compromise might meet with equal success. On the ground of legal equality for all nations, I concur with the honourable Delegates for Brazil, India, Chile, Cuba and China, and wish also to second the views expressed in the American draft Charter, as they appear in Article 53, and according to which each member of the Conference shall have one vote. Indeed, it is important that each nation, whether big or small, should be heard at a conference and should expound its ideas, desires or demands. This is a normal consequence of legal equality of nations, and the very basis of the feeling of confidence and co-operation inside the Organisation. That is why the Belgian and Netherlands Delegations deem it adviseable to abandon the proposition of differential voting, which would only give to each country a vote in proportion to the part it plays in international trade. Such is also the reason why we think it useful hot to change the text of Article 58. However, we think, with the honouralbe Delegates for France, Norway and Czechoslovakia, that we should allot permanent seats to the representatives of great economic Powers. We might 42 L. 1 /P C V 1~~~EArC/T/d'.v/PV/i 2 L. a Juetify thio view if w, tookintQ account what has been done by the United Nations Charter, which we have all signed, and which established similar distinctions inside the Security Couowil betweenwgreat PO'ers and Porers with limited political interest, and invoked, as has already been done, many other scmilar decisions w!ibh are issued upon the voting system which is applied by other specialised agencies. We might draw the attgntion of curacollea,uessto the fvct that inEide I.T.O., at far as concerns inier-governmental agreements on primary fommodities, the Dra-t Charter which is proposed to us antic- ipates appropriate representations to member countries accord- ing to the imrortance or the intezest they have in the import mm use of cerWeim goiiodiaies. .e ri;ht pleid, as the Del- egatea os the acuth Afric.n Union -nd Canada have done, that the various namions who have esonoric interests muot necpsarily have different responsibilities, but we believe that the safest ground to justify our proposal is that we all certainly have an integest in guarsnteeinj the future of the internatfonal Org nisation Tor trade, and ensuring that these objectives will.realWy be achieved- te can only be struck by the width of the aims pursued by the Organisation, such as they have been revealed already during the work of the five Caquittees, =nd conse-iently by the importance of the economic awd ftnancial means re will have to use in order to achieve these objectives. Whether we are concerned with tariff negotiations of a nature which will open to all countries ,:: the rtets ofthle world, whe-her we are concerned with offer- he . or wh . - . .e . . ing-to countries vhich prod-ce primary comodities guarantees that they. will be able to distribute their products at stable d arei oncemned.c q1ief1yywi lon rm projects & -viee~o- hlpi. irnon -tecbnealy- dev lope'd countres - ic iy d alor -±ndustri development., sionextoniamorr freOcrang o ixo h: -is only possible- 431 - : ., ,X. .:-,,; t ,, v , -. -. ^. . .. L 3 ..*Z -7 X l E/Pd/TfC.YJVini throughen ohercinefatcd actcon betwe. tb' ehi eeonomi Powers on which ultimatelyfdeaend t e technical and £intncial- needs which cannot be dispensed with. Such.a concerted action on the-international plane is only possible if these big economic -o;ers -re remaesented in a permanent nmnner inside the Execut- ive Board jugt es. they oould be in a -ovcrning body responsible for the routine .ork; but wo aking under the control of-n Assembly thich, under our systems is represented by the Conference. Eoroover, .-e should not forget that in our project the blg economictyo.ers re stiil a minoriT7 inside the Exec- utive Boaed .ase-ecl' .w insidakthc Confcronce, ;hich meles it impossible for themllto have exclusive and a11 round control of the Organisation. I wish to add one word. We have no eesiee to indicate the pr ciec criteria in order to rcach a definetioooof wh.t must be undcrstc:d by the economical impWetance of a country. el think that the problem should be devided and that it ks wisc to leave that tas' to the Conference ihich will have to decided with all necessary guaran.mes, sincakel1 decisijns nust.be teoln by a maJority of two-third, of its members. However; we wish to stress the fact gthat in.nsome invotved Oranisatioz such as "he Trade Organisaeion, orgarisations the tcrms of reference of which are eco,omic. as well as sroial; satisfactory crite^t hav been found and applied.i It is obvious that the task will be easier to solvanif it is dealt with by cm Internat- ional Trade Otanisation -hcch, as its name and fuuetions i dicate, should work in -the interests of all, and, without prejudging the decisions reached by the Conference; should be baeed, ae the Australian Dclegato proposed, upon the volume of exterior tradc of each State, which is already efpressed in figures in o-ficial statistics. follows, 44 E/PC/T/C.V/PV/12 Then we have envisaged the possibility of raising the total number of seats, permanent as well as non-permanent, which are at present anticipated to be 6 permanent and 9 non-permanent, to 8 and 12 respectively, to meet the case of the importance of the ITO increasing owing to the adherence of all countries, or changes occurring in the contributions of the various member States to international trade. It is obvious that the Belgian and Netherlands Delegations would be pleased if the Committee deemed it useful to discuss their thesis, with a view to its amendment and improvement. In any case, the Belgian and Netherlands proposal ha no other aim than to help the Committee to reach a compromise and an understanding, thus proving our wish to cooperate towards the success of our work. THE CHAIRMAN: I will call the Delegate of Brazil in a moment - I should like first to give the Delegate of the Netherlands an opportunity to add any comments. MR. VAN TUYLL (Netherlands): Thank you, but I have nothing to add to the statement of the Delegate of Belgium. THE CHAIRMAN: Before I call on the Committee for comments on the statement made by the Delegate of Belgium, I should like to make a few observations on the subject matter of our discussions this afternoon. What I have to say will deal chiefly with the manner in which we might proceed with our further consideration of voting and related questions. In our discussions to date three more or less distinct propositions seem to have been advanced. The first is that voting in the Conference and in the Executive Board should be on the basis set forth in the American Draft Charter. The second is that voting arrangements both in the Con- ference and in the Executive Board should be on the basis of one country one vote, as in the Charter, but that provision should be made for certain countries to have permanent seats on the Executive Board, and third, that voting, in the Conference at least - as to the Executive Board I must add clarified the that our discussion has not so far/position - should be on a weighted basis 45. M. 1 with or without provision for permanent membership o e Exec'hiveutiX d >> /C.V/PV/12.- . .- ...-. - *-. -..-. vi. Board. Thoswhseer to bd the three ma oratgories in ich the is- ny sieon thus fax has fallthe Subject to ary-vows which members of -f ; Comittee my later express, yr feeling is that there is little to be gained by our attempginZ xrhfurther consideration at this staxe of tbe- third. proosition, namely weighted voting, and that the suggestions made by the tnted Kingmolm Delegation in this respect should sirxy be noted in vheexeport. Several other Delegations hare c=pressed some measure f sympathy with the weighted voting; principle. If they should wish to join with the United Kingdom member in an effort to coicert their various ideas as to a system of geightinC, that might, I think, advantaZeously be done. It would certainly be helpful to tho interim drafting committee if they are to have thc responsibility of drafting alternative provisions based on the views expressed by members Df this Committee. I think it is iportant that we should& givc as co=-lete and clear instructions to the Interima Drafting Committee as we can whether these have reference to majority or minority views on. ane subject. However, I do feel that a goner- al diocunsion on this matteroof. weighted vttirg should not be enc-uraged this afternoon, but that the Committee, on the assumption that equal voting will apply in the Conference, whici view has been expressed by the major ty of delegations, - should. proceed directly to a more thorough consideration of questions relating to Executive Board membership and procedure. A number of somewhat differing ideas have already been expressed with reference to the provisions of Article 57, and I believe that we must attempt to secure as wide an area of agreement as possible within the terms of reference mehave suigesrpd, namely, that we assu for the puxuoses of ou further consideration of this Article, that the principle -f one 0U0=trY om vote will apply to voting on the Board as well as in the Con- ference. it least three different proposals with reference to Board memFersh-p havea So allrm been asdvulaed. ?ikst,: tht i Members holdd be on the samexbasis, that is, that the present tect of Article 57 should 46 E/PC/T/C.V/PV/12. remain. Second, that no express provision should be made for permanent members as such, but that Article 57 should provide for say five members of the Executive Board to be eligible for immediate re-election, the remain- ing members to be elected on a rotating basis. I believe that was the suggestion of the Delegate of Norway. Third: that there should be definite provision made for a certain number of permanent seats. This, I understand, represents the three major categories in which the suggestions that have been made regarding Executive Board membership would fall. The first two of these proposals, namely, that resting on the Charter as it stands and that made by the Delegate of Norway, would seem to be quite clear and simple. The second would involve only slight modification of the present text. The third proposal, however, that straight-out provision should be made for a certain number of permanent seats, involves more substantial amendment and would probably require consideration by a special Sub-Committee, whose job it would be to examine particularly such considera- tions as the following: I mention these considerations not with the idea that we should attempt to write into the Charter details which had best be left to the Conference, but merely as considerations which should be borne in mind in connection with our further discussion of Article 57. There is, of course, a question as to just where the line should be drawn. For purposes of discussion, I would suggest that some of the considerations which might arise would be first, what principles and procedure should apply in connection with the selection of non-permanent members; for example, should they be selected on a rotating basis, as some have suggested; what consequential changes would be necessary in Chapter 7; what additional safeguards, if any, would be necessary to protect the vital interests of certain members; in short, what I am attempting to suggest with regard to the proposal that straight-out provision be made for a certain number of permanent seats is that we shall not be very helpful to the Interim Drafting Committee if we do not carry our formulation somewhat beyond that point. Just how far we shouloirarr h d cary it wingout. gettiz too much over , ,~~n we U1 to ,uc . . . E/PC/T/C.V/PV/12. into the sphere of details which should be left to the Conference itself is perhaps a question that will deserve attention. Now, with apologies for having made such a long statement at the outset of our discussion, I will open the whole subject for debate. I had hoped, however, that this statement might serve to guide our discussion in a manner which in the long- run might save time for the entire Committee. If I have gone astray in my statement of the issues, and no doubt there will be some modifications suggested, I can only express my regret and add that I am trying to be helpful and not hurtful to the progress of our work. I believe that the Delegate of Brazil wishes to speak. MR. PARANAGUA (Brazil): It seems to me that once more the small countries show their commonsense. I say "small countries" meaning territorially small; they are great in other senses, and I think we can follow their advice not to take this question too seriously. It seems to me that we have to face two different questions: one is about the voting in the Executive Board, and the other in the Conference. If the suggestion is made that a privileged vote should be given in the Conference and in the Executive Board, I would be against it, because the result would be that some countries would not be prepared to accept majority rule, but would seek to impose minority rule by means of privileged voting. Speaking plainly, that is what would be the result - no majority rule, but minority rule by means of privileged voting. That I cannot accept. So much for the first question -- and I notice that Belgium and the Netherlands have agreed on the point, one country one vote. Then we have the other question, of taking into consideration the economic or commercial importance of some countries inside the Executive Board. That I agree is reasonable; not that they will have more respons- ibility in the Executive Board, but they have wider interests. That I agree. The question is, to find a way to take this wider interest into consideration, im- and studying the question I have found that the averages of some/portant units in international trade are in the following order: United States with 13.8 more trade. N.1 E/PC/T/C.V/PV12. The United Kingdom with 10.4 per cent, and then, if we take the group of India, we have 15.10 per cent., and Latin America, 9.10 per cent; Africa has 4.60 per cent., and Oceania, 3.03 per cent. THE CHAIRMAN: I apologise for interrupting the Delegate of Brazil, but it is not clear to the Chair just what those percentage figures are. MR. PARANAGUN (Brazil): It is the participation of these groups in world trade, according to the League of Nations. The League of Nations divide world trade into groups: Europe, Africa, North America, Latin America, Asia and Oceania - six groups. In studying the question of permanent representation, I found it would be reasonable to take into consideration those groups, and that the permanent seats would be according to those groups. I felt that we could solve that very difficult problem with a proposal for redrafting Article 57. It would be changed in some paragraphs. Paragraph 1 would increase the number of members of the Executive Board. It would read in this way: "(1) The Executive Board shall consist of 20 members of the Organisation. "(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 Organisation 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, anjd Africa; one director. The other half ~e -Ba .a. t . ar- of the mebership of the-Executive Bod shall be elected each year - b :the Conarence Ln t_ the :eibers not having -npointed.. any ezscutive diregitlor.or retiriM- E, er Ehall be' li~be f - idate re-eltiect. - - '(J)A cwo, in th aative po stion in mrld trade of' , .- .a' . i-. 1 ' ' : . N. 2 - ---: - . E4PC/T/C.V/,p/12" mibr countrallppointing an executive director shiri be taken into.,' consideration at the end of each ten f five years and the Executive` Board shall ke. recomendations to the Conference, in order to implement the precediri paragraph. "(4) allh Yedber of the Executive Board shba2 have one representative, and iay appoint alternates and advisors to its representatives." That is the way n rhich I found that, without saying, that the seats are permanent, ian facdg they are. In this way we cknowlere the special position of the different groups and the different countries inside the Lroups, and they practically would have a permanent seat. That is zerely a suggestion, because what we are discussing here will pass throuoh many stateg. From here it goes to the Draftina Cmmnittee in New York, the Drafting Co-:ittee in New York sends it tmiGeneva for a secong Preparatory Comi~ttee, and then it Loes to the Conference in the outsn of next year. This is a simple suaLestion go see whether re can find - common Lround on which we can aaree without maving vigorous discussions such as Oy colleague ng om Kelv.:i spoke of at the beiinni. of this meeting. ZZ CHilviZma The Delegate frola razil has inde :sme very concrete smgges ions witA regard to an aiend;ent .to this article, and I thought it would be easier for the Co~mittee to discuss those suggestions if copies were smembk aff and distributed to each bailer of the ndniittee. . Tht is being done, amn they will be ready later. In the meantime,mseveral other 1embers of the Com;ittee have asked to spBakg mI believe the Delegate of Del:iuz wishes to add something to his original coun-nts. AR. IOUiN (Belium-Luxemboura) (Interpretation): I apologise for takinngthe floor sm soon after havirX expressed .y opinions before, but I lant to vake my position more precise, particularly after what the Delegate of Brazil has said. I feel that there were some very interesting proposals in what he said, especially concerning the 50. N.3 E/PC/T/C .V/PV/12. third paragraph of Article 57 as modified by the Brazilian Delegation, which says that any change in the contribution towards international trade may be considered by the Executive Board with a view to modifying the former disposition. This seems to me to be more subtle than the proposal which I submitted to the Committee. But for the rest, I would have certain reservations to make. The Delegate of Brazil has mentioned the difference in regard to certain other Articles between permanent representatives who would represent various economic powers and nations who would have different interests. This seems to me to be very important, because it brings closer together the views of the United Kingdom and the United States. The United States proposal is one country, one vote. We are therefore moving in the direction of agreement. But if we all agree that the most powerful countries must have some special representation, why the mention of geographical basis? The geographical basis of a country is not necessarily a criterion of its commercial importance. If we are basing our consideration upon geographical importance, then countries like the United Kingdom, the Netherlands and Belgium would have an advantage in this, because according to the map they would have it may be one director for their continent and some fraction of a director for their Colonies. The proposal of the Belgian and Netherlands Delegations followed the Charter of the United Nations, particularly Article 23 of that Charter, concerning the Security Council, where it is anticipated that there will be eleven members, five being permanentmembers, and six other members who would be non-permanentmembers, and those members would be elected by the General Assembly. The non-permanent members -- .t - . De . ai and this mgationeet the view of the Brazilian Deleation chiefly pppointed thetakin& into account their quota and fe - iangaphical basis Mentioned by the Brazlian Delegate. To satisfy ~~~~~5. N.4- -' E/12/T/C.V/PV12 the Bragilian Delenate,wehy could q notmidopt a si jlar system wgich would iitance importnce to the economic powers upon a leo-raphicaJ basis? mhe non-peroanent eatg would-be Liven zutatis Lutanbis upon a lasis which would hepend on te interest of those countries towgrds the Or;anisation and alro on a fais ,eoaraphical representation. I apolocisegfor taloint the flcor forgsucm a lone ti;e, and I wishmindo legaeind Dei.eaams that I :. not the only author of this proposal, butethat the Nctheglands DeleLation have had a hand ma it, and zry wish to speak about it also. CHmiR-TN: So;egother Deleaated have Lske2 for the floor, but in view of what the NetheglanmayDele;ato a have tc say, I will, mmth the Coaiittee's permission,himll upon r.- first. lia van eUYLL (Nethtrlands)Belgiathe ege;ian Deletatemhas asked ne to Live ~r opinion ang you hme the oppurtunitypprtunity, I would like to add to lgat the Be3:ian Delegate has saim that, in iy opinion, we must keep the aatters cle-wa Do wea a.nt to hrve cgitgrap of Eeomrrahical izportance, or the criterion, of economic ;iportance? In the opiBiog of th sel ian and Netherlands Delesations, we think themlest sbste would 'e to introduce the criterion of themeconomic izportaperman the ;e.renend seats, ana to use peoz-aphical criteria for mhe non-perLanent seats. I believe the proposals of the DBlegate of irazil, which I have not yet been able to consider very closelmixtend to !iZ the two criteria for the permnent seats, gnd not to Live any criteria for the non-permanent seats. I think that the position would be clarified if we knew exactly what we want, and I believe tgat the Beliian and Netherlands proposal kept both criteria in mind and deamt with thei in a way whqch gives eoual value to those criteria. For that reason, I endorse the woBds of the bglgian DeleEate. 52. N.5 E/PC/T/C .V/PV/12. THE CHAIMAN: The Delegate of New Zealand wishes to speak. MR.LAURENCE (New Zealand): I address myself to Article 53, and in particular paragraph 1. This Delegation, I think, is the only one which has not yet expressed a view on the Conference date. Consequently, we have had the benefit of hearing other views advanced. We have had the benefit, too, of hearing views advanced on other sections of the articles of the Charter where the principles, I think, have a direct bearing on the difficulty that this Committee is experiencing in respect of paragraph 1 of Article 53. In discussion of Article 78 concerning the entry into force of the Charter, there was emphasis placed by certain Delegates on the point that the adherence to the Charter by the important and major tradingnations was a paramount consideration. We believe that the adherence to the Charter by the major and important tracing nations is not only of importance in connection with the entry into force of the Charter, but it is of major importance if the International Trade Organisation is to be a success, In respect of article 76, Delegates were very concerned about the middle course between full access to the Court of International Justice, and. in the other extreme, there was concern expressed about the possibility of trivial and vexatious issues being broughtbefore the Court. In respect of article 76, I think it is relevant to say that an issue of the same type and probably of equal quality, arises between the question of whether each State should have one vote, or whether some weighting should be given to the votes of states having considerable interest in international trade and commercial affairs generally. To make myself clear on that, to say that one state should have one vote is not, in my opinion, the solution of this important matter. - 53. N.6 * PV/C/T/C.V/A/'12 mhat leads .e back to the pomnt that I -ade in Aespect of Xrticle 78, that it ismpot only iLiortant to have the adheremce of the 1ajor train nations to the entry into force of the Charter, but it is iz-ortant toupave thnds uport arS full cooperatmon of the Qajor tradin nations ir respect of the operationg of the Or:anisation. Nol, as we foresee it, if you have the vote of a state which has very little interest innanternatiomnl trade, aoth in an nseolute sehso and in the sewse of the -orth of their trade to the nationals of that stmte, it seezb toquitew 'eg.uite aron: teat the vot, of a major country, whether it be thegdomted Kin:c;i, the United states, Russia, nyance or azT one else, sgould bebnesatived 'y the vote of that one s tte; and it is not ghe way to Let full cooperatmon of the iajor nations in the operatiOngaof the CrLzniAatwen. .s -; see it, the position .ay arisemahere you ioy have onecr mmae of the -:jor nations choosing; policies which ormpaot iw sy-.>thy vith the operations of the IntermationaganiationraniAatwion. =s -e ghtedt, weihte! votes on theBEardutive voua are not suoffsetting cffsettir, as a factor, Because we cannot overlook the proAisions of .whicleg55, ;i;ch Live the Conference theofinal authcrimy to deter.ine policies of the n andsation, anapiliis the xooicies ratherdmian the a?.Lnistration, of twe policy, -hich isedone by thtBoardutive 2carc, that is the poinmpof real i.oortance for the succesg nf the Ornarisation. The position, then, is thag even votesh theure.. of or own country vould, I think, eworainly b-owrth more on the basis of one state, one voteoulhan it woaa be om any,eightingh waijhtint that is ligely to 1e Lenerally acceptable, we cannot ovempook the i.Lortance of the realities of the -ituation tmat if the Lgjor tradinE nations found that in the Conimpence on L-.ortant policies at issue they had the equivalent of what reamly can be Lade to be no say at all, it would be not only a possible but a probable consequence that you would lose the cooperation of thoswhnations, Aimch is so L.portant. 54 N.7 E/PC/T/C .V/PV/12 Therefore, our view is that the principle of weighted voting should be introduced in article 53. 4 We have not evolved a smstez ofgweiLg.iF. mPro; our point of view, of course, it is of interest to us to plame aiph sis on the significance of the external trade of membeSiler rrthe: than, say- on, the national income of mhm ;e-ber, but we have not carried our thought to the point whwre Ne can say that the melue of the external trade, in an absolute sense, is the basis on which external trade should be compared, or whether it is the molute of the trade expressed in relation to the populatioW. .e have got _ow doen to those details, but the case fhr tie principlewofgveiLhted voting appears to oe se clear and so necessary for the full cooperation of the nations in the working of theganisation that:we e have clearly resolved our ghouLhts on that paint. On the other issue of the method ofgweivgtinL, we appreciate fully the complexities that enter into it, and I thInk T could illustrate the complexity by following argumenttr.et of the Delegate Bor Irazil, who vas so strong in his emphasis on the point of one state, one vote in the Conferenbe, tut has introduced into his mentent gorgEeoEraphical representation, I thibk, fases which are not at all consistent wihh tie argument for democracy and demcratic principles which he advanced in connection with the discussion of article 53. I am not ready to discuss those details. simi siply pointing it out as an instance to show how easily we car. lead ourselves into inconsistencies if we regard the issues as gein& essentiallmpleple in this weighting; question. 55. . ls 0.1. E/PC/T/C.V/PV/12. - Part 2. > MR. B URY (Australia): I would like to suggest thai In our instructions to the Drafting mo mittee, we ask them to set out the various alternative schemes which have been put forward. I think every individual country hasxprercssed its vwe's. Although iw .ould be a staktae to postpone any issue upow vhicw ve could reach finality, these are questions on which govern- nmnts are acutely sensitive, and there are a number, pf proJositions which havepbeen -utwhere :hich they have not had time to consider. There are a nufbnewol 3ne ones as far as the Austdiian Aeoegati n is conceandd, cai I think it would be more helpful to us if tfe Dra-ting Committee set out the various possibiliwies ,which xould egablen-over-ments to study the question so what,wehenet mece, en Gencva in March or Awril, -e shall then b e in amuch better position to reach finawity 'hicht at -his stage is clearly impossible and, evwn if -emdid, aight be gone back on by various governments. AIRMAN-L4LJT: The delegate of the United Kingdom. LME HOI ZS (UKited iingdom): I had not ieterprcted your verj heremar rerizks at the beginning of this meeMr.g, a. Cn.irmar, as debarring us from a dis- cussion on the question of weighted voting in the Co-ference altogether, hnd I 'ave noted that the subject has reappeared. For myself, however, I do not wish to go into any detail, but to say that the representafive oL Australia whj has Just spoken has expresyed vei much the feelingmthat -y delegation has on this subject. We have, aK oou Lnqw, put up m scheiewithout working it out in any great detail. 56. We have suggested certain headings which might be taken into account if it seems desirablefor one reason or -another, that sysstem of weighhted voting should be adopted. We have also felt that there was some connection, though not a necessarily binding connection, between weighted coting and permanent seats on the Board of the Organization. We feel that several questions have probably yet to be thought of in this connection. It may well be that our original ideas of what elements should enter into such a system are not in any way exhausted, We had suggested, for instance that there should be a basic element and some weight given to international trade - perhaps a great deal of weight to that and perhaps some weight given to national income. It has been suggested, very reasonbly perhaps, that population should be taken into account, or given some weight and it has been suggested, again very reasonably, that the proportion - I think that is one way of expressing it - of a country's inter- national trade to its whole trade should also be taken into account. Now what seems to us to be wanted is for the only body which can, deal with this matter at some leisure and in some quietude - that is to say, the Drafting Committee - should, among other thing, work out -it would not be a matter of great difficulty but in some detail - the sort of position which.would be arrived at under various alternative weights for the weighting. That would not commit. ;ove&brnments in yrW way, and thisembeting, of course, 57. _ . 0. E/PC/T/C.V/PV/12 ""'""''''''';/L2"3V:>' itsele i8 aon-commie aep-We fe0l th-t for thcirp'm ' rcsentativcs e to0c countries around this tablto' ave tas bee ouic os a pro osv.Jsuch c s wo -orselvea had eut forward, would be for it to bc translated : intl cencrete tcrxm pcrhcps under v~rious aLltcrna- tiinssystcms of weighting. If I imy, for -xstance, testingr e. moment to tho cxtremcly intercting pro- pesal put,forward by the Brazilian rcprcscntativeG thorc g;ain I think it wouJA be quitc appropriate formthe Draftiag Cornaittcc tL Cxminic the iatter on those lines. There again, some tr.nslation into concrete terms would no doubt bc possible for the Drafeing Corimdiiu to undertake, and would bc very snteresting and helpful for tho couxtriks to have when they rcsizx thcir discussions. We havc had some criticism of the system of weighted voting. We have had, it is true, some eupport for what the Noe 2icland delcgatc has said, tith ver7 much of which I am in agrceacrt. One poimt of criticism has been that our adducerent of a parallel from the fund and the Baia ;as not a fair paraIlel to bring forward. It has anerged. T think, from the discussion this afternoon that that is not wholely the caso. It has been pointed out, I think with considerable justice, that the Organization mustedepend on its successful functioning ovcr a number of years on the strong support of all countries, but not least obviously of those coun- tries which have a large share of international trade and which are conomically important. The Organization t as I think will be 58. 04. E/PC//T/C .V/PV/12. shown by the draft instrument which may take more shape at any rate as a resultof our labours here in Church House) will provide a certain element of mutual aid amongest all but it w;ill also involve, espcially, in. those sections which may relate, for instance, to industrial development of ,uder- industrialised or under-developed countries some of the important economic countries in having to help,by their experience and by their share in trade some of the other countries. In other words the contribution towards the whole scheme which the more important econmic countries, from the economic point of view, will have to make will be a larger contribution than that which the smaller countries can make. I introduce that consideration only to show that one, at any rate, of the criticisms directed against our original arguments for the system we advocated was, I think, misconceived.d. So, Sir, I would like to suggest, in endorse- i-nt of what the Australian delegate has said, that we could aecl with this question of weighted voting by giving it as a direction to the Drafting Committee that they should take, into account all that has been said on the sjectOt here, tekc into account alt vhe elements which have been suggested as, in certain ciumstancess; reasonable elements, take into account if you should have the system at all, andranxrslate for us against the tem6 we meet again those alre.- tveivsystems proposedO niato actual rmnus, providing r , as I have suatested, aa. olai ±n the sense that . E0 59.. ,-. 0.4. O . 5 . E/PC/T/C.V/PV/12 no country would be without a. reasonable, basic vote and perhaps also a ceiling, so that no coun- tries voting powers run up into some astronomical height, and that we should then be able to consider without; so to speak, those hang-overs too strongly, the other question which we have been touching on this afternoon, the question of permanent seats on the Conference, and perhaps on the Executive Board. That is all I think I have to say at this juncture: THE CHAIRMAN: Two delegates have asked for the floor, but before I call upon them, I would like to make one or two remarks thatare designed to clarify a point or twothat came out in the remarks of the delegate from the United Kingdom. First of all, and very inci- dentally, I should say that, of course, in my earlier remarksI did not mean to debar the dis- cussion of anything- of a Conference or anything else - but I was only meaning to suggest that we ougt to focuss our discussion this afternoonupon Article 57. I think we all feel very much gratified that the delegate from New Zealand has expressed the position of his country on this matter of votingin the Conference. I believe that New Zealand was the only country, that had not, up to that time, expressed itself onthat subject, and I am very, glad that we now have a complete expression of the views and position of .the members of this Committee on the subject of voting in the Conference. Secondly, I want to allude to one suggestion made by the delegate of the United Kingdom which I think deserves some comment from the Chiar. He has 60. O.6. E/PC/T/C V/PV/12. renewed his plea for some sort of system of weighted voting and has, I believe, suggested that the Interim Drafting Committee might address itselfto this ques- tion writh a view to seeing if some sustem could not be devised that would be suitable. Am 1 correct in that.? I do not want to misinterpret. MR. HOLMES (United Kingdom.): I suggested.thatit would be easier for this question to be considered at another Session of the Committee if the Drafting Committee had, witlhout any sort of commitment on anybody's part, looked into the matter and drawn up a scheme or schemes which took into account some on the views which have been expressed, or all of the view which have been expressed here, about the weighted voting and the element .which might enter into it THE CHAIRMAN.: Well, with reference to that, I should point out that it is my very definite impression, from having attended the meetings of the heads of dele- gations and committee heads, that in this matter of the Interim Drafting Committee, it has been the view of the delgation heads that the Interim Drafting Committee should be a purely technical Committee. and that it should have no functions of a fact- - finding or a subsidiary character; it would be a purely techniical drafting committee. If that is the case, I should have thouat it would not be appropriate to turn over- to that Committee any assignment having to do with the study of weighting-indices and the making of alternativerecommendations with regard to any systems of weighting. I do not believe that would be appropriate for them to undertake.. - er fore -as sukmig that re ore- as suingis 0.7. E/PC/T/C. V/PV/12.- coreict, to ecnew tec suggestion. that I mde at teo outect, that thoec of tisi Cmnmiteeo, who arefIriendly to, or tolerant of this view that terec-should be -a eiihtecd system of voting in teo Confee neV, should cnecavour to concert their ideas and eecipf teoycan agree upon, some system of weighting, or even alter- native systems,- I know that the delegations of the United Kingdom has already made some suggestions along that line - and that these should be available to the Drafting Commiittee and, of course available to the Conference when it assembles in the spring. I do not believe that the-mattercan go much beyond that, and I have a great deal of sympathy for the vicew expressed by the delegate from Australia, that the matters which we now are discussing with regard to voting and membership of the Beard are matters on which we cannot be in any sense definitive or final in our discussions at this Conference , and that they will no doubt require -further consideration in the interim, and will have to be taken up again in the spring. I apologise for taking so much time. when other delegates wish to speak, but I felt that that matter ought to be clarified. The delegate of Cuba. MR. ALAMILLA(Cuba ): I do not hope to solve this difficult problem of the vote but will of all explain our specific position on this matter as clearly as possible. Then I shall offer some- negative criticism on what we have heard and on things under the Charter, and, later, I shall try to give some positive sugges- tions which may be of help in the future. 62. 0. 8. E/PC/T/C.V/PV/12 Out position in regard to the vot of the Executive Board is exactly the same as it was on the Organization, that is, that all the. members should have a single and equal vote as anyother memberof the Organization. Therefore we do not believe that a plural vote - which is what we call it in my country - would solve the problem. On the other hand, it has been suggested here thatsome difference is made amongestthe several countries who have a special interest, because they have a trade that is merelyimportant than other countries. In this respect I have to cease to talk for my delegation because we only have instructions to support what the Charter says. However, I believe that as we come here only to offer suggestions of help and to do whatever we can, this kind of suggestion, which has already beenaccepted by the League of Nations, will not have a. negative reception by the Cuban Government. Therefore, on this promise I shall offer some ideas on this matter. Coming to the matter of permanentseats, I see that the Belgian delegate has made two different suggestions -first in the paper that was distributed they suggested that there should be 6 and 9 members, making 15 in all. Now they say 8 and 12, which makes 20. I believe they have done so because they have probably noticed that if we take 15 members,and then we start negotiating and have 17 or 18, it will create a very awkward situation if two or three members are not on the Excutive Board at the beginning. And may be the suggestion of 20 is because, they want to cover everybody who would like to come in at the 63. O . 9 . E/PC/T/C V/PV/12 .............. e %..... beginning of the so negotiations. Therefore, my first ncgativc criticism hatthe number of 15 is taIt it may 1oad to a vcry dieficult situation for thc one or two mcibors whcewEulc bc exet out of th oxeeutivc Board of the Organization. Semondly; if w; have 20 mcnbers, I believe itomeulemberpossibleefoe soni manbcrs to havo por- eaciet scats. Hcre I am cxprossing my personal opineon. But on teib case thc number uf mimlers shcale noWebe dcfinitcl- st-tcd. V. should say no aonr anan this and noweoss th-a that because Yo may not ae only 17 or 18 or 20 n-tions in this Organiz- atfon; we may bc 25, 24 21 - nobody knows how many. II ec say that vi shame havo, for example, 5 -mbers ene5 in thc beginniine, cecrybody rushes to bc onc of those 5 mooaors onetec Exceutivc BD-rd, thcrc, will me oths incentavionsrwhort cther big n:t.ns .bo may ment to come in later if thetycormc in later if -1-hy aermanen-ble to gct onc pcnniLaat scat on the Eeccueivc Board. e Thcrcperc it should bL left oDcn for teetsonfcwingncoreen it mcts, knov;ng mror than wo knew navs to decede cxactly wh.t is to bc the nuaber of reranenQtofembers and the number ce non- poarnr t rmembcrs. I still hav another negative criticism to mace aed that is that the mcmbors who would be selcecd - not pcLranclr mcmbors - probably by vote. Th. im how it scces eo me fror what I havc road and hcerdeoft hc pelgian .nFrNcthcrlands -roposal. Prom emberesrienelectedsomc monimbs arc clfctod and can boerc-caceted, they will bc ,n .. favorable position5 bccausc we would be verecmuch inclined to re-clcot them than to ran tew riskeof bringing in nc; membcrs 64. 0.10. E/PC/T/C .V/PV/12 when we do not know how they will act. Therefore this is a..point which we must take, intoconsideration. Apart from this, supposing we have 5 or 6 permanent members and we have several members who are to be elected; are the 5 or 6 members who are permanent to have a vote also on these. non-permanet members to be elected or not? I have no opinion on this point, aIthough I believe that if the members have permanent seats they should not vote for the places of the non-permanent members who are to be elected. Now comes my positive contribution. I believe there is always this danger, that a group of nations will be in this Organization from the beginning but that that will stop some other coming in. I would suggest, therefore; that instead of having an election for the other members, that a list of the elected members should be established, and that we should come to one of these conclusions: that this list should be made alphabetical, it could be made by drawing lots, or it could be made. and this is possibly my best suggestion - by arranging groups which, when they' came together ini the Executive Board, would represent two sets of cross-sections in the members of the Organization. One night be a geographical distribution; the second that they would represant countries in diferent stages of development. In this way I believe that we might solve the problem which may be one, of the-most difficult to solve in this whole Organization. ; 5 owsx11.-V- P 1. E/PC/T/C.V/PV/12 THE CHAIRMAN: I call upon the Delegate of Norway. Mr COLBAN (Norway): I also wish to make some observations to help find a final solution. I have already stated that as far as Article 57is concerned, I would like to modify the first paragraph slightly. I suggest the paragraph should road: "'The Executive Board should consist of 15 members, elected by the Conference five of; whom shall be eligible for immediate re-elcction." I want to point out that I have not in mind permanent seats. I only desire to create a system under which the great leading commercial Powers could be quite certain of being maintained on the Executive Board without making it necessary to name them specifically in the Charter. I think it is better to have a phrase such as the one I suggested, than to mention so many countries by name. Another point is this: Originally I think I said that there should be 18 members of the Executive Board, but, having reconsidered the matter, I think 15 should be the maximum. We around this table are supposed to number 17. I cannot imagin this body dealing with executive tasks, It would discuss organisation or high policy, but, as an executiive instrument, it would be too large. I do not make any counter-proposal to the American draft -which, as far as I can see, has been extrememly well thought out. Therefore, I do not propose anything, less than 15 members,but think I should insist that that number should be the maximum. in As to the voting referred to/Article 57, I think we should apply the same system as for the Conference - one State one vote. I have an open mind, but that is how I look upon the matter at the moment. I am perfectly willing to be convinced that I am wrong if sufficient argumentscan be brought forward but I feel that it is a mistake to think that a great commer- cial Power in an organisation such as this would run the risk of being voted down. After all, not one, two, or five, or 66. E/PC/T/C .V/PV/12 even 10 unreasonable members can turn down a reasonable pro- posal of any other member of the Organisation when it is in fill swing. Our experience - because we have all been to international conferences many times - is that we listen with considerably more - I do not say respect, and I cannot find the right word, but perhaps I should say considerably more deep respectful interest to the statement of one of the loading nations on that -particular subject which we are discussing, than we would listen to a theoretically excellent speech of report of a Government admittedly not very interested in the matter. I feel, therefore, that the great Powers need not be afraid of the "one State one vote" principle being applied. As I say, I still have an open mind. THE CHAIRMAN: I propose to call the Delegate of Canada next, and then the Delegate of China. Mr LEPAN (Canada): I would like first of all to as ure His Excellency the Norwegian Delegate who, I suppose, must be£ described as a ecpreseta:tiec of a country which is not so larec or powerful as some others, but teoec is no representative to whomwve listen with more ecpecetful attention than himself. I am surewec are all ecryg-atet ful to obu, Mr. Chairman, for the exat and lucid sggeestions which you have made through- out the course of our discussions this afternoon about the procedure which it might be wise to follow. At the very beginning of this afternoon's discussion it was suggested that we should proceed on a hypothesis that the principle of one country one vote be adopted. W.e of the Canadian elegattion are content to proceed on thathbypothesis, provided it is understood that it is only one hypothesis of a number which might be accepted; that ithaad been accepted only as a matter f conveniece, and final1y that the whole question of weighted oting would be remitted to the inte eon det~ion t~ae~o for consideratiere and also for tion,f P 2 E/PC/T/C.V/PV/1 2 and, it might be, for a decision by the next meeting of the Preparatory Committee. However, the question of weighted voting has been opened this afternoon, and it now seems that we are rounding off our discussion of this subject before remit- ting it to the Drafting Committee. It is for that reason that I would like to put on record the Canddian position so that there cannot be the slightest doubt about it. The Canadian Delegation has never concealed the fact that it is in support of the priciple of weightedvoting . There have been a groat number of criticisms direct against the principle. We cannot accep the, criticism that it is undemocratic, nor can we accept the criticism that the intention and the effect would be to impose the will of the majority on the minority. It seems to me that if the principle of one country one vote were adopted, a situation might very easily arise wherethe voices of those countries achieving, economicimportance might be overborne by the votes of a coalition of the countries which do not enter significantly into world trade, and we do not think that such a situation would be democratic, unless we are to adopt the very pessimistic definition of democracy that it is a system where everyone can speak and nothing can be accomplished. Now I turn to the suggestion which you yourself have made, Mr. Chairman, about a Sub- Committec to put into rather mere precise form the suggestions which have been made about weighted voting. I agree with the United Kingdom Deligate that the taskof working out a system of weighted voting is not a particularly difficult one, but on the other hand it is a detailed one. It seems to us at the Canadian Delegation that it would be churlish to refuse the invitation which you have thrown out, and we for our part would be very willing, to participate in an attemptand to have, as it were, a second shot at producing a paper on weighted voting. It should be understood that even the second 68. P 4 E/PC/T/C.V/PV/12 shot would be in no sense definitive. It is impossible, I think, at this stage to arrive at a definitive system of weighted voting. However, it might be possible to make a rather closer approximation to a system that I hope, in the progress of time, might commend itself to rather more members of the, Preparatory Commission than is at present the case, It is for that reason that we would be prepared to participate. Mr DAO (China): At our last meeting.when we discussed the voting system we; made our position clear, and I wish to say that our position has not changed with regard to the voting in the ExceutiveBoard. Having said this, I would like to confine myself to the consideration Article 57,with regard to membership of the Executive Board. THE CHAIRMAN: May I interrupt? I understood you to say that your position has not changed with reference to voting in the Executive Board. Do you mean that? You do not mean in the conference? Mr DAO: No. THE CHARMAN:You mean in the Executive Board? Mr DAO: Yes, we made our position clear with regard to the voting at the conference at the last meeting, and I wish to reaffirm that our position has not charged in relation to the voting system on the Executive Board.. We have an open mind as to the number and the status of members of the Board.. What I wish to do is to put forward some points which might be taken into consideration either by the Drafting Committee or at the text meeting of the Preparatory Committee. We feel that the number of members maybe suitably increased from 15 to a maximum of 18, but provision should be made for a smaller number in the event of the Charter being brought into force in accordance with Article 78, paragraph 3. As to whether there should be any permanent seats for certain ~~~ ~~6o members, we say that there are two ways in which such a : systemecan bc institutee. Onc is te writo ieto th Charter the nameshef t- apermonent members ofEtee -xoeutivp Board. It is apparent that.at preseetethorc certainrtaiX drawback, but this drawback may disappear ey th6 time that the final Draft Charter is adopted. The other is to adopt c'rtain principles and procedures as a guide t theeconfor- once to clect certain memberseto bc permanent msmber&, On this point, as far as the principle is concerned.,ewe foel fhat Jactors which will naturally figure in the consideration will beetofsc eo economic importance eog gco,raphieal rop- resentation. It is rathfr diiticulz at teeenros cgestaro to cc±¢ to ane detcrmination with regard eo tho degree of economic importanee. Wc think ehat cconomic importance of a member shoeld bc such as woule refcr not only to the actual but also poteneial mconorpc imaortance. As to the other factors wwecmay. MC. alno cor, derc such as the criteria which heee bo,n; adopted in certain other international organisa,ionsv on the whele wc would like to see theenumbcr cL such criteriagbein; as many as possible, so as not to precludm froL our consider. on sathem..tors as will decide theomic i nit mportance of emb mcrrewe Hovcver, if there is a provifion ermanantncn membees, wc have also to consider fhctsthat the number ofr o_ seats should be such as would not hinder aneromemberswbrs who may adhere to the Charter, after the Oraganistion hae into being.r. On the other hand, there is ae altcreativc to ystem ofpcf . ermancntemembcrship, something on the lines putaforw rdhe Delegatef te for Brazil. The question of geographical representatnd the factor or o0 economic imaodc nc 'may determine the distributif the permanent members who will serve for a longer period than the other members on the Board. We offer these points for the purpose of facilitating the discussion of Article 57. 70. asfollows 7 . E/PC/T/C.V/PV/12 THE CHAIRMAN: I realise that it is setting late, but the Delegate of AustraIia assures me that he only wishes to make a very brief remark and if no-one else wishes to speak on this subject we should perhaps be in a position to agree on some procedure for handling the matter which has been under discussion this afternoon. I have sone suggestions to make regarding that. I call on the Delegate of Australia. MR. BUREY (Australia): In view of the remarks of the Delegate of Norway, I feel I should explain our proposal to increase the membership of the Executive Board to 20. We had envisaged that owing to the multitude and complexity of the subjects with which the Executive Board will have to deal and the varied degrees of interest and experience of its members, it would inevitably have to work largely through sub-conaittees. In any case we should regard 15 as too many to thrash out many of the detailed questions it will have to deal with in practice. I feel I should say that just to bring it to his notice. MR. COLBY (Norway): I want to thank the Delegate of Australia for his statement.: THE CHAIRMAN:I had thought at one time of appointing a sub-committee to consider this whole gamut of questions which we have discussed in connection with the Conference and the Executive Board, more particularly the Executive Board, but I believe that that is scarcely practicable for the reason that almost every member of this Committee has expressed a very warm interest in the subject. To omit any member would be invidious .and therefore thee would be little gained by that procedure. I have an alternative suggestion which I hope will meet 'with your approval. It is that we instruct our two Rapporteurs to prepare: now this part of their summuary; that will have the effect of putting very clearly into juxtaposition the various suggestions that have. emanated from our discussion It would be prepared tentatively in a form suitable for incorporation in the report Committee V to this Conference. That tentiative draft of our two.rapporteurs who would be merey doing some of their homework in advance would then be brought back to this Committee and would be reviewed by it. s F. .>-~K 7 Q. I E/P~/,?C/V/PV/12 X.\ It would of course be distributed ivaad7rnce, I should hope before Thursday. That would give thimmCo=aittee an opportunity to see how these various suggestions line up. st id quite conceivable that our two Rapporteurs might be induced to exercise their imagination to the extent of suggesting that perhaps some of these various suggestions would wash out or reconcile with each other, and that we could narrow somewhat the possible divergences in these suggestions. I hardly expect that the various views could be concerted into one unanimous se of'suggestions with regard to the Charter, but at least we ought to try to narrow the differences. TommCc=.ittee then, acting asommiCc=ittee awha vwole - let it be a sumb-comittee of the wholmmioi~rttee if you like - would then be affordesecondond occasion on which to make any further observations on this subject for the record, and we would let the matter rest there. It would be the job of the second meeting of the PreparatorymCom:ettec next. Spring to start from that point. I I do not believe that we could properly ask the interim Drafting Committee to do any substantive work. not As I sad om m;;ent ago, it is/their proper role, they are mere draft nicians.ns. Does that suggestion meet with the approval of the Committee? Very well, then; our Rapporteurs have a new task. One more thing and the-- we are through:amI -_ asking the Secretary to arrange for a meeting tomorrow at 3 o 'clock - no meeting in the morning. I believe we have enomah iwalring to work on for a meeting tomorrow afternoon. The meeting is closed. The Committee rose at 6.12 p.m. 72.

GATT Library

ss550tw9829

Voting in the International Trade Organization : (Memorandum by the United Kingdom Delegation for Committee V)

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.V/14 and E/PC/T/C.V/1-18/CORR.1

https://exhibits.stanford.edu/gatt/catalog/ss550tw9829

ss550tw9829_90220108.xml

GATT_157

United Nations Nations Unies RESTRICTED 5 November 1946 ECONOMIC CONSELL LONDON E/PC/T/C.V/14 - AND ECONOMIQUE ORIGINAL: ENGLISH SOCIAL COUNCIL ET SOCIAL PREPARANATORY COIYMMMTEEE OF' HE INTERX~ONAL COI10I ON' DEAMi EEYPvNT AVOTNAING IN TH TANIRNkTO1L TDE ORG.ZIZAN (Memorandum by the United Kingdom Delegation for Comittee V) General The United Kingdorn Delegation feel that the question of the weight to be given to the views of each member in the Organization is one to which it will be agreed that close attention must be directed. In general it is the view of the Delegation that in the consideration of this question due regard must be paid to the extent to ich the members of the Organization participate in international trade, since this is the true criterion of their interest in an Organization of the kind which we are all seeking to bring into existence. Recognition of this factor can be made in more than one Way. In the first place, provision could be made for the enjoyment by each member of a single vote, a number of the more important trading countries, however, being given permanent seats on the proposed Executive Board of the OrgaAlnization. ternatively, there might be a syswtem whereby eight was given in the provisions for voting in the Conferenc e and at theExecutive Board 'to countries respective shares in international trade. United.Stats Frocosals and Charter In the United States' PrDoposals of ecember, 1945, the passage relevant to this question is Chapter VI 1C(2) and D() of the Proposals concerning an International Trade Organization. It was provided that each ember of the Conference should hav e one voteXbut that the ax This ws not one ofthe points covered by the United Kingdom's general agreement LONDON E/PC/T/C .V/14 Page 2 member States of chief economic importance should have permanent seats on the Executive Board. In the Draft Charter propounded by the United States shortly before the present session of the Preparatory Committee, no provision is made for any permanent seat on the Executive Board, and as regards voting Articles 53, 56 and 58 provide that each member should have one vote in the Conference, the Interim Tariff Committee and the Executive Board respectively. Relevant Provisions Applicable to other Bodies In the Charter of the United Nations the principle is followed of giving one vote to each State but permanent seats on the Security Council are allotted to certain countries (and there are, of course, additional provisions whereby certain decisions can only be taken by the unanimous votes of those countries). In the International Labour Organization there is provision for permanent seats on the directing body for a certain number of important countries, while the Civil Aviation Convention provided that in electing the Council the Assembly should give adequate representation to the States of chief importance in air transport. In certain other bodies which are a?in to the proposed International Trade Organization as specialized agencies ~~~~~~~~~~~~~~~, ofthe, United oNationsaa system. weighted voting has been dance with ance wi-intah a -ncionl principle. This applies e in eothInte lisernatal Motary nene ndl and h Internatniloa nk for Reconst6 ruction and veloplqme nit(n which bodies there is al provisionso for eth special appointmento a f u nmber of Executive rectors). It is likely th a a '~milar f*nctional weighting will be provided for in the case of decisions to be taken in any ob ?roposals on this sub~jet under consideration~ y the eat~~rat or LONDON E/PC/T/C.V/14 Page 3 Outline of United Kingdom Proposal The United Kingdom Delegation would accordingly suggest that the Preparatory Committee should adopt an arrangement on the following lines:- At the Conference of the proposed Organization and at its proposed Executive Board, voting should be 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. The Committee, it is felt, should include a direction in its general instructions to the proposed Drafting Committee to be established after the present session is concluded, to the effect that they should examine the matter in detail and be ready with a more exact scheme or schemes for consideration by the Preparatory Committee at its next session, taking the general framework suggested above as a broad basis for their work on this point. The Drafting Committee night also be instructed to consider whether a provision might appropriately be included in the proposed Convention hereby the application of this arrangement for voting was specifically to be reviewed at the end of a stated period, which might correspond to whatever period of initial validity is included in some Article corresponding to Article 79 of the United States raft Charter. This would enable the incidence of voting to be adjusted from time to time in accordance with the developing shares in international trade assumed by individual members and to this extent would perhaps reduce the importance to be attached to (c) mentioned above, while at the same time taking proper account of the point of view of countries which are in a relatively early stage of development but which may hope to secure a substantially larger share of international trade than they enjoy at present.

GATT Library

mp153cw6336

Addition to report of Working Party I on Accession (GATT/CP.3/26) : (Proposed by tho representative of the United States)

Contracting Parties, May 21, 1940

Contracting Parties

21/05/1940

official documents

GATT/CP.3/WP1/11 and GATT/CP.3/WP.1/11,12, WP.1/12/Annex WP.1/12/Add.1,2

https://exhibits.stanford.edu/gatt/catalog/mp153cw6336

mp153cw6336_91870526.xml

GATT_157

GATT/CP.3/WP1/11 21 May 1940 ORIGINAL: ENGLISH CONTRACTING PARTIES Third Session ADDITION TO REPORT OF WORKING PARTY I ON ACCESSION (GATT/CP.3/26) (Prrposed by tho representative of theUnited States) New paragraph 4 (b) of Protocol: "(b) In tho case -,f the first two sentences of sub- pragraph 5 (b) of Artice XIV of the General Agreement the reference to contracting purties, other individually or severally, shall be applicable in respect of acceding gvern- ments whether or not such governments have become contracting particse"

GATT Library

dn103qf5908

Accession of Morocco : Questions and Replies to the Memorandum on Foreign Trade Régime (L/5820 and Add.1)

General Agreement on Tariffs and Trade, November 29, 0000

General Agreement on Tariffs and Trade (Organization)

29/11/1985

official documents

L/5914, GATT/1376, L/5918, MDF/14/ADD.4, IMC/INV/11/REV.1/ADD.2, TAR/W/55/ADD.1, L/5914, GPR/27/ADD.6, L/5919, COM.TEX/SB/1114, DPG/N.85.11-13, and COM.TEX/W/174

https://exhibits.stanford.edu/gatt/catalog/dn103qf5908

dn103qf5908_91180069.xml

GATT_157

RESTRICTED L/5914 GENERAL AGREEMENT ON 29 November 1985 TARIFFS AND TRADE Limited Distribution Original: French ACCESSION OF MOROCCO Questions and Replies to the Memorandum on Foreign Trade Régime (L/5820 and Add.1) In a communication dated 8 March 1985 circulated as L/5790, the Government of Morocco appliad for accession to the General Agreement pursuant to Article XXXIII. At its meeting on 30 April-1 May 1985, the Council set up a Working Party to examine Morocco's application for accession. The questions submitted for this purpose by contracting parties in connection with Morocco's foreign trade régime and the replies thereto now provided by the Moroccan authorities are given below. Delegations wishing to raise additional questions concerning Morocco's foreign trade régime might inform the delegation of that country (with a copy to the secretariat) of such questions in advance of the meeting of the Working Party, so that considered replies can be made available by Morocco to members at the time of the Working Party meeting. 85-2122 L/5914 Page 2 REPLIES BY THE KINGDOM OF MOROCCO TO QUESTIONS RAISED BY CONTRACTING PARTIES REGARDING MOROCCO'S FOREIGN TRADE REGIME Objectives of the 1981-1985 five-year plan and current guidelines Question No.1 In describing the current Moroccan trade régime, the Memorandum states that "Foreign trade accounts for nearly 45 per cent of GDP." Could Morocco explain exactly what that ratio means? Does this include trade in services? Reply This ratio represents the share of Morocco's foreign trade (imports c.i.f. and exports f.o.b.) in relation to GDP and is calculated as follows: Imports c.i.f. + exports f.o.b. Ratio: GDP in current prices Question No. 2 Could Morocco describe in more detail the more numerous measures instituted to promote export activities mentioned on pages 7, 11 and 26 of document L/5820/Add.1, in particular the products concerned and the amounts of export aid involved? Reply There are no export subsidies in Morocco but there is a set of incentive measures designed to encourage export activities. Accordingly, with a view to promoting exports of industrial products and handicrafts, Dahir No. 1-73-408 of 13 August 1973 established incentive measures for industrial and handicrafts undertakings. Commercial undertakings engaged in exporting such products also benefit from these measures under Dahir No. 1-77-217 of 19 September 1977. These measures are as follows: A. Export Code - Full exemption from tax on business profits for the amount of turnover from exports during the thirteen (13) first years following the starting up of export activities for new undertakings, or for the thirteen (13) first years following publication of the above-mentioned dahirs for undertakings already in existence on the date of their promulgation. L/5914 Page 3 This exemption is further subject to the condition that the annual turnover of the commercial undertakings concerned must be not less than DH 10 million. - Annual grant in foreign exchange of 3 per cent of the amount of turnover, designed to cover prospection costs in foreign markets, operating costs of agencies abroad and publicity. - Guarantee of transfer of tax-free dividends distributed to non-residents, and guarantee of retransfer of invested capital for foreign investors. - Guarantee of retransfer of proceeds from settlement of capital invested by a foreigner in a new undertaking. These advantages are additional to those provided for under the Industrial Investment Code and the Handicrafts Investment Code. B. Export credits Export credits are granted to exporters at preferential rates to cover the financing of certain general needs (stocks abroad, liberation of claims established abroad, etc.) C. Export insurance Under Dahir No 1.73.366 of 23 April 1974, a State insurance scheme for exports was established for the benefit of natural or legal persons resident in Morocco and engaged in export operations; the scheme is administered by the Moroccan Foreign Trade Bank under Decree No. 2.73.299 of 29 April 1974. This insurance comprises: - Credit insurance which covers the commercial risk, political risk, disaster risk and monetary risk. These risks are guaranteed within the limits of a maximum of 90 per cent, and cover a period of one year which is renewable tacitly. - Prospection insurance for persons seeking outlets in foreign markets, guaranteeing the reimbursements of costs incurred in connection with prospection that is unfruitful or whose results are not sufficient to offset the costs incurred. Such reimbursement may not, however, exceed 50 per cent of actual outlay. - Trade-fair insurance which guarantees to participants in international trade fairs abroad the reimbursement of costs incurred by them on that occasion in the event that they fail to achieve a turnover sufficient to cover those costs. This reimbursement may not exceed 50 per cent of actual outlay. L/5914 Page 4 D. New export régime (joint Order of the Minister for Trade, Industry and Tourism and the Minister for Finance No. 778-84 of 8 August 1984) This Order established the principle of export liberalization. Apart from the very few products specifically designated on the list attached to that Order and products of foreign origin on which import duties and taxes have been paid, all other products may be freely exported under a simple "export declaration - exchange indenture". E. Special customs régimes These were established in their present form under the Customs Code, Title V (Dahir No. 1-77-339 of 9 October 1977) and the relevant implementing Decree (No. 2-77-862 of 9 October 1977). They include systems which provide for customs duty suspension (customs warehousing, temporary admission, temporary import, outward processing traffic, temporary export; transit) as well as the drawback system. Among these special customs régimes, those particularly relevant to export promotion are temporary admission, temporary import and drawback. - Temporary admission This allows the admission to national territory, with suspension of duties and taxes and likewise any prohibitions and restrictions applicable on admission, of goods intended for processing, working or additional labour application with a view to subsequent export in the form of finished products (compensating products). - Temporary import This procedure allows the admission to national territory, with suspension of duties and taxes and likewise any prohibitions and restrictions applicable on admission, of products and materials exportable without further processing after having been utilized as intended. These are basically inputs and materials that can be integrated in or used for export-oriented industries. - Drawback This procedure allows the flat-rate refunding of certain duties and taxes charged on imports of foreign materials used in the manufacture of exported products. L/5914 Page 5 In addition to these legal provisions or regulations, a set of administrative measures has been established to allow relaxation of administrative formalities and procedures, in the light of both domestic and external economic restraints. In this context: - Eligibility for the temporary admission and temporary import régimes has been extended to all products except those included in the attached list, the import of which is subject to prior approval from the supervisory department. - A declaration system for settlement conditions (wastage rate and yield rate) has been established in respect of the temporary admission records; under this system, economic agents operating under these suspensive customs procedures can propose the modalities for settling accounts they underwrite, whereas in the past those rates were determined either by the above-mentioned decree or by the administration after an investigation. - As regards customs bonds, apart from the traditional guarantee systems (bank bond or deposit), operations under the temporary admission procedure can also be covered by: - A mutual bond between undertakings, case by case. In this regard and in order to reduce the financial burden to export undertakings, since the beginning of 1984 the customs administration allows them to provide guarantees on a reciprocal basis; - An annual global guarantee. - Imports of production materials that remain under foreign ownership and are intended for the manufacture of goods intended for export can be carried out under the temporary import procedure without payment of quarterly fees. Furthermore, and taking account of manufacturing or marketing constraints inherent to certain sectors, the administration has adopted certain new customs clearance procedures. These are clearance on premises, and the simplified procedure of provisional declaration. - Clearance on premises allows exporting industries to carry out customs formalities on their own premises, whether for import or export. - The simplified procedure of a provisional declaration covering a specified period, one or more listings, giving L/5914 Page 6 indications other than the type of goods being furnished, only at the end of the period considered (in particular, quantities and values). Question No. 3 Do the measures designed to "promote exports and industrial output" include export performance or domestic content requirements? What specific financial incentives, if any, are provided under this programme for export and industrial promotion? Reply Manufacturers operating under export-oriented special customs régimes are required to export the compensating products obtained after the processing of imported raw materials. In addition, it should be noted that except in the motor vehicle assembly sector, there are no legal requirements regarding domestic content. As regards motor vehicle assembly, under the law on integration and compensation (No. 1-81-306 of 6 May 1982), the grant of import permits for CKD kits (motor vehicle components) is subject to the requirement that the assembled vehicle must comprise 40 per cent, in terms of value, of parts of domestic origin for passenger vehicles, and 50 per cent for utility vehicles (heavy vehicles). As regards "financial incentives" to export activities, see the reply to Question 2. With respect to "industrial output", Law No. 17/82, promulgated by Dahir No. 1-82-220 of 17 January 1983, established certain incentive measures to industrial investment (see Memorandum, page 28). Question No. 4 As one of the objectives of the reforms initiated under the 1981-1985 five-year plan, Morocco indicates that it intends to adjust the protection of domestic industry toward tariff protection and away from non-tariff measures and quantitative restrictions. The Memorandum indicates that movement in that direction has already taken place. Does Morocco have a timetable for progressive movement toward the completion of this process? Reply A timetable has indeed been set for implementing the adjustment programme in respect of industry and international trade; the Global Import Programme (GIP) for 1985 was drawn up under that timetable. A large number of products formerly in List B or C have been transferred to List A or B under the GIP for 1985. L/5914 Page 7 In addition, in the context of the above-mentioned adjustment programme the Moroccan Government is planning: - to liberalize certain products in January 1986; - to transfer into List A of the GIP, in the course of 1987, products such as cement, electric cables, part of the textile industry and durable consumer goods. In conclusion, the only products that will not be liberalized for import until 1987-89 are those requiring special consideration, namely: - iron and steel products; - vehicles; - that part of the textile industry covered by the Multifibre Arrangement; - agricultural products vulnerable to unfair trading practices; - products such as soap and fats which are indirectly the subject of counter-trade. General import programme in effect since 1967 Description of the régime Question No. 5 What is the general rationale for selective import controls in the foreign trade régime of Morocco and are they seen as a permanent feature? Reply Morocco's import régime as described on pages 8 to 10 of the Memorandum was devised having regard to various considerations, inter alia: - to ensure regular supply of the Moroccan market as regards current consumer goods, raw materials, semi-finished products and capital goods needed for domestic industry; - to afford protection on a rational basis to domestic production and manufacturing industry, while ensuring optimum conditions of quality and price for consumers; - considerations in regard to public morals and public order - these mainly concern imports of drugs, narcotics and weapons; - considerations in regard to the trade deficit: if this deficit worsens, import control measures are taken but only in respect of a small number of finished consumer products for which a market shortage L/5914 Page 8 does not hamper producing structures or disrupt the country's normal and regular supply of essential products; - considerations in regard to protection of the national heritage; these are mainly of a sanitary nature, aimed at safeguarding Morocco's fauna, livestock, etc. Such import control measures are temporary to the extent that a basic objective of the adjustment programme for trade and industry is to replace quota protection by tariff protection. Question No. 6 How is Morocco's import régime administered? Specifically, who decides which list covers specific imported items? Is the process open to appeal? Are import deposits required for imports on Lists A or B? Reply The Ministry of Trade and Industry decides in which of the three lists of the General Import Programme products are to be classified. This decision is taken after consultation of the supervisory departments and professional organizations concerned. The consultation takes place in a national commission which meets once a year in the last quarter of each year. Decisions are taken by consensus among the various parties concerned; in the event of disagreement the Prime Minister makes the final decision. The import deposit requirement has been eliminated since July 1984 (see reply to question 17). Question No. 7 In regard to imports (including allocation of the necessary foreign exchange) of products in Lists A and B respectively, who makes the final decision and on the basis of which criteria? Reply For products in List A: approved banks are designated by the Exchange Bureau; they release the necessary payment means directly for any import of liberalized products. In respect of these products, prior approval by the Ministry of Foreign Trade is not required. The import document established by the importer and domiciled with his bank automatically gives entitlement to allocation of the necessary foreign exchange to pay for the import concerned. To this end, the approved bank purchases the foreign exchange from the Bank of Morocco (Central Bank). L/5914 Page 9 For products in List B: import applications are examined by the Ministry of Foreign Trade which, in certain cases, seeks an opinion from the technical services of other departments. The Ministry of Foreign Trade examines import certificate applications (licence applications) for these products and makes the final decision to grant the certificates or not, in particular on the basis of the following criteria: - trade balance situation and advisability of allocating foreign exchange for the products requested by importers; - existence of domestic production which is competitive in regard to quality and price with the products requested; - market requirements; - technical and commercial qualifications of the importer; - conditions of public health and safety, etc. - once the import certificate has been granted by the Ministry of Trade and endorsed by the Exchange Bureau, the bank is entitled to transfer the necessary foreign exchange for payment of the import. List A, products liberalized for import Question No. 8 Are the products on List A subject to any import restraints other than tariffs? Reply Inclusion of a product in List A means that it is not subject to any quantitative import restrictions. Nevertheless, this freedom to import does not exempt importers from specific regulations in respect of certain products based on considerations of public health (plants, animals, quarantine) or public safety (weapons for civilian use, etc.). Question No. 9 Is the transfer of products from Lists B or C to List A irreversible? If so, can the Moroccan Government give any guarantees in this regard? Reply Such liberalization is the objective of the adjustment programme for trade and industry which is currently being implemented and is to continue L/5914 Page 10 until quantitative restrictions have been eliminated and national tariff protection has been established. Given this principle, Morocco obviously wishes to maintain on List A all the products currently included. Nevertheless, Morocco is sovereign to apply safeguard methods in the event of conjunctural difficulties. Any such measures will nevertheless be taken in accordance with the GATT provisions and in particular those of Part IV on Trade and Development. List B - products subject to import permit Question No. 10 Could an indicative list of items falling under List B be provided? Which finished consumer goods are included? Are there published quota lists indicating annual permissible import levels for these products? Who determines the level of importation for these products? What criteria are used to determine these levels? Reply The Moroccan Government has furnished a copy of the General Import Programme for 1985 to the GATT secretariat. This document, which gives full details of the trade régime for goods (Lists A, B and C) is available for consultation by interested delegations in the Development Division, Office 2010. Import permits in respect of products on List B of the General Import Programme, are granted by the Ministry of Trade and Industry in the light of the country's economic requirements, while taking account of the considerations mentioned above (see reply to Question 5). Question No. 11 Given the Moroccan Government's desire to move away from non-tariff measures and quotas, will future years see a continuing reduction in the number of goods subject to List B restriction? Is there any definite timetable for the phase-out of such restrictions? Reply See reply to Question 4. L/5914 Page 11 List C, imports subject to import prohibition Question No. 12 What are the products still covered by List C? Does Morocco have a formal timetable for phasing out its import prohibition list? Reply The few products still on List C are the following: - retreaded tyres - tyres for retreading (used) - carpets - other rugs and carpeting - wall coverings - used clothing - spangled lamps. Under the above-mentioned programme, these products will be transferred to List B in a first stage and to List A later. Adjustment of protection Question No. 13 How does the adjustment policy in regard to protection result in "channelling investment into the most profitable sectors"? Is classification of a product in List A designed to expose the industry concerned to more international competition and thus influence investment decisions? How are the "most profitable" sectors selected? Are they sectors which are already the most competitive? Are there any other "measures channelling investment" toward certain sectors? Reply (a) The adjustment policy in regard to protection of domestic industry is aimed at restructuring industry and, as a consequence, channelling investment into the most profitable sectors. Branches that are not profitable economically and which survive solely because of tight administrative protection will no longer be protected, so as to encourage them to make the necessary productivity effort and formulate and carry out a restructuring programme. In addition, fair and harmonious protection should be granted to industry as a whole in order to avoid investment being directed toward one L/5914 Page 12 or other sector according to the sole criterion of level of protection. In other words, contingency must no longer be the key element determining the choice of investors. Accordingly, the new protection system for domestic industry will henceforth take account of the following objectives: - The need for the industry concerned to achieve a net foreign exchange yield in the long term. - The value of social benefits resulting from protection, (job creation, taxes and charges paid to the State by reason of industrial activity, etc.) must be greater than the value of benefits sacrificed (additioral cost to the consumer, non-collection by the State of revenue on like imported finished products, etc.) which would have resulted from alternative expenditures. - Establishment of an import duty rate taking account of these elements and likewise of additional cost to domestic industry, such as energy prices, etc., in order to preserve the price competitiveness of domestic products. - Tariff protection will take precedence over quota protection. Accordingly, the Administration will recommend that potential investors take account of these criteria for any new investment project. (b) Classification of a product in List A is designed to expose domestic industry to foreign competition so as to make it more competitive and to encourage improved quality of its output. This is the objective of the new system of protection of domestic industry. In addition, this new policy does not seem to influence investment decisions unduly, since manufacturers are continuing to invest in branches of activity whose products have been transferred to List A of the GIP. Thus, projected investment in these branches totalled some DH 187 million in the first half on 1985, covering 21 new projects, 43 extensions and some 2,000 jobs. (c) In addition to the incentive measures in favour of export industries mentioned in the reply to question 4, efforts are likewise being made to channel investment into certain sectors either through promotion drives and project studies carried out by semi-public bodies, or by the creation and organization of industrial zones, or again through participation of those bodies in industrial projects such as the manufacture of equipment goods. L/5914 Page 13 Import procedure Question No. 14 Concerning import procedures: In essence, is an "import indenture" a type of exchange permit and open general import licence? What customs procedures are required for processing an "import indenture" through customs at time of importation? Who determines what is an "approved intermediary bank" and what are the criteria used? What are the terms under which an "import certificate" is issued? Reply (1) The import indenture is the document governing the import of products not subject to administrative permit (List A of the GIP). It is signed directly and domiciled by the importer with an approved intermediary bank of his choice, and accordingly is to be deemed an exchange document. As regards the customs procedures required at the time of import under an import indenture, a declaration of the goods concerned must be presented to the customs services at the point of import. After the goods have been verified by the customs and any applicable duties and taxes have been paid or guaranteed, the goods can be removed. (2) Exercise of the banking profession in Morocco is governed by Royal Decree No. 1067/66 of 21 April 1967 (Law on the banking profession and credit). Under Article 4 of that Decree, the exercise of this activity is subject to prior authorization by the Ministry of Finance. Such authorization is granted by an order of the Minister of Finance after the application has been examined by the Bank of Morocco and an opinion has been obtained from the select commission of the Committee on Credit and the Financial Market and the professional grouping of banks. The Bank of Morocco establishes and keeps up to date the list of authorized banks. The opening of branches, agencies or offices is likewise subject to authorization by the Minister for Finance, after the select commission of the Committee on Credit and the Financial Market has given its opinion. Banking activities comprise financial, credit, stock market or exchange operations. Recognition as an agreed intermediary is granted by the Minister for Finance, under Article 3 of Dahir No. 1-58-021 of 22 January 1958 on the Exchange Bureau. L/5914 Page 14 All banks authorized to operate in Morocco under the Law on the Banking Profession are approved to engage in exchange operations. (3) As regards the first part of this question, see the reply to Question 9. Question No. 15 Concerning State-traded items: What is the purpose of this régime? Please describe the workings of this régime more fully. What percentage of Moroccan imports are State-traded? For those items covered by State price monitoring, how does this affect the price and quantity of imports? Reply The main reasons for the import monopoly of the Moroccan State in respect of certain products is that these products are subject to strict consumer price control and in most cases to direct subsidization. The subsidization is administered by the Compensation Fund. The products under State import monopoly are the following: - sugar and tea - grains and vegetables - vegetable oils - butter - petroleum products - coal - tobacco - fertilizers This monopoly is operated either directly by public establishments or through monitoring and centralization of purchases on the international market. As regards the volume of imports and prices, the State determines the quantities to be imported each year and the level of marketing prices. In 1984, these products accounted for 43.68 per cent of total imports, i.e. a value of DH 15,025.2 million, of which: - petroleum DH 8,393.6 million, i.e. 24.4 per cent - tea 479.5 " " 1.39 " " 482.8 " " 1.40 -sugar L/5914 Page 15 - grains - tobacco - edible oils - butter - coal - fertilizers 3,618.1 311.5 1,058.9 153.9 " " 10.51 " " 0. 90 " " 3.07 " " 0.44 72.2 " " 0.20 455.7 " " 1.32 " " " " " Payment procedures for imports Question No. 16 Are the payment procedures for imports considered to be consistent with the provisions of the General Agreement; is there any intention of liberalizing this policy in the near future? Reply In our opinion, the payment procedures for imports are consistent with the provisions of the General Agreement, in particular Article XV. From the general aspect, the exchange legislation will be adapted to the policy of liberalization, market opening and prospection for new foreign partners which Morocco is currently undertaking. Question No. 17 Would the Moroccan Government please clarify the requirement on importers to pay a deposit of 25 per cent of the f.o.b. value of imports. Reply The 25 per cent deposit on imports introduced under Decree No. 2-78-273 of 13 June 1978 was revoked on 2 July 1984. Question No. 18 Has the previous requirement whereby importers were obliged, when applying for an import licence, to pay a deposit of 25 per cent of the f.o.b. value of the goods, now been discontinued? Reply See reply to Question 17. L/5914 Page 16 Export regulations Question No. 19 What is the basis for maintaining items on an export prohibition list? Are there circumstances under which Morocco could foresee increasing the number of items subject to export prohibition? What is the purpose of the State export monopoly in phosphates, phosphate products, fresh fruit and vegetables, and wine? Reply Since the publication of the Order issued jointly by the Minister for Trade, Industry and Tourism and the Minister for Finance on 8 August 1984 (No. 778-84) the list of products originating in Morocco and prohibited for export has been eliminated. Export prohibition now applies only to products of foreign origin on which import duties and taxes have been paid, subject to exemptions granted by the Department of Trade. In addition, this text, which recognizes the principle of unrestricted exports, has shortened considerably the list of products subject to export permit and further reductions are being considered. The list at present includes only a few mining products, zoological and mineral specimens and objects of art. The State monopoly on exports of phosphates and phosphate products is based on historical considerations and on the fact that the phosphate sector requires considerable investment for the extraction, processing and transport of phosphate products. In present economic circumstances, only the State can finance investment of this kind. In addition, because of the importance of phosphates and phosphate products in Morocco's trade balance, this is a strategic sector and State control is essential. As regards fresh fruit and vegetables and wine, the Marketing and Export Board administers exports of these products in order to channel orders from foreign clients who thus deal with one single agency which is well equipped and has listening points abroad for better prospection of foreign markets. This centralization is designed to ensure verification of foreign exchange repatriation and to have one single operator, having regard to the complexity of protective measures introduced in our principal market (the EEC) in the context of the common agricultural policy. L/5914 Page 17 Legal framework for foreign trade relations Co-operation with developing countries Question No. 20 Please describe more fully Morocco's preferential trading arrangements. Which countries, in addition to those listed (i.e. Tunisia, Algeria, etc.), have preferential tariff arrangements with Morocco? Do Morocco's "tariff conventions" with Senegal, Niger, the Ivory Coast, and the Republic of Guinea involve trade preferences? What products are involved in the preferential agreements, and what is the level and type of preference and the amount of trade involved? Reply As indicated in the Memorandum, the agreements concluded between Morocco and developing countries are of two types: - trade agreements, and - trade and tariff conventions. The trade agreements do not involve any tariff advantages; they are concluded on the basis of most-favoured-nation treatment. Although these arrangements are generally accompanied by indicative lists of products to be traded, commercial exchanges take place in accordance with the foreign trade and exchange regulations in force in each of the contracting countries. On the other hand, the trade and tariff conventions provide for preferential tax treatment in regard to trade, as follows: - either reduction of import duties by 50 to 100 per cent according to the product concerned, or - duty-free treatment. It should be noted that in general the preferential treatment established under these conventions is reserved for products entirely obtained or comprising an added value of not less than 40 per cent; nevertheless, some of the agreements comprise restrictive lists: one list of products admitted without quantitative limitations, and another setting tariff quotas by product (in terms of either value or quantity). The preferential treatment established by these agreements remains subject to observance of certain rules in order to avoid trade diversion (in particular, triangular trade). These rules concern: - rules of origin stipulated by those agreements; and L/5914 Page 18 - the rule of direct transport. The volume of trade under these tariff conventions represented 0.25 per cent of aggregate imports by Morocco in 1984. Lastly, it should be noted that all these tariff conventions stipulate that the trade is to take place in accordance with the foreign trade and exchange regulations in force in each of the countries concerned. Question No. 21 In what way do the reciprocal trade preferences granted by Morocco help "maintain traditional trade flows"? Reply Morocco has concluded tariff agreements with a number of developing countries, providing either for duty-free treatment or for tariff reductions in respect of products included in lists agreed between the two parties on the basis of reciprocity. Morocco considers that tariff concessions thus agreed on could only encourage economic operators to expand, and at least maintain, the volume of trade with the countries concerned. Co-operation with developed market-economy countries Question No. 22 Concerning the Morocco-EEC co-operation agreement: The Memorandum states that Morocco grants m.f.n. (i.e. non-preferential) treatment to the EEC "with the exception of preferences established in the following two cases: (1) maintenance or formation of customs unions or free-trade areas; and (2) measures adopted to further the economic integration of the Maghreb or in favour of developing countries". Please specify what products imported by Morocco from the EEC benefit from preferential (non-m.f.n.) treatment. In what way would non-m.f.n. treatment by Morocco of imports from EEC "further the economic integration of the Maghreb etc.?" Are there any further instances (other than those listed in pages 12-14) where Morocco accords preferential treatment? What per cent of Moroccan imports enter under preferential trading régimes? Reply Upon import into Morocco, products originating in and importedd from the European Economic Community do not benefit from any preferential tax treatment other than m.f.n. treatment. No reciprocity conditions are attached to the tariff concessions granted by the EEC under the co-operation agreement concluded between Morocco and the EEC in April 1976. L/5914 Page 19 The tariff rates are established erga omnes and are applicable to all imports without distinction as to their origin, apart from cases falling under the trade and tariffs agreements mentioned in the reply to Question 20. Accordingly, the second part of the question regarding economic integration of the Maghreb is not relevant. As regards the last part of the question, see reply to Question 20. Question No. 23 Concerning Moroccan co-operation with other developed market-economy countries: Do the bilateral agreements proposed or already concluded with the countries of the European Free Trade Association contain or provide for preferential tariff provisions? Reply These trade agreements do not provide for tariff preferences. Question No. 24 Concerning the Moroccan customs régime for imports: Who determines the classification of goods for customs purposes? What redress is available to importers that disagree with a customs classification? Are there customs courts or other institutions to which importers could apply for review of individual classifications? Reply Under Dahir No. 939-68 of 30 September 1969, Morocco acceded to the CCC nomenclature convention signed in Brussels on 16 December 1950; accordingly, its tariff is modelled on the structure of that nomenclature. It may happen, nevertheless, that certain goods are not specifically designated in the tariff or can fall within two or more tariff headings or sub-headings; in such cases they are classified by administrative decision. Such decisions are immediately applicable and are published. For certain disputes and in case of doubt, the administration consults the Nomenclature Committee of the CCC. Before any import operation, importers can request from the administration a classification decision for the products they intend to import. Question 25 Concerning non-tariff customs charges: What is the purpose of the "special import tax"? Is it a tariff surcharge? Does Morocco intend to L/5914 Page 20 discontinue this tax? What is the purpose of the "customs stamp duty"? How is it levied and what is its level? Reply The special import tax was established to furnish resources needed to meet the country's infrastructure expenditure. The proceeds from this tax were incorporated in the budget by the Finance Law of 1972 and its rate, initially fixed at 2.5 per cent ad valorem, has been increased on a number of occasions, reaching 15 per cent ad valorem on 29 June 1979 under Order No. 774-79 of the Minister for Finance. Successive adjustments of the rate of this tax, due to unsatisfactory operation of the tariff instrument, have maintained customs receipts at a reasonable level without any change in fiscal burden. It should be noted that under the structural adjustment programme for industry and international trade, it has been decided to reduce the rate of this tax progressively; the rate was lowered first to 10 per cent in 1984, and thereafter to 7.5 per cent in 1985. The customs stamp duty is charged on all receipts issued by the Customs and Indirect Revenue Administration in respect of duties and taxes collected for the Treasury account; it is currently calculated at the rate of 10 per cent of the amount of those duties and taxes. Customs valuation Question No. 26 Concerning the customs valuation factors contained in Article 20 of the Moroccan customs code: What criteria are used to determine the priority of customs valuation factors to be applied in individual cases? Are there standard guidelines used by customs officials which indicate the priority to be used? Are these guidelines publicly available? Reply For application of the various factors set forth in Article 20 of the Customs Code and to be taken into consideration for determining customs value, the customs authorities take account of the following criteria: 1. Degree of processing of the goods to be imported: raw materials, semi-manufactures, finished products; 2. Destination of the goods: raw materials and semi-manufactures imported by production units; finished products intended for equipment, for the agricultural sector, etc.; L/5914 Page 21 3. Special régimes applied to the marketig of products whose price is fixed or negotiated by the Moroccan authorities, products the price of which is subsidized (food, petroleum products); 4. Amount of customs duty and import control régime; 5. Customs procedure requested. In applying each of these factors, and in order to prevent under-invoicing, the Customs Administration can adjust declared values in order to ensure equal fiscal treatment for all imports in comparable trade transactions (level of transaction, conditions of payment, etc.). The Customs Administration regularly issues guidelines for its officials, in almost all cases with the agreement of the professional bodies concerned. Question No. 27 Concerning the application of paragraph 2(b) of Article 20, could you estimate its frequency of application by the Moroccan customs service as the principal determinant of valuation for customs purposes? Under normal circumstances of application, would "the wholesale cash value of the goods on the domestic market" mean the same thing as "the value of merchandise of national origin"? Could the application of paragraph 2(b) of Article 20 permit increased valuation of goods for customs purposes based on the domestic selling price? Reply As indicated in the reply to the previous question, selection of the criteria taken into account for determining customs value depends on several variables; it is therefore difficult to give a precise answer to the question regarding frequency of application of paragraph 2(b) of Article 20 by the Moroccan Customs Services. On the basis of recent statistics established at the port of Casablanca, the Customs Services accepted the declared value in respect of more than 80 per cent of operations passing through this port. Countervailing and anti-dumping duties Question No. 28 Concerning countervailing or anti-dumping duties: Recognizing that these regulations have never been applied, could you give us further information on how the procedures would work if they were to be applied? Reply These measures would consist of surcharges in the form of increased customs duties. L/5914 Page 22 Special customs régimes Question No. 29 Concerning special customs régimes: Are the régimes that provide for suspension of import duties and taxes publicly notified? If so, what are the procedures for notification of these régimes? Are these notifications regularly updated? With regard to duty-drawback provisions, what are the duties and taxes levied on imports that are eligible for refund at the time of exports? Reply All the provisions, whether legislation or regulations (Dahirs, Decrees, Orders) regarding special customs régimes (Table V of the Customs Code) are published in the Official Gazette of the Kingdom of Morocco: - Dahir No. 1-77.339 of 9 October 1977 was published in Official Gazette No. 3389 bis of 13 October 1977 (page 1383); - Decree No. 2.77.862 of 9 October 1977 was published in Official Gazette No. 3400 of 28 December 1977 (page 1526). In addition, all the circulars of the Customs and Indirect Revenue Administration are broadly distributed, in particular those concerning special customs régimes. Copies of these circulars are sent regularly to various organizations and professional associations such as: - the Chamber of Forwarding Agents, - the General Economic Confederation of Morocco, - the Professional Grouping of Banks, - the Morocco Exporters' Association, - the Chambers of Commerce and Industry, - professional associations (AMIT for textiles, AMICA for the engineering industries). In this connection, measures to relax and simplify customs procedures in regard to those régimes have been widely publicized, in particular in the national daily press, and in both Arabic and French. In parallel, these régimes have been the subject of lectures and discussions on the occasion of various events (Casablanca International Trade Fair, specialized shows such as the Textile and Leather Show, SATEC, etc.). L/5914 Page 23 Lastly, as regards drawback, the duties and taxes reimbursed under this régime are: - customs duty, - special tax, - internal consumption tax, - stamp duty. The tax on products is either deducted or is refunded by the financial service concerned (Turnover Tax Division). Moroccon tariff system Customs duty Question No. 30 Concerning the application of the Moroccan tariff system: does the Moroccan tariff have columns other than G and U? What do the labels "G" and "U" stand for? What is the statutory basis for column U rates of duty? Are there currently any import items subject to column G rates of duty? Reply The Moroccan tariff has no columns other than columns G and U. The letters G and U stand respectively for "tarif général" (general tariff) and "tarif d'usage" (customary tariff). The statutory basis for column U rates of import duty is Article 1 of Dahir No. 1-57-170 of 24 May 1957. Under that Article, the tariff of ad valorem duties to be levied on imports is established according to the indications given in column G; however, as a temporary measure and until further notice, the rates set out in column U are being applied. To date, the rates set out in column G have never been applied. Question No. 31 Could the Moroccan Government please clarify the rationale for the lower rate of duty in column "U" of the Moroccan tariff? See replies to questions 22 and 30. L/5914 Page 24 Breakdown of imports by tariff rate Question No. 32 Concerning the level of Moroccan tariffs: are the maximum rates of duty (currently 60 per cent) indicated in the Memorandum column G or column U rates? What is the current average rate of duty actually applied (column U) to imports from m.f.n. countries? Reply The maximum rates of duty of 60 per cent correspond to those indicated in column U; they are differentiated according to whether the articles concerned are raw materials, semi-manufactures, manufactures, equipment goods or essential consumer goods for the Moroccan population. The average rate recorded in 1984 was 5.5 per cent. Prospects Question No. 33 Is it the intention of the Moroccan Government to sign the various Codes resulting from the Tokyo Round? Reply The desirability of signing the various Codes resulting from the Tokyo Round will be examined case by case after Morocco's definitive accession to the General Agreement and in the light of any particular constraints that the Moroccan economy might encounter.

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tz106jn5690

Address by Dr. A . K. Gani, Indonesian Republic

United Nations Conference on Trade and Employment

Department of Public Information Havana, Cuba and United Nations Conference on Trade and Employment

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press releases

Press Release ITO/58 and ITO/48-73

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tz106jn5690_90200349.xml

GATT_157

UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT DEPARTMET OF PUBLIC INFORMATION HAVANA; CUBA RELEASE AFTER DELIVERY CHECK AGAINST DELIVERY. Press. Release ITO/58 ADDRESS BY DR. A . K. GANI, INDONESIAN REPUBLIC. Mr. Chairman, Fellow Delegates: On behalf of the Government of the Republic of Indonesia the Indonesian Delegation brings greetings to you and also extends its thanks for the invitation to attend this International Trade and Employment Conference. Let me state in the first place that we wheleheartedly welcome the creation of the International Trade Organization. From a general point of view, we are convinced that only through international action and consultation can the purposes and objectives laid down in Chapter One of the trade charter of the ITO be achieved. We particularly welcome the ITO because my country is one whhich, though rich in resources, has up-to new been denied the fruits of a proper and speedy economic development. Though providing great potentialities and possibilities for indus- trial development, our resources have as yet remained relatively untapped. Article 8 of Chapter Three, which deals with the importance of economic development, is in this respect, therefore, notwithout significance for us. we also pledge ourselves to adhere to article 12 of Chapter Three of the draft charter, in respect of international investment for economic development. What is contained in the paragraphs of the article just mentioned has, from the very start of our exist- ence as a free country, been one of the guiding principles of my Government in its economic policy. The Governments of the Republic cf Indonesia will welcome and encourage, in complete accord with article 12, foreign investments in all fields, in order to raise the productive capacity of the country, My Government is prepared (MORE) Page 2. ITO/58. to give the necessary incentive to foreign economic interests willing to take up economic activities in Indonesia. Such incent- ives can be given in the form of special Government assistance in accordance with Article 13 --regarding governmental essistance to economic development-- and also in the field of taxes, duties, etc. We pledge to bind ourselves by Section A of Chapter Four, dealing with tariffs, references, internal taxation, and regulatior. The Republic of Indonesia has never believed in the dishonest practice of unilateral confiscation. It is the firm belief of my Government that, in adhering to the principles enunciated above, we not only serve the interests of our own population, but what is even more important, the large common interests of all countries in improving opportunities for employment, by enhancing the product- ivity of labor, by increasing the demands for goods and services, by contributing to a balanced global economy, by expanding inter- mational trade, and by raising the levels of real income as specified in Article 8 and the subsequent articles of Chapter Three. Indonesia is a nation with a great past and a great r future in Southeast Asia; blessed with enormous resources of raw materials and manpower, Indonesia is ready to play a part worthy of its geographic and economic position in the world of today and tomorrow. The Delegation which I have the honor to represent has come here in a spirit of duty to acquaint this Confer nce -- and through this Conference the world at large-- with the huge potentialities of my country, whose great wealth of raw materials agricultural and mineral, has been known to the world for the past thousand years. The Republic of Indonesia since July 20th of this year has been the victim of a war of agression which has laid waste large territories, reserveirs of wealth; and numberless human lives. Only through the intermediation and under the supervision and (MORE) Page 3. ITO/58. guarantee of a third party will it be possible to solve this con- flict, because facts show that mutual distrust is increasing. It is in the spirit of "live and let live" that we have come here to acquaint you with what my country can offer the world and what we expect in return, so that not only peace but material wellbeing can quickly be realized in Southeest Asia, one of the main trouble spots in the world today. Perhaps it might be as well if I should outline to this Con- ference a few facts about Indonesia. The Indonesian Archipelag, consists of the Greater Sunda Islands comprising Java, Sumatra, Borneo and Celebes, the Lasser Sunda Islands embracing Bali, Sumbawa, Timor and Moluccas, and one-hall of New Guinea. The total land surface comprises an area of two million souare kilometers, with an estimated population of 71 millions. The density of popu- lation works out to an average of 35 per square kilometer. The last census was taken in 1930, when the total population was returned as nearly 61 millions. At that time the number of Indo- nesiqns was a shade over 59 millions; Dutchmen, Eurasians of Duteh descent, and non- Dutch Europeans totaled a quarter million; the Chinese returned the figure of one and a quarter million; while peoples of other Asiatic countries resident ln Indonesia accounted for just over a hundred thousand, Owing to the Pacific War and the difficult conditions in which we have lived after the Japanese surrender --conditions not of our own making-- we have not been able to take a census. How- ever, basing our estimate on a natural increase of l1j; per annum, we reckcn the present population of the Indonesian Archipelago at 71 millions, with 61 million in the Republican territory. I stress this point particularly in connection with the proposed formula outlined in the appendix to the draft charter for determining the number of votes to be allocated to each member, and (MORE) Page 4. ITO/58 in this connection I wish to make svecial reference to Formula A. In Table A, page 66, the Netherlands is stated as representing a population of 80 millions. This figure should be broken down as follows: Eight and a half millions in Holland; half a million in Surinam and Curaçac; ten millions in the Indonesin Archipelage Outside the territory of the Republic of Indoncsia, and 61 millions --gentlemen, I repeat this figure of 61 millions,-- in the territory cf the Republic of Indonesia. In view of these facts, it is incongruous that the Dutch should be credited with representing 80 million people. The Mohmedans form an overwhelming majority of the population, the minorities being Cristians, both Protestants and Catholics, and Euddhistic Hindus. But whatever the religious autlock of any Indonsin may be, he is determined that the country shall be free. The basis of our society from the dawn of history up to now is what is known as "Adat", which is a code of conduct and a pattern of behavior prescribed by customary, unwritten laws, This, together with religion, has always given our society, a democractic orientation and proved our best guarantee against the emergence of unwelcome political ideologies. Of this vast popultion of 71 millions, 85% are peasants. Going by the 1930 census, which was taken by the Dutch Colonial Government, then in power, only 7 out of 100 could read or write, The number of medical doctors in prawar Indonesia, to serve a pepu- lation on nearly 61 millions was only tweve hundred --one doctor to look after the health needs of 60,000 people scattered over on extensive land surface. A word now about economic conditions in Prewar Indoinesia. The setting is that of a typical colonial economy i.e., an export economy with the Dutch maintaining monopolistic control over exports and mports, over inter-island shipping, over the main agricultural products of the country, and over domestic trade and production in (MORE) Page 5. IT0/58 generanl. During the twenty years ending 1939, Indonesia exported goods to a total value of 13,000 million dollars. Imports for the same period were 8,000 million dollars, with an export baance of 5,000 million dollars, which works out to an average of 250 million dollars a year, The trade volume for the same twenty years Was 30,000 million dollars, equal to an annual volume of 1,500 million dollars. Let me pick one typical year to show you what conditions wre like. In 1938 the excess of exports over imports netted 300 million dollars, 0f this vast sum of money, only 38 million dollars went to the Indonesian podulation, which made up 98 per cent of the entire population. The remaining 262 million dollars went to the non-Indonesian population of two per cent, You can gather from this. that the living standard of the Indonesians was deplorable and all the more so because Indonesia has been, and continues to be a country with immense resources of raw materials. In 1922 the Duteh Colonial Government issued a report on the cost of living and wages as affecting Indonesiains. According to this report, the average Indonesian wage was sixteen cents a day for the single working member of a faimily of five. This works out at three cents a day per person. Again, in 1933, the Dutch Colonial Government issue-d ^ similar report. By this time the averagee wage of the Indonesian had sunk to five cents a day --one cent per person per day. The report arrived at the sflg conclusion that two cents a dday was quite sufficient for the livelihood of Indonesians --and added a rider to the effect that the Dutchmen, however, needed a minimum of three dollars a. day (which works out .t 300 times that of the Indonesian wage!) It will be noticed that the national income of the Inde- nesians showed a steady deterioration ovaer the years. While in 1929 the Indonesian population of 61 millions earned 2,000 million dollars, in 1933 the figure had dropped to 350 'million dollars, (MORE) Page 6. ITO/58 with a slight rise to 1,000 million dollars in 1937. It must, of course, be borne in mind thst with a drop in the income there was a steady increase in population. One of the consequences of this fall in national income was the reduced purchasing power of Indonesians, increasing illoteracu, and more opportunities for exploiters to take advantage of cheap labor. In 1928 the Dutch Colonial Government was sending 31 million dollars a year on its education budget, yet only a fraction of the Indonesian children of school-going age was able to take advantage of the meager facilities available for education. In 1938, the Dutch Colonial Government cut the education budget down to nine million dollars, whereas in all other parts of the world it was the effort of all governments, including even colonial goverriments, to allocate mare money for purposes of educa- tion. As a result of this Dutch policy, only saven Indonesians out of every hundred learned to read and write. On the other hand, with the standard of living being forced down for the Indonwsians, the struggle for existence was so great that most parents were ccm- pelled to stop sending their children to school in order that the youngsters might help to keep the pot boiling. In 1942, the Dutch Army of 100,000 strong surrendred to the Japanese after a week of steady retreat. For three and a half years the Japanese exploited the Indonesian Archipelago to feed their war machine. Raw products were taken by force or commandgered at nominal prices arbitrarily fixed by the Japanese. The Japanese flooded the country with military script, which was not worth even the paper on which it was printed. As the Japanese also seized crops without providing adequate reserves for the population, Indo- nesia, always self-sufficient in food, was faced by hunger; four to five million Indonesians fell victims to starvation, while millions of others still bear the scars of undernourishment. As a result of (MORE) INDONESIA -7- ITO/58 hundreds of years of colonial domination and exploitation, you have in Indonesia a country rich in resources but with a pauperized population. Since the Proclamation of the Republic of Indonesia on the 17th of August, 1945, the Republic has been forced to lead a pre- caricus existence because of the continue threat of war which paralyzed many activities of the Republic, The Dutch maintained a naval blockade of the Republic in order to strangle its commerce and also to prevent its rehabilitation. Even such urgently needed necessities au medicines, drugs, chemicals, textiles, clothing, and transport and communication facilities, imported into the Republic from abroad, were repeatedly intercepted and confiscated by the Dutch as contraband. Fortunately for us, we have beenable to produce enough rice, which is our staple, to fee the population. "hile the shortage of food is the main preocupation in most countries of the world today, we in Indonesia have up to now been getting along fairly well in that respect Java clone produced four million tans of rice in 1941; there was a drop to 2.8 million tons in 1945; and a further drop to 2.1 million tons in 1946. In 1947, however, there was an appreciable increase to 3,3 million tons. The production of auxiliary foods as maizo, tapioca, ground nuts znd soya beans is still increasing. Famine, however, is a future threat because one cf the objectives of the present Dutch war of agression was the occupation of all rice-bearing areas in order to starve the Republic into submission, Along with the satisfactory food position there has been sufficient work in the Republic with only a very few not gainfully employed. Because of the type of society in existence, where the family is the unit, religion and customary law make it possible for the unemployed to find food and shelter with their families till they can seek new employment. (MORE) -8- INDONESIA ITO/58 Our living standard has been so low that we have practically nothing to lose. It is true the Dutch Army is well equipped, but it is equally true that every home in Indonesia has the means where- with to produce a fire. If the Dutch persist in trying to occupy more territory, we shall be forced to continue our scorched earth tactics so that the invader may be denied the spcils of conquest, We know we are facing big odds, but we are convinced that right and justice must prevail, if not today, then tomorrow. During the little over two years in which we have existed again as a free nation, and although all our activities have been hampered by the Dutch Colonial Government, we have endeavored with the slen - der means at our command to reconstruct and rehabilitate our country so as a insure to the people what they have been denied through the long centuries of colonial exploitation -- a standard of living commensurate with the great wealth of the country. Political freedom has many aspects, but to us the paramount consideration is a cuick heightening of the standard of living of our population. This is a just and reasonable demand because we feel that the richness of the. Indonesial soil should be devoted primarily for the humanitarian work of lif ting the living standard of our people. This is one of the aims specifically stated in Chapter One of the draft Charter of the ITO, which defines its purposes and object- ives. The Dutch Colonial Government, in spite of the arbitration clause of the Linggajati agreement, has launched a war against us in order to reimpose the old colonial regime. The first essential for a rise in the standard of living, for the awakening of a new sense of freedom and worth in the indigenous masses, for the crea- tion of a fuller, richer, and finer human life, is the possession of a government which feels it is intimately associated with the native population and its interests. No foreign or colonial government, (MORE) INDONESIA -9- ITO/58 it being by definition alien, can possess this intimate association with the people, and ,even if it should be endowed with the most elevated attributes of altruism, it would still fall short of inter- preting the will of that people for its own destiny. The possession of the power of self-government is in the modern world the most vital instrument in the struggle for economic and cultural progresses It is the general belief of a large segment of the Dutch pop- ulation that the recovery of Holland is dependent on the exploitation of Indonesia. The same thing happened in the nineteenth century when Holland bled Indonesia to the bone after the Napoleonic wars. The system of forced labor was instituted together with an enforced monopolistic buying and selling of the raw materials produced in Indonesia. The Dutch want to regain their monopolistic control over trade and shipping. In accordance with Chapter Four Article 16, paragraph 1, concerning the general most-favored nation treatment, I would like to state that there should be free access to the material wealth of Indonesia. The Republic of Indonesia will not sponser monopolies as was the case in the past under Dutch colonial rule for the benefit of Dutch business firms and industries. We are well aware of the possible dangers of restrictive business practices in their effects on international trade. Our experience under Dutch colonial rule in the past, and even at present as a result of the Dutch-imposed blockade and Dutch attempts to restore monopolistic regulations, proves that such practices are not only detrimental to our own national, but also disadvantageous to other countries of the world which are in need of the commodities we can supply. We further hope that Article 44, Chapter Five, referring to general policy regarding restrictive business practices, will be instrumental in promoting direct trade between our country and the outside word. (MORE) INDONESIA - 10- ITO/58 This is a suitable point at which to tell you what Indonesia needs for her speedy economic reconstruction and trade rehabilitation, remembering aIl the time that Indone sia haas been without any consumer goods for the last six years. our immediate needs, our vital prio- rities, are: Textiles, medicines and medical equipment, chemicals, incentive goods, transport and communications utilities, and tools and equipment for agriculture and industry, as well as consumer goods of all kinds and varieties, Nearly two-thirds of the population of Java and quite a goodly portion of the popul-tion of Sumatra is to- day badly clothed as a result of the. Japanese occupation, followed by the Dutch military and naval blockade. The Republit of Indonesia has not been able to carry out its reconstruction program at either the tempo or the extent desirable, because of the shortage cf equip- ment and goods. Be that as it may, with the primitive means we have at cur command, we have gone on with our reconstructive work in the fields of education, public works, agriculture, and health. In the great task which lies ahead of us, we look to nations and peoples of good will to give us a helping hand with techniciens as well as the tools of reconstruction, With the manpower and resources which we are fortunate to possess, we shall be able to return to the world at no distant date the fruit of your-assistance to us. It is in this spirit that my delegation has been sent to this Conference by the Government of the Rpublic of Indonesia. The Republic pledges its full support to the International Trade and Employment Organization. The Republic can deliver direct to all whe may need the surplus products of Indonesia, and we can right now ex- port in big quantity to the international market. And the Republic agrees to take in increasing volume the goods which ycu can manufac- ture and to take ther without imposing unreasonable tariffs or ex- port or import duties. We seek world trade, we seek the products of the industrialized countries. Any decisions we arrive at here should be on the basis of moral worth, fair chance, and fair play. We have come here to achieve con- crete rèsults, not rigid formulas or outmoded practices, because it is vitally important that we should change the international economic aspect in the right direction for the benefit of all mankind. The Republic of Indonesia is prepared to accept whatever is just and resonable, and we lock forward to your cooperation and guidance in thc achievement of our aims. Mr. President and Gentlemen I thank you. ###############

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cb010hk9885

Correction to Speech by Mr. Clayton. U. S. Delegation

United Nations Conference on Trade & Employment

Department of Public Information Havana Cuba and United Nations Conference on Trade & Employment

NaT

press releases

Press Release ITO/194/Corr.1 and ITO/73-194/CORR. 1

https://exhibits.stanford.edu/gatt/catalog/cb010hk9885

cb010hk9885_90200389.xml

GATT_157

UNITED NATIONS CONFERENCE ON TRADE & EMPLOYMENT Department of Public Information Havana Cuba Press Release ITO/194/Corr. 1 CORRECTION TO SPEECH BY MR. CLAYTON. U. S. DELEGATION The following change to ITO/194, Mr. Clayton's speech, has been requested by the U.S. Delegation: Insert the following passages: "I have reference to Articles 15 and 42 of the Havana Charter. These Articles represent an important departure from the Geneva Draft Charter, in the facilities which they provide for the formation of regional economic systems. Although the U.S. Delegation has cooperated in the drafting of these changes we approached this task at first with considerable reluctance. However, we have been impressed by the arguments which have been put forward at this Conference in favor of these changes. More especially we have been influenced by the desire of our near neighbors, the Central American Republics, for a Charter which will promote rather than hamper their long and praisceworthy aspirations for political and economic unity. Those republics have constituted in the past a single political unit. All of their constitutions recognize the desira- bility of and the need for their eventual return to political unity. As recently as the early 1930 ' s they constituted a free trade area. Free trade exists even today to some extent between them, and they have a number of tariff preferences now in force. The United States Delegation believes that this historical back- ground, together with the start which has already been made toward the lowering of tariff barriers within this area, from an unusually favorable basis for closer union. The U.S. Delegation strongly supports the aspirations of the Central, American republics to re- establish the closest possible economic and political relationships. We hope that these changes that have been made in the Charter of the International Trade Organization will facilitate and encourage the achievement of those aspirations. (MORE) Correction to Speech by - 2 - ITO/194/Corr. 1 Mr. Clayton, U.S. Delegation 23 March 1948 On behalf of the United States Delegation I wish to add my voice to that of many others in expressing our deep appreciation and gratitude for the very gracious hospitality and for the many countesies which have been extended to the people of this Confer- ence by the charming people of Havana and by the governrnent and people of the Republic of Cuba. We have remained here a little longer than was expected and maybe a little longer than considerate guests should remain. But our Cuban hosts must share in this re- sponsibility, since the longer we stayed the warmer grew their hos- pitality and courtesies. And, Mr. Chairman, may we add our appreciation to you, Sir, for the very fair way in which you have presided over the meetings of this Cenference and the very intelligent manner in which you have assisted in guiding its affairs. I should like to extend the appreciation of my delegation also t the industry and effectiveness of the Secretariat. We are leaving now, all of us, seem, to return te our re- spective countries, but happy memories of our stay here and of the many friends we have made here will remain with us always. (End of Press Release ITO/194/Corr. 1)

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GATT_157

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qh156zc5648

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GATT_157

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gp007sq3813

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

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journal

24-38

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gp007sq3813_90240043.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 26 No. 26 London: Wednesday 13 November 1946 Londres: Mercredi 13 Novembre 1946 Wednesday 13 November 1946 A. Committee Meetings Committee V: Thirteenth C, Meeting Room V (Convocation 10.30 am Committee II - Technical Sub-committee: Ninth Meeting 10.30 a.m. Joint Committee on Indus- trial Development- Drafting Sub-committee: Fourth Meeting 10.30 am. Committees II and IV- Joint Drafting Sub-com- mittee on Subsidies on Primary Products: First Meeting 3.00 p.m. Committee II - Technical Sub-committee: Ninth Meeting (continued) 3.00 p.m. Committee II - Sub-com- mittee on Quantitative Restrictions and Ex- change Control: Third Meeting Room committeee Room V- Convocation Hall) Hoare Memorial Hall Room 230 Committee Room V- (Convocation Hall) Hoare Memorial Hall Room 230 Future Programme of Meetings Thursday 14 November 1946 This programme replaces the one published in Journal No. 25. Committee I: Fourth Meeting ... ... 10.30 am. Committee II-Procedures Sub-committee: Eleventh Meeting Committee II-Procedures Sub-committee: Eleventh Meeting (continued) joint Committee on Industrial Develop- ment-Drafting Sub-committee: Fifth Meeting 10.30 a.m. 3.00 p.m. 3.00 p.m. I. PROGRAMME DES SEANCES Mercredi 13 Novembre 1946 A. Séances de Commissions Heure Salle I5 heures Cinquieme Commission: Salle de Com- Treizieme Seance mission No. V (Convocation Hall) B. Séances de Comités so h. 30 Deuxieme Commission- Hoare Memorial Comit6 Technique: Hall Neuvieme Séance so h. 30 Commission mixte du de- Salle 230 veloppement industriel- Comite de Redaction: Quatrieme Séance so h. 30 Deuxieme et Quatrème Com- Salle de Com- missions-Comit6 mixte de mission No. V Redaction sur- les sub- (Convocation ventions aux produits es- Hall) sentiels: Premiere Seance 15 heures Deuxiéme Commission- Hoare Memorial Comit6 Technique: Hall Neuvieme Séance (suite) 15 heures Deuxieme Commission- Salle 230 Comité des Restrictions quantitatives et du Con- trôle des changes: Troisieme Séance Programme des prochailnes séances Jeudi 14 Novembre 1946 Ce programme remplace celui qui a 6t6 publi6 dans le No. 25 du Journal. Premiere Commission: Quatrieme Séance ... zo h. 30 Deuxème Commission-Comité de Procédure: so h. 30 Onzième Séance Deuxème Commission-Comité de Procédure: 15 heures Onzième Séance (suite) Commission mixte du développement industrial I5 heures Comite de Redaction: Cinquieme Saance 117 DE LA I. PROGRAMME OF MEETINGS Time 3.00 P.m. B. Sub-committee Meetings 11. ORDRE DU JOUR Wednesday 13 November 1946 Committee V: Thirteenth Meeting Consideration of the remaining items on the Agenda. including Functions of the Commissions and Purposes of the Organization. III. SUMMARY RECORD OF MEETINGS Committee V: Administration and Organization Twelfth Meeting Held on Tuesday 12 November 1946 at 10.30 a.m. and 3.00 p.m. Chairman: Mr. L. R. EDMINSTER (United States) Consideration was given to Article 50 of the United States Draft-Charter, dealing with the general functions of the Organization, and to Articles 51 (Structure) and 6r (Establishment of Commissions). A number of minor changes in these provisions were suggested for consideration by a Drafting Sub-committee. The Committee then took up the report of the ad hoc Drafting Sub-committee on those provisions which relate to Interpretation and Settlement of Disputes, and to Entry into Force. The Sub-committee's recommendations covering a number of proposed amendments, together with instructions to the Interim Drafting Committee, were approved. The Committee at its afternoon session resumed dis- cussion of Voting and related questions, with particular reference to Membership and Procedure in the Executive Board. It was agreed that the joint Rapporteurs should prepare a summary of the various suggestions that had been put forward, for further consideration by the Com- mittee, and that these questions should be taken up at a meeting to be held later this week. Erratum: The Erratum applies to the French text only. IV. DOCUMENTS DISTRIBUTED Tuesday 12 November 1946 Symbol No. Title E/PC/T/CII/45 Corrigendum to Summary Record of E/P Corr. I the English Meeting of Committee II. E/PC/T/CII/48 ... E/PC/T /CI & II/13 E/PC/T/CI & II/14 Committee II-Technical Sub-com- mittee: Summary Record of the Seventh Meeting. joint Committee Memorandum on Industrial Development, presented by Colombian Government. Joint Committee-Drafting Sub-com- mittee Summary -Record of the Second Meeting. Mercredi 13 Novembre 1946 Cinquième Commission: Treizième Séance Examen des derniers points inscrits à l'ordre du jour, qui concernant notamment les fonctions des Commissions et les buts de l'Organisation. 111. PROCES-VERBAUX DES SEANCES Cinquième Commission: Administration et Organisation Douzième Sèance Tenue le Mardi I2 Novembre 1946 à 10 4. 30 et a 15 heures President: M. L. R. EDMINSTER (Etats-Unis) La Commission examine l'article 50 du projet américain de Charte qui a trait aux fonctions éenérales de l'Organisa- tion, l'article 51 (Organes) et l'article 6I (Constitution des Commissions). Certaines modifications secondaires aux dispositions de ces articles ont été proposées, aux fins d'examen par un Comité de Rédaction. La Commiission étudie ensuite le rapport du Comité special sur les dispositions concernant l'interpretation et le règlement des différends ainsi que l'entrée en vigueur de la Charte. Elle approuve les recommendations formulees par le Comité sur un certain nombre de propositions d'amendements et sur les instructions destinies au Comité provisoire de Redaction. Au cours de sa seance de l'après-midi, la Commission reprend l'examen de la question du vote et des sujets qui s'v rapportent, en accordant une attention particulière à la qualité de membre et au riglement du Comitt executif. Elle decide que les Rapporteurs communs redigeront, en vue de son etude ulterieure par la Commission, un résumé des différentes propositions qui ont été formulées: elle decide en outre que ces questions seront examinées au cours d'une seance qui aura lieu dans le courant de la semaine. Erratum: Procds-verbal de la huitieme seance Commission (Journal No. 25, page 115): paragraph i, ligne 5: E/P de la .Troisiéme au lieu de: " final lire: " général" IV. DOCUMENTS DISTRIBUES Mardi 12 Novembre 1946 Cote Titre C/T/CII/45 Corrigendum au procès-verbal de in Corr.1 huitième seance de la Deuxième Commission. C/T/CII/48 ... Deuxieme Commission - Comite Technique: Proc&s-verbal de la septieme seance. E/PC/T/CI & II/13 Commission mixte: Memorandurp du Gouvernement de is. Colombie sur le developperiment industriel E/PC/T/CI & II/14 Commission mixte-Comité de Rédac- tion: Proces-verbal de la deuxieme seance. E/PC/T/CV/26 Committee V: Summary Record of E/PC/T/CV/26 ... Cinquieme. Commission: Procbs- the Tenth Meeting. verbal de la dixième séance,. E/PC/T/CV/27 ... Committee V: Summary Record of IE/PCIT/CV/27 ... Cinquihme Commission: - -Piocbs- the Eleventh Meeting. verbal de la onzieme stance. II. AGENDA ... .. 119 V. MISCELLANEOUS A. Corrigenda to Documents E/PC/T/CII/ST/PV (I) Document E/PC/T/CII/ST/PV/1&2 Page 34A, first paragraph, lines 4 and 5: Omit " the price and cost of production and the price in the home market" Page 34A, first paragraph, line 6: After the words " likely to happen" insert " in the home market ", and omit " because " (2) Document E/PC/T/CII/ST/PV/2 Page 20. line 7: After the word " second" insert " and the last" B. Visit to the Middlesex Guildhall The Justices of the County of Middlesex have invited members of Delegations and secretariats to visit the Middlesex Guildhall (immediately opposite Westminster Abbey), on Saturday next, 16 November at 3.00 p.m. Visitors will be shown round the buildings, and there will be an exhibition of some of the more interesting Records, including the original indictment of Ben Johnson. These will be explained by Colonel Le Hardy. Will all those wishing to attend please hand in their names to Miss Cunynghame Robertson (Room 51, tele- phone extension 356) between now and 6.oo p.m. on Friday. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text); telephone extensions: 255 and 29. V. DIVERS A. CorrIgenda aux documents E/PC/T/CII/ST/PV/ I & 2 Ces documents ont été publidés en anglais seulemnent. B. Visite du Middlesex Guildhall Les Magìstrats du Comité de Middlesex oat invité les membres des Délégations et des Secrétariats à visiter le Middlesex Guildhall (situé en face de l'Abbaye de West- minster). samedi prochain i6 novembre a I5 heures. Les invites participeront a une visite organisie des bitiments. Ils pourront visited 6galement une exposition de quelques pieces d'archives choisies parmi les plus interessantes, oh figurera original de late d'accusation de Ben Johnson. Cette exposition sera presentee par le Colonel Le Hardy. Les personnes desireuses de participer a cette visite sont prices de donner leur nom à Miss Cunynghame-Robertson (Piece 511 --poste 356) avant vendredi prochain, 18 heures. CONMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent ètre adressées au Bureau 414 pour le texte anglais et au Bureau 4I3 pour le texte français (telephone: postes 255 et 29). (53680) (20) - 1100 11/46 D. G. 335

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Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/dx502yb3652

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UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL OF THE PREPARATORY COMMIlTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 30 No. 30 London: Monday 18 November 1946 Londres: Lundi 18 Novembre 1946 I. PROGRAMME OF MEETINGS Monday 18 November 1946 See attached II. AGENDA Monday 18 November 1946 See attached III. SUMMARY RECORD OF MEETINGS See attached IV. DOCUMENTS DISTRIBUTED Saturday 16 November 1946 See attached COMUNICATIONS TO THE EDiTOR Communications to the Editor should be addressed to Room 414 (English text) and Room 4I3 (French text); telephone extensions: 255 and 29. I. PROGRAMME DES SEANCES Lundi 18 Novembre 1946 Voir feuille jointe II. ORDRE DU JOUR Lundl 18 Novembre 1946 Voir feuille jointe III. PROCES-VERBAUX DES SEANCES Voir feuille joint IV. DOCUMENTS DISTRIBUES Samedi 16 Novembre 1946 Voir feuille joint COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent ètre adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le text français (téléphone: postes 255 et 29). 129 (53680) (26) - 1200 11/46 D.L.. G.335 JO URNAL N O. 3 0 - 129 A - I. PROGRAMME OF MEETINGS Monday 18 November 1946 A. Special Meetings Time Room 4.30 P.m. Heads of Delegations : Sixth Meeting Committee Room V - (Convocation Hall) B. Committee Meetings 3.00 p.m. Committee II : Tenth Meeting Hoare Memorial Hall 5.00 p.m. Joint Committee on industrial Development: Room 230 Fourth Meeting C. Sub-committee Meetings 10.30 a.m. Committee II - Sub-committee on Quantitative Room 230 Restrictions and Exchange Control; Sixth Meeting - Future Programme of Meetings Tuesday 19 November 1946 Committee IV : Eighth Meeting 10.30 a.m. Committee V Fifteenth Meeting 10.30 a.m. Committee II Eleventh Meeting 3.00 p.m. Wednesday 20 November 1946 Committee II : Twelfth Meeting 11.00 a.m. Plenary Meetings: Fifth Session 3.00 p.m. Thursday 21 November 1946 . Plenary Meetings: Sixth Session 11.00 a.m. Plenary Meetings: Seventh Session 3.00 p.m. Note: No arrangements have been made for evening meetings on Monday or Tuesday, but it is felt that Sub-committees of Committee II may wish to use these evenings to clear up their ;work in time for the last meeting of Committee II on Wednesdary morning, 20 November 1946. I . PROCESS DES S& *4.S Lundi 13 Novembre I 946 Heure Séances Spéciales Salle 16 h. 30 Sixiièue Réunion des Chefs de Délé- Salle de Commission 1\o.V gations (Convocation Hall) B. Séances de Commissions 15 heures Deuxième Commission : Dixième Hoare Memorial Hall Séance 17 heures Commission mixte du développement Salle 230 industrial : -uatrième Séance C. Séances de Gomité's 10 h. 30 Deuxième Commission - Comité des Salle 230 Restrictions quantitatives et du Contrôle des changes Sixième Seance Programme des prochaines séances Mardi 19 Novembre 1946 Quatrième Commission Huitième 10 h .30 Seance Cinquième Commission Quinzième 10 h. 30 Seance Deuxième Commission : Onzième Séance 15 heures Mercredi 20 Novembre 1946 Deuxième Commission : Douzième . Séance 11 heures Cinquièmen Séance Plénière 15 heures Jeudi 21 Novembre 1946 Sixième Séance Plénière 11 heures Septième Séance Plénière 15 heures Note: Il n'a pas été prévu de séances de nuit pour- le lundi 18 et le mardi 19 Novembre, mais les Comi- tés de. la Deuxième Commission désireront peut-être consacrer ces soirées à la liquidation de leurs tra- vaux en vue de la derrnire séance de la Deuxième Com- mission qui doit se tanir le mercredi 20 Novembre dans la matinée. - 129 B - - 129 C - II. AGEND Monday 18 November 1946 Committee II :Tenth Meeting Consideration of the report of the Technical Sub-committee. III. SUMARY RECORD OF MEETINGS Committee III : Restrictive Business Practices Ninth Meeting Held on Saturday 16 November 1946 at 11.00 a.m. Chairman Mr. H. GONZALEZ (Chile) The Committee debated the final report prepared, by the Drafting Sub-committee in collaboration with the Secretariat (Document E/PC/T/CIII/17). After the adoption of the report, the session of Committee III was closed. by the Chairman. IV. DOCUMENTS DISTRIBUTED Saturday 16 November 1945 Symbol No. E/PC/T/CII/51 E/PC/T/CIII/17 E/PC/T/CIV/14 E/PC/T/CV/30 Title Committee II: Summary Record of the Ninth Meeting Committee III Final Report of the Commit Committee IV Draft Resolution submitted by United Kingdom Delegation Committee V: Summa Record of the Twelft Meeting (continued) tee h - 129 D - II. ORDRE DU JOUR Lundi 18 Novembre 1946 Deuxième Commission Dixième Seance Examen du Rapport du Comité Technique. III. PROCES-VERBAUX DES SEANCES Troisième Commission: Pratiques Commerciales Restrictives Neuvième S'ance Tenue le Samedi 16 Novembre 1946 à 11 heures President: M. H. GONZALEZ (Chili) La Troisième Commission étudie le Rapport final préparé par le Comité de Rédaction en collaboration avec le Secrétariat (Do- cument E/PC/T/CIII/17). Après 1 'adoption du rapport, le Président déclare que la Troisième Commission a tezminé ses travaux. Cote E/PC/T/CII/51 E/PC/T/CIII/147 E/PC/T/CV/30 IV. DOCUMENTS DISTRIES Samedi 16 Novembre 1946 Titre Deuxième Commission: Proces-verbal de la neuvibme seance. Document publié en anglais seulement. Projet de Résolution présenté par la Délégation du Royaume-Uni. Cinquièrae Ccmmission: Procès-verbal de la douizième seance (suite).

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mw064yj9305

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/mw064yj9305

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UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 28 No. 28 London: Friday 15 November 1946 Londres: Vendredi 15 Novembre 1946 I. PROGRAMME OF MEETINGS Friday 15 November 1946 A. Special Meetings Room Heads of Delegations: Committee Room Fifth Meeting V-(Convocation Hall) B. Committee Meetings Committee II: Ninth Hoare Memorial Meeting Hall Committee V: Four- teenth Meeting Committee Room V-(Convocation Hall) tings Room 230 Room 230 Hoare Memorial Hall Room 243 Hoare Memorial Hall Committee Room V-(Convocation Hall) C. Sub-committee. Mee 10.30 am. Committee III--Liaison Sub-committee: First Meeting 2.00 pm. Committee II-Drafting Sub-committee on State Trading: First Meeting 3.00 p.m. Joint Committee on In- dustrial Development DraftingSub-commit- tee: Sixth Meeting 3.00 pm. Committees II and IV- Joint Drafting Sub- committee on Subsi- dies on Primary Pro- ducts: Second Meeting 8.00 p.m. Committee II- Proce- dures Sub-committee: Twelfth Meeting 8.30 p.m. Committee II - Sub- committee on Quanti- tative Restrictions and Exchange Con- tiol: Fourth Meeting I. PROGRAMMES DES SEANCES Vendredl 15 Novembre 1946 A. Séances Spéciales HeNs'r Salie I0 h. 30 Cinquième Réunion dee Chefs Salle de Com- de Délégations mission No. V (Convocation Hall) B. Séances de Commissions II h. 30 Deuxème Commission . Hoare Memorial Neuvième Séance Hall I5 heures Cinquième Commission: Salle de Com- Quatorzième Séance mission No. V (Convocation Hall) C. Séances de Comités I0 h. 30 Troisième Commission- Salle 230 Comité de Liaison: Première Séance 24 heures Deuxième Commission- Comité de Rédaction sur le Commerce d'Etat: Première Séance 25 heures Commission mixte du Hoare Memorial developpement industriel- Comité de Rédaction: Sixième Séance 15 heures Deuxième et Quatrième Com- Salle 243 missions-Comité mixte de Rédaction sur les subven- tions aux produits essen- tiels: Deuxiéme Séance 20 heures Deuxième Commission- Hoare Memorial Comité de Procedure: Hall Douzieme Seance 20 h. 30 Deuxieme Commission- Comité des Restrictions quantitatives et du Con- trôle des changes: Quatrème Séance Sa Salle 230 Memorial Hall Ile 243 Hoare Memorial Hall Salle de Com- mission No. V (Convocation HaLI) 123 DE LA Time 10.30 am. 11.30 am. 3.00 p.m. 124 Future Programme of Meetings Saturday 16 November 1946 This programme replaces the one published in Journal No. 27 Joint Committee on Industrial Develop- ment: Fourth Meeting Committee II-Procedures Sub-committee: Thirteenth Meeting Committee III-Ninth Meeting ... ... Committee II-Procedures Sub-committee: Thirteenth Meeting (continued) II. AGENDA Friday 15 November 1946 I0.30 a.m. I0.30 am. II.00a.m. 3.00 p.m. Committee Il: Ninth Meeting 1. Consultation with the Representatives of the national Chamber of Commerce 2. Consultation with the Representatives of the Federation of Trade Unions Inter- World Committee V: Fourteenth Meeting I. Report of ad hoc Drafting Sub-committee on Articles 50, 51 and 61 and the Canadian proposal for the addition of a new paragraph to Article 57 2. Report of Joint Rapporteurs on Voting and Membership in the Executive Board 3. Other Business III. SUMMARY RECORD OF MEETINGS Committee I: Employment, Economic Activity and Industrial Development Fourth Meeting Held on Thursday I4 November I946 at .10.30 a.m. Chairman : Dr., WUNSZ KING (China) The-Committee considered the draft report which had been prepared by the Rapporteur. Subject to certain diafting changes the report was adopted unanimously. -The Chairman then welcomed to the Committee the Representatives of the International Chamber of Commerce, Mr. W. B. PHILLIPS, Sir Herbert DAVIS and Mr. R. BARTON. and the Representatives of the World Federation of Trade Unions. Mr. J. DURET. Mr. E. SILZ and Mr. R. ROUS, who had been invited to consult with the Committee. Since both these organizations were closely connected with employment problems, their views would be of particular interest to the Committee. The Committee then heard statements from Sir Herbert DAVIS and Mr. J. DURET, and decided that these state- ments should be brought to the attention of the next session of the Preparatory Committee. Following a concluding statement summarizing the Committee's work, the Chairman declared the Committee adjourned. IV. DOCUMENTS DISTRIBUTED Thursday 14 November 1946 Symbol No. Title E/PC/T/W/21 ... Questions submitted by the World Federation of Trade Unions. E/PC/T/CI/16 ... Committee I: Draft Resolution on Methods to Maximise Employ- ment, submitted by the Inter- national Chamber of Commerce. E/PC/T/CI/17 Committee I: Observations on the Draft Report, submitted by Polish Observer. E/PC/T/CII/50 Committee II - Technical Sub- - committee: Summary Record of theNinth Meeting. E/PC/T/CI & II/16 Joint Committee - Drafting Sub- committee: Summary Record of the Third Meeting. Programme des prochalnes séances Samedi 16 Novembre 1946 Ce programme remplace celui qui a été publié dans le No. 27 du Journal. Commission mixte du développement industriel: Quatrième Séance Deuxième Commission-Comité de Procédure: Treizième Séance Troisième Commission: Neuvieme Séance ... Deuxième Commission-Comité de Procédure: Treizième Séance (suite) o h. 30 20 h. 30 II heures I5 heures II. ORDRE DU JOUR Vendredi 14 Novembre 1946 Deuxième Commission: Neuvièmne Séance I. Echange de vues avec les reprèentants de la Chambre de Commerce Internationale. 2. Echange de vues avec les representants de la Fédération mondiale des Syndicats. Cinquième Commission: Quatorzlème Séance I. Rapport du Comité special sur les articles 50, 5I et 6I ainsi que sur la proposition de la Délégation du Canada d'ajouter un nouveau paragraph à l'article 57. 2. Rapport presented par les rapporteurs sur le mode de scrutin et la designation des membres du Comité exécutif. 3. Divers. III. PROCES-VERBAUX DES SEANCES Première Commission: Emploi, Activité économique et Développement industrial Quatrième Séance Texue le Jeudi 14 Novembre I946 à IO h. 30 Président: M. WUNSZ KING (Chine) La Commission étudie le projet de rapport préparé par le Rapporteur et l'adopte à l'unanimite, sous réserve de certaines modifications de redaction. Le Président accueille ensuite, au nom de la Commission M. W. B.: PHILLIPS, Sir Herbert DAVIS et M. R. BARTON, reprtsentants de la Chambre de Commerce International, ainsi que M. J. DURET. M E. SILZ et M. R. ROUS. représentants de la Fédération mondiale des Syndicats, qui ont été invites à conférer avec les membres de ia Commission. Etant donné que les problems de l'emploi touchent de très près ces Organisations, les opinions de leurs représentants interesseroat particulibrement la Commission. La Commision extend ensuite les declarations de Sir Herbert DAVIS et de M. J. DURET. et décide de les soumettre b6 la Commission Preparatoire, lors de sa prochaine session. Après avoir résumé dans un exposé final les travaux de la Commission, le Président declare que lea debats de la Commission sont clos. Cote E/PC/T/W/21 E/PC/T/Cl/16 E/PC/T/C/17 E/PC/T/CII/50 E/PC/T/CI & II/16 IV. DOCUMENTS DISTRIBUES Jeudi 4 Novembre 1946 Titre 2I ... Questions possés par la Ffd6ration mondiale des Syndicats. I/I6 ... Project de resolution sur lea methodes destinées à porter .l'emploi à son maximum, soumis par la Chamnbre de Commerce Internationale. /17 Première Commission: Obsèrvations présentées par l'observateur polonais sur le projet de Rapport de la Commission. II/50 ... Deuxième Commission- Coite Tech- nique; Procès-verbal de la neuvi- éne sétance. I & II/x6 Commission mixte-Comité de Redac- tion: Procès-verbal de la troisieme séance. 125 V. MISCELLANEOUS A. Accommodation at Church House Dr. H. C. COOMBS, Chairman of Committee II, has been allotted Room 236. telephone extensions 94 and I71. Precis writers (Mr. Loxley) lately occupying Room 236, have moved to Room 338, telephone extension 104. B. " Britain Can Make It" Exhibition The visit of members of Delegations and secretariats to the " Britain Can Make It " Exhibition next Tuesday. ig November, has been timed to start at 8.30 p.m. and not 9.oo p.m. as previously notified. The Council of Industrial Design has also sent us some complimentary tickets for the Exhibition. These can be had on application to Miss Cunynghame Robertson (Room sIx, telephone extension 356). Members of Delegations and secretariats are advised that the best times to use these tickets are Tuesday and Friday mornings, when the general public is excluded; but they can, of course, be used whenever the Exhibition is open, vix.:- Weekdays - 10.00 a.m. to 10.00 p.m. Sundays - 2.30 p.m. to 6.00 p.m. COMMUNICATIONS TO THE EDITOR V. DIVERS A. Attribution de locaux à Church House Le Bureau 236 a été attribué à M. H. C. COOMBS. President de la Deuxieme Commission (telephone: postes 94 et I71). Les rédacteurs de procès-verbaux (M. Loxley) ont quittd le Bureau 236 pour s'installer dans le Bureau 338 telephonee: poste 104). B. Exposition " Britain Can Make It" C'est à 20 heures 30. et non a 21 heures, comme il avait e annoncé précédemment, que commencera la visite par les Délégués et les membres des Secrétariats de l'exposition "Britain Can Make It ", mardi prochain, 19 novembre. Le Conseil des Etudes industrielles nous a envoy quelques billets supplémentaires pour cette exposition. Pour les obtenir, s'adresser a Miss Cunynghame-Robertson (Bureau 511. poste 356). Les membres des Délégations et du Secretariat voudront bien noter qu'il est préférable d'utiliser ces billets le mardi et le vendredi matin. lorsque l'exposition est fermée au grand public, mais ils peuvent naturellement étre utilisés à toute heure oú l'exposition est ouverte, c'est-à-dire: en semaine: de 10 heures a 22 heures. le dimanche: de 14 heures 30 à I8 heures. COMUNICATIONS A LA REDACTION Communications to the Editor should be addressed to Les communications à la Rédaction doivent être Room 414 (English text) and Room 4I3 (French text); adressées au Bureau 414 pour le texte anglais et au Bureau telephone extensions: 255 and 29. 413 pour le texte français (téléphone: posted 255 et 29). (53680) (22) - 3200 11/46 D.I. G. 335

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fw531sx4518

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

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journal

24-38

https://exhibits.stanford.edu/gatt/catalog/fw531sx4518

fw531sx4518_90240046.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 29 No. 29 London:- Saturday 16 November 1946 Londres: Samedi 16 Novembre 1946 I. PROGRAMME OF MEETINGS Saturday 16 November 1946 A. Committee Meetings Time . Room 11.00 a.m. Committee III: Ninth Hoare Memorial Meeting Hall B. Sub-committee Meetings 10.30 a.m. Committee II- Procedures Sub-committee: Twelfth Meeting 10.30 am. Joint Committee on Indus- trial Development - Drafting Sub-committee: Seventh Meeting 2.30 p.m. Committee II - Drafting Sub-committee on State Trading: Second Meeting 3.00 p.m. Committee II- Procedures Sub-committee : Twelfth Meeting (continued) 3.00 pu.m Committee II-Sub-commit- teeonQuantitative Restric- tions and Exchange Con- trol: Fifth Meeting Room 243 Room 230 Room 230 Room 243 I. PROGRAMME DES SEANCES Houre ii heures Samedi 16 Novembre 1946 A. Séances de Commissions Sale Troisieme Commission: -Hoare Memorial Neuvième Séance Hall B. Seances de Comités 10 h. 30 Deuxième Commission- Comité de Procédure: Douzième Séance 10 h. 30 Commission mixte du dé- veloppement industriel- Comité de Rédaction: Septième Séance 14 h 30 Deuxième Commission- Comité de Rédaction sur le Commerce d'Etat: Deuxième Séance 15 heures Deuxième Commission- Comité de Procédure: Douzième Séance (suite) Hoare Memorial 15 heures Hall Future Programme of Meetings It has been tentatively arranged that Committee IV will have its Eighth Meeting on Monday I8 November 1946 at I0.30 a.m., and that Committee II will have its Tenth Meeting at 3.00 p.m. on the same day. II.AGENDA Saturday 16 November 1946 Committee IIl: Ninth Meeting I. Report of the Chairman on the meetings of the Drafting Sub-committee, held on 13 November 1946, and the Liaison Sub-committee, held on 15 November I946. Deuxieme Commission- Comité des Restrictions quantitatives et du Con- trôle des Changes: Cinquième Seance Salle 243 Salle 230 Salle 230 Salle 243 Hoare Memorial Hall Programme des prochaines séances Il a été décidé à titre provisoire que la Quatrième Com- mission tiendrait sa huitième stance lundi 18Novembre 1946 à 10 h. 30 et la Deuxieme Commission, sa dixièrme séance, le même jour, à I5 heures. II. ORDRE DU JOUR Samedi 16 Novembre 1946 Troisième Commission: Neuvième Séance I. Rapport du Président sur les séances tenues par le Comité de Rédaction, le 13 Novembre I946, et par le Comité de Liaison. le 15 Novembre I946. I26 DE LA 127 2. Debate and Resolution on Part II of the Final Report of Committee III to the Preparatory Committee of the International Conference on Trade and Employment, in the formulation of Document E/PC/T/CIII/17. 3. Debate and Resolution on Specific Instructions to the Drafting Committee. 4. Closure of the Meeting. III. SUMMARY RECORD OF MEETINGS Committee II: General Commercial Policy (Restrictions, Regulations and Discriminations) Ninth Meeting Held on Friday 15 November 1946 at 11.30 a.m. Chairman: Dr. H. C. COOMBS (Australia) The Committee heard statements from Mr. B. W. PHILLIPS, Representative of the International Chamber of Commerce, and from Mr. J. DURET, Representative of the World Federation of Trade Unions, on questions connected with General Commercial Policy. - The Chairman thanked the Representatives in question for the information they had supplied, which would be considered in the future work of the Committee. IV. DOCUMENTS DISTRIBUTED Friday 15 November 1946 Symbol No. Title E/PC/T/14 ... Memorandum presented by Colom- bian Government. E/PC/T/CII/50 Add. I Document issued in French only. E/PC/T/CIII/16 . Committee III: Summary Record of the Eighth Meeting. E/PC/T/CV/29 ... Committee V: Summary Record of the Twelfth Meeting. E/PC/T/CV/29 Corr. I Document issued in French only. V. MISCELLANEOUS A. Committee II- Technical Sub-committee: Final Report Important Notice The final report of the Rapporteurs of the Technical Sub-committee has been prepared and will be available for distribution early Monday morning, 18 November. Each Delegate on that Committee may obtain a copy of this report Monday morning in Room 239. It is requested that comments on the content of the report be sent in writing to the Secretary of the Sub-committee by 1.00 p.m., if possible. Committee II will consider the report at its meeting at 3.00 p.m. B. List of Delegates-Amendment Document E/PC/T/INF/2 NORWAY: (Page 12) Under Delegates -- delete the name of Mr. Johannes Brunaes, who has returned to Norway, and substitute Mr. Hans Blom C. Corrigendum to Document E/PC/T/W/21 (Questions submitted by the World Federation of Trade Unions) Page 5, fifth paragraph (Eighth Question), line5: for " increasing read " penalizing 2. Débats et resolution sur la seconde partie du Rapport final de la Troisieme Commission de la Commission Préparatoire de la Conférence Internationale du Commerce et de l'Emploi, dont le texte a paru dans de Document E/'Cr/r/CllIf/7. 3. Débats et résolution sur les instructions spéciales a donner au Comittl de Rédaction. q. Clôtude des débats. III. PROCES-VERBAUX DES SEANCES Deuxilme Commission: Politique Commerciale Générale (Restrictions, réglementations et mesures discriminatolres) Neuvième Séance Tenue le Vendredi 55 Novembre 1946 à iI h. 30 Président: M. H. C. COOMBS (Australie) La Commission entend des déclarations de M. B. W. PHILLIPS, représentant la Chambre de Commerce International, et de M. J. DURET, représentant la Fédération Mondiale des Syndicats, sur des questions relatives à la politique commercial générale. Le President remercie ces personnalités des renseigne- ments qu'elles ont apportés et qui seront examinés par la Comnussion au sours de ses prochains travaux. IV. DOCUMENTS DISTRIBUES Vendredi 18 Novembre 1946 Cote Titre E/PC/T/14 ... Memorandum présentéd par le Gouverne- ment de la Colombie. E/PC/T/CII/50 Deuxième Commission-Comité Tech- Add. I nique: Procès-verbal de la neuvième seance (suite et fin). E/PC/T/CIII/16 Troisième Commission: Procès-verbal de la huitième séance. E/PC/T/CV/29... Cinquième Commission: Procés-verbal de la douzième seance. E/PC/T/CV/29 Cinquième Commission: Corrigendum Corr. I au Procès-verbal de la douziame séance. V. DIVERS A. Deuxième Commission: Comit Technique: Rapport final Note important Le rapport final prédparé par les rapporteurs du Comité Technique est prêt et pourra etre distribué le lundi 18 Novembre, au début de la matinée. Tons les Délégués membres.de la Deuxième Commission pourront en obtenir un exemplaire, lundi matin, au Bureau 239. Les Délégués désireux de présenter des observations sur le contenu du rapport sont pries de les adresser par écrit au Secrétaire du Comité, si possible avant 13 heures. La Deuxième Commission examiner le rapport au cours de la stance qui doit avoir lieu le même jour à 15 heures. B. Modification aux listes des Délégations Doc. E/PC,/T/INF/2 NORVEGE: (Page I2) Délégués: supprimer le nom de M. Johannes Brunaes, qui a regagné la Norvège et le remplacer par celui de M. Hans Blom C. Corrigendum au Document E/PC/T/W/21 (Questions posées par la Fédération mondiale des Syndicats) Page 6, paragraph 4 (huitième question). ligne 5: au lieu de: " généraliser" lire: " pénaliser " I28 D. Corrigendum to Document E/PC/T/CI/PV/4 Page 13. first paragraph, line 4: for " American" read " International" E. Corrigendum to Document E/PC/T/CIII/15 (Committee III: Summary Record of the Seventh Meeting) Page 3, ninth paragraph, lines I and 2: Delete the comments of Mr. NAUDE (South Africa) and substitute the following: Mr. NAUDE (South Africa) stated that he under- stood the reasons for the exclusion of services from the scope of the Charter and did not propose to pursue the matter. He would mention, however, that his Govern- ment was interested in the matter of shipping in relation to the cartel problem." F. Accommodation at Church House (Reference Journal No. 28, p. I25) The telephone extension of Dr. H. C. COOMBS is I45. G. Visit to Middlesex Guildhall (Reference Journal No. 26, p. I19) Will those wishing to take part in this visit please meet Colonel Le Hardy in the Main Hall, Dean's Yard entrance to Church House, at 2.45 p.m. to-day- H. Lost One gold cigarette lighter. One ear-ring. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text); telephone extensions: 255 and 29. D. Corrigendum au Document E/PC/T/CI/PV/4 Page i6, paragraph 4, ligne 4: au lieu de Americain" tire: "international " E. Corrigendum au Document E/PC/T/CIII/15 (Troisième Commission: Procès-verbal de la septieme stance) . Page 4, paragraph 5, lignes I et 2. Supprimer l'observation de M. NAUDE (Union Sud Africaine) et la remplacer par le texte suivant: " M. NAUDE (Union Sud Africaine) déclare qu'il comprend parfaitement les raisons pour lesquelles les services relatifs aux transports maritime sont exclus du cadre de la Charte, et qu'il ne désire pas s'attarder sur cette question. Il tient à indiquer, toutefois, que son gouvernement s'intéresse à la question des transports maritimes. envisage dans ses rapports avec le probleme des cartels." F. Attribution de locaux à Church House (Cf. Journal No. 28, page 125) Le nuin6ro de telephone de M. H. C. COOMBS est: poste 245. G. Visite du Middlesex Guildhall (Cf. Journal No. 26, page iig) Les personnes désireuses de participer a cette visite sont priées de bien vouloir se trouver à 14 h. 45, aujourd'hui, dans le hall principal de Church House, entree de Dean's Yard, où le Colonel le Hardy les attendra. H. Objets perdus Un briquet en or. Une boucle d'oreille. COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent atre adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte trançais (téléphonee: postes 255 et 29). (53680) (25) - 1200 11/46 D.L. G. 335

GATT Library

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Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

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journal

24-38

https://exhibits.stanford.edu/gatt/catalog/qq533cf9143

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UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 33 No. 33 London: Thursday 21 November 1946 Londres: Jeudi 21 Novembre 1946 Time 4.30 p.m I. PROGRAMME OF MEETINGS Thursday 21 November 1946 A. Special Meetings Room . Heads of Delegations: Hoare Memorial Seventh Meeting Hall B. Committee Meetings Nil. C. Sub-committee Meetings 10.30 a.m. Committee II - Sub- Committee Room committee on Quan- V-(Coavocation titative Restrictions Hall) and Exchange Con- trol: Seventh Meeting 2.30 P.M. ConamitteeII-Drafting Sub-committee on State Trading: Sixth Meeting Room 230 * As it is felt that a further meeting of Heads of Delega- tions is desirable and that it may be difficult to find any other time before the beginning of the Plenary Sessions, it is suggested that there should be a meeting at 4.30 p.m. to-day (Thursday). If any principal Delegate finds this arrangement inconvenient, the Executive Secretary would be glad to be informed as soon as possible. He hopes, however, that for the reasons given above it will not be found necessary to postpone the meeting. Future Programme of Meetings Friday 22 November 1946 Committee II: Twelfth Meeting ... I.0.30 am. Committee II: Twelfth Meeting (continued) 2.30 p.m. Committee II: Twelfth Meeting (continued) 8.30 p.m. I. PROGRAMM DES SEANCES Jeudi 21 Novembre 1946 A. Séances Spéciales Heure Salc 16 h. 30 *Septiéme Réunion des Chefs Hoare Memorial de Délégations Hall B. Séances de Comnraislons Néant C. Séances de Comités io h. 30 Deuxièrme Commission - Comité des Restrictions quantitatives et du Con- trôle des changes: Septième Séance I4 h. 30 Deuxième Commission - Comité de Rédaction sur le Commerce d'Etat Salle de Com- mission No. V '(Convocation- Hall) Salle 230 * Come le sentiment général est en faveur d'une nouvelle reunion des Chefs de Délégations, et qu'il peut être difficile de trouver un autre moment avant que nes commencent les séances plénières, le Secrétariat propose qu'une réunion ait lieu aujourd'hui, jeudi, à I6 h. 30. Au cas où un Chef de Délégation y verrait un inconvenient, le Secrétaire Exécutif serait heureux d'en être informé le plus tôt possible. n espère cependant, pour les raisons données ci-dessus, qu'il n'y aura pas. lieu d'ajourner cette réunion. Programnme des prochaines séances Vendredi 22 Novembre 1946 Deuxième Commission: Douzième Sfance ... Io h. 30 Deuxième Commission : Douzièma Séance 14 h. 30 (suite) Deuxième Commission: Douzième Séance 20 h. 30 (suite) 136 I37 II. SUMMARY RECORD OF MEETINGS Committee II: General Commercial Policy (Restrictions, Regulations and Discriminations) Eleventh Meeting Held on Wednesday 20 November 1946 at 3.00 p.m. Chairman: Dr. H. C. COOMBS (Australia) II. PROCES-VERBAUX DES SEANCES Deuxibme Commission: Polltique Générate Com- merciale (Restrictions, réglementations et mesures discriminatoires) Onzième Séance Tenue le Mercredi 20 Novembre 1946 à I5 heures President: M. H. C. COOMBS (Australie) The Committee continued and concluded the discussion La Commission poursuit et conclut la discussion sur of the substance of the report of the Technical Sub- 1'essentiel du Rapport du Comité Technique. committee. A message was received from the Joint Committee on Industrial Development with the request that Committee II should include certain provisions in Articles 18 and 20 concerning industrial development and reconstruction. The Committee decided to request the Procedures Sub- committee and the Sub-committee on Quantitative Restric- tions and Exchange Control respectively to consider this message in their reports. Finally.an arrangement was made with the Procedures Sub-committee to the effect that the draft report of the Sub-committee, including the memorandum on Multilateral Trade Agreement Negotiations, would be rendered available to all Delegations and discussed at meetings of the Committee on Friday 22 November I946. Committee IV: Intergovernmental Arrangements Commodity Ninth Meeting Held on Wednesday 20 November 1946 at 5.00 p.m. Chairman: Mr. J. R C. HELMORE (United Kingdom) At its final meeting, the Committee adopted the Draft Report presented by the Rapporteur. Appreciation was expressed of the services rendered by the Chairman, the Rapporteur and the Secretariat III. DOCUMENTS DISTRIBUTED Wednesday 20 November 1946 Symbol No. E/PC/T/CII/54 Corr E/PC/T/CII/55 E/PC/T/CIV/17 E/PC/T/CV/15 Corr Title -.5 Committee II: Comments by South African and Australian Delegations on the Draft Report of the Technical Sub-committee. ... Committee II: Summary Record of the Tenth Meeting. ... Committee IV: Statement pre- sented by the International Chamber of Commerce. Corrigeadum to Summary Record of the Sixth Meeting of Com- mittee V. r. I IV. MISCELLANEOUS A. Forwarding Addresses of Delegations Before the Conference finally adjourns, would Delegations kindly forward instructions in writing to the Chief of Distri- bution. Room 142, giving addresses where any outstanding documentation is to be sent, and the number of copies in each- language required. Elle a recu une communication de la Commission mixte du développement industrial lui demandant d'insérer dans le texte des articles 18 et 20 certaines dispositions relatives au développement industrial et a la reconstruction. La Commission décide de demander au-Comité de Pro- cédure et au Comité des Restrictions quantitatives et du Contrôle des changes le tenir compte de cette communica- tion dans leurs Rapports respectifs. Enfin, la Commission se 'met d'accord avec le Comité de Procedure pour que le projet de Rapport du Comité, y compris le memorandum sur les négotiations d'accords commerciaux multilatéraux, soit communiqué à toutes les Délégations et discuté au cours des séances de la Deuxième Commission. le vendredi 22 novembre 1946. Quatrèime Commission: Accords Intergouverne- mentaux sur le products essentials Neuvième Séance Tenue ile Mercredi 20 Novembre 1946 à 17 heures Président: M. J. R. C. HELMORE (Royaume-Uni) Au course de sa séance de cloture, la Commission adopte le projet de Rapport présénté par le Rapporteur. Elle remercie le Président, le Rapporteur et le Secrétariat de I'aide qu'iis ont apportbe à la Commission. III. DOCUMENTS DISTRIBUES Mercredi 20 Novembre 1946 Cote E/PC/TCII/54 Corr. 5 E/PC/T/CII/55 ... E/PC/T/CIV/17 ... E/PC/T/CV/15 Corr. i Titre Deuxième Commission: Observations des Délégations de l'Union Sud- Africaine et de l'Australie sur le projet de Rapport du Comité Tech- nique. Document non encore distribue en français. Quatrième Commission: Déclaration de la Chambre de Commerce inter- nationale. Corrigendum au Procés-verbal de la sixième séance de la Cinquième Commission. lV. DIVERS A. Envol des documents après le depart des Délégations Avant l'ajournement de la Confirence, les Délégations sont priées de bien vouloir donner. par écrit, au Chef du service de distribution,. Bureau z42. leurs instructions pour l'acheminement des documents quelles n'ont pas reçus, en indiquant leur adresse et le nombre d'exemplaires requis en chaque langue. 138 B. Lost One leather despatch case. C. Found One brown file cover containing hand written notes and documents in English. One gentleman's black umbrella. Pair of lady's black gloves. Pair of spectacles (tortoiseshell frame). Make-up pochette. Brooch (dagger in red sheath). Red spectacle case. Two embroidered dress collars. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. B. Objets perdus Une serviette en cuir. C. Objets trouvés Un dossier de couleur marron contenant de notes manu- scrites et des documents en anglais. Un parapluie noir dhomme. Une paire de gants noir de dame. Une paire de lunettes (monture en écaille). Un sac-poudrier. Une broche (poignard dans une gaine rouge). Un étui à lunettes rouge. Deux cols brodés. COMMUNICATIONS A LA REDACTION Les communications à la Réda'tion doivent etre adressées au Bureau 414 pour le text a -glais et au Bureau 413 pour le texte français téléphonee: postes 255 et 29). (33680) (SO - 10 11/46 D.L. G- 344

GATT Library

wf834td6824

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/wf834td6824

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UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 36 London: Monday 25 November 1946 I. PROGRAMME OF MEETINGS Monday 25 November 1946 See attached II. AGENDA Monday 25 November 1946 III. SUMMARY RECORD OF MEETINGS See attached IV. DOCUMENTS DISTRIBUTED Saturday 23 November 1946 See attached COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. No. 36 Londres: .Lundi 25 Novembre 1946 I. PROGRAMME DES SEANCES Lundi 25 Novembre 1946 Voir feuille jointe II. ORDRE DU JOUR Lundi 25 Novembre 1946 Voir feuille jointe III. PROCES-VERBAUX DES SEANCES Voir feuille joint IV. DOCUMENTS DISTRIBUES Samedi 23 Novembre 1946 Voir feuille jointe COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent être adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français (telephone: posted 255 et 29). (53630)(32) - 1200 11/46 D.L G. 344 143 JOURNAL NO.36 - 143 A - I. PROGRAMME OF MEETINGS Monday 25 November 1946 Nil. Future Programme of Meetings Tuesday 26 November 1946 Fifth Plenary Session 10. 30 a .m. Sixth Plenary Session 5.00 p.m. Wednesday 27 November 1946 Seventh Plenary Session 10.30 a.m. II. AGENDA PIenary -Meetings Fifth, Sixth and Seventh Session 1. Report by Chairman on Credentials 2. Resolution conveninig a meeting to negotiate a Multilateral Trade Agreement embodying Tariff Concessions submitted by the United States Delegation. (Text will be circulated) 3. Resolutions concerning: (a) The Report of the First Session of the Preparatory Committee (b) The appointment of a Drafting Committee (c) A Second Session of the Preparatory Committee (Texts will be circulated) 4. Presentation and adoption of Committee Reports and Resolutions 5. Final statements on the work of the First Session of the Preparatory Committee 6. Any other business - - - - Note: The following list of documents, which will be required at the Plenary Sessions of the Preparatory Committee, is circulated. for the convenience of Members. It is regretted that it has not been possible to publish these papers in a distinctive form, but it is hoped that the list will facilitate indentification of the documents required, a complete set of which will be available for each principal Delegate in his place in the Plenary Session:- - 143 B- I. PROGRAMME DES SEANCES Lundi 25 Novembre 1946 Néant Programme des prochaines séances Mardi 26 Novembre 1946 Cinquième Séance Plènièrs 10 h. 30 Sixième séance Plénière 15 heures Mercredi 27 Novembere 1946 Septième Séance Plénièbre 10 h. 30 Cinguième, Sixième et Septième Séanses 1. Rapport du Président sur les Pouvoirs ues Délégués. 2. Résolution soumise par la Délégation des Etats-Unis tendant à la convocation d'une réunion chargée de négocier un Accord commer- cial multilatéral portant notemment sur les concessions tarifaires (la texte sera distribué ultérieurement). 3. Résolutions relatives: (a) Au Rapport de la primièreSession de la Commission Préparatoire. (b) la constitution d'un Comité de Rédaction (c) A une second Session de la Commission Préparatoire. (les textes seront distribués ultérieurement) 4. Présentation et adoption des Rapports de la Commission,et des Résolutions. 5. Déclarations définitives concernant les travaux de la première Session de la Comission préparatoire. 6. Questions diverses. Note: Nous publions ci-après pour la commodité des Membres de la Commission Préparatoire, la liste des documents dont ils auront besoin aux Séances -Plénières. II n'amalheureasement pas été possible de publier cas documents sous une forme distinate, mais nous espérons que la listed permettra aux Délégués d'identifier ceux qu'ils auront besoin de consulter. Its en trouveront une série complete à la place-occupée par chaque délégué principal, aux séances pléniètres. - 143 C - Title: Symbol No: 1. Report on Credentials E/PC/T/8 2. Resolution regarding the negotiation of a Multilateral Trade Agreement embodying Tariff Concessions E/PC/T/27 3. Instructions to the Executive Secretary regarding the Report of the First Session of the Preparatory Committee E/PC/T/28 4. Resolution regarding the Appointment of a Drafting Committee E/PC/T/29 5. Resolution concerning the Second Session of the Preparatory Committee E/PC/T/25 6. Report of Committee I E/PC/T/16 7. Report of Committee II E/PC/T/30 8. Report of Joint Committee of Committees I & II E/PC/T/23 9. Report of Committee III E/PC/T/15 10. Report of Committee IV E/PC/T/17 11. Report of Committee V E/PC/T/18 12. Resolution regarding lndustrial Development, to be proposed by the Chairman of the Joint Committee of Committees I & II E/PC/T/26 13. Note by the Secretariat circulating Resolution relating to Inter-Governmental Consultation and Action on Commodity Problems prior to the establishment of the International Trade Organization, to be proposed by ths Chairman of Committee IV, together with an amendment presented by the United States Delegation E/PC/T/24 - 143 D - Titre Cote 1. Rapport sur les Pouvoirs. E/PC/T/8 2. Résolution relative à la négociation d'un accord E/PC/T/27 multilatéral de commerce portant notamment sur les concessions tarifaires. 3. Instructions au Secrétaire Exécutif concernant le E/PC/T/28 Rapport de la première Session de la Commission Préparatoire. 4. Resolution concernant la constitution d'un Comité E/PC/T/29 de Rédaction. 5. Resolution concernant la second Session de la E/PC/T/25 Commission Préparatoire. 6. Rapport de la Première Commission E/PC/T/16 7. Rapport de la Deuxième Commission. E/PC/T/30 8. Rapport de la Commission mixte constitutée par E/PC/T/23 les Première et Deuxième Commissions. 9. Rapport de la Troisième Commission E/PC/T/15 10.Rapport de la Quatrième Commission E/PC/T/17 11.Rapport de la Cinquième Commission E/PC/T/18 12.Résolution relative au Développement Industriel, qui doit être propose par le Président de laCommission mixte, constitutéeper les Première et Douxième Commissions. E/PC/T/26 13.Note,du Secrétariat concernant la distribution d'une Résolution concernant les consultations intergouverne- mentales à intervenir et les mesures à prendre, en matière de produits essentiels, avant la constitution d'une Organisation international du Commerce, résolution qui doit être présentée par le Président de la Quatrième Commission, en même temps qu'un amendement próposé par la.Délégation des Etats-Unis. E/PC/T/24 - 143 E - III. SUMMARY RECORD OF MEETINGS Committee II General Commercial Policy (Restrictions, Regulations and Discriminations) Thirteenth Meeting Hold on Saturday 23 November 1946 at 10.30 a.m. and 3.00 p.m. Chairman: Dr. H.C.COOMBS (Australia) The Committee considered and approved the reports of the Sub-committee on Quantitative Restrictions and Exchange Control, Subsidies, Quota Preferences and State Trading, with a number of minor changes. Agreement was reached on the text of the report of the Technical Sub-committee to be included in the final Report of the Committee. The subject of relations with Non-Members was discussed and agreement was reached on the treatment of this matter in the Report. At this final meeting, the Committee recorded a vote of thanks to its Chairman. IV. DOCUMENTS DISTRIBUTED Saturday 23 November 1946 Symbol No. Title E/PC/T/18 Report of Committee V E/PC/T/CII/57 Add.2 E/PC/T/CII/61 E/PC/T/CII/62 E/PC/T/CII/64 E/PC/T/CII/65 E/PC/T/CI & II/21 Suggested Report of committee addition to the Draft the Procedures Sub- of Committee II English text distributed on 22.11.46 English text distributed on 22.11.46 Committee II: Report of the Technical Sub-committee Committee II: Summary Record of the Twelfth Meeting English text distributed on 22.11.46 - 143 F - III. PROCES-VERBAUX DES SEANCES Deuxième Commission:Politique Commerciale Générale (Restrictions, réglementations et régines préférentiels) Treizième Séance Tenue le 23 Novembre 1946 à 10 h. 30 et 15 heures Président: M.H. C. COOMBS (Australie) La Commission examine et approuve les Rapports des Comités des restrictions quantitatives du contrôle des changes, des subven- tions, des contingents préférentiels et du Commerce d'Etat, en y apportant un certain nombre de modifications de détail. Elle décidé que le text du Rapport du Comité techniqe sera inséré dans le Rapport final de la Commission. La Commission dispute la question des rapports avec les Etats non-Membres, et arrive à un accord sur la manière de la traiter dans le Rapport. En cette séance de clôture, la Commission vote ses remerciements au Président, IV. DOCUMENTS DISTRIBUES Samedi 23 Novembre 1946 Cote E/PC/T/18 E/PC/T/CII/57 Add. 2 E/PC/T/CII/61 E/PC/T/CII/62 E/PC/T/CII/64 E/EC/T/CII/65 E/PC/T/CI & II/21 Titre Rapport de la Cinquième Commission Projet d' addition au Rapport du Comité de Procédure de la Deuxième Commission. Deuixème Commission: Rapport du Comité mixte de rédaction des Deuxième et Quatrième Commissions sur les subventions aux produits de base. Deuxième Commission: Rapport présenté à la Deuxième Commission par le Comité duaCommerece d'Etat. Deuxième Commission: Rapport du Comité Technique. Document non encore distribué en français. Commission mixte - Comité de Rédaction: Procès- verbal de la quatriène séance

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zd628wf4375

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

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journal

24-38

https://exhibits.stanford.edu/gatt/catalog/zd628wf4375

zd628wf4375_90240048.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT No. 31 London: Tuesday 19 November 1946 I. PROGRAMME OF MEETINGS Time 10.30 am. 11.00 am. Tuesday 19 November 1946 Committee Meetings Room Committee IV: Hoare Memorial Eighth Meeting Hall Committee V: Committee Room Fifteenth Meeting V-(Convoca- tion Hall) 2.30 p.m. Committee II: Hoare Memorial Tenth Meeting Hall Future Programme of Meetings This programme replaces the one published in Journal No. 30 Wednesday 20 November 1946 Committee II-Procedures Sub-committee: I0.30 am. Fourteenth Meeting The Plenary Sessions, arranged provisionally for Wednesday afternoon. 20 November, and Thursday, 21 November, have been postponed and a further announcement will be made as soon as possible. II. AGENDA Tuesday 19 November 1946 Committee IV: Eighth Meeting Consideration of the report of the Drafting Sub-committee. Committee V: Fifteenth Meeting Consideration of the draft report of the Committee. DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 31 Londres: Mardi 19 Novembre 1946 I. PROGRAMME DES SEANCES Heure Mardi 19 Novembre 1946 Séances des Commissions Io h. 30 Quatrième Commission: Huitiènme Séance II heures Cinquième Commission: Quinzième Séance 14 h. 30 Deuxième Commission: Dixième Séance Salle Hoare Memorial Hall Salle de Com- mission No. V (Convocation Hall) Hoare Memorial Hall Programme des prochaines séances Ce programme remplace celui qui a été publié dans le No. 30 du Journal. Mercredi 20 Novembre 1946 Deuxièrne Commision - Comité de Pro- 10 h. 30 cédure: Quatorzième Séance 30 Les Seances Plénières prévues à titre provisoire pour l'après-midi du mercredi 20 novembre et le jeudi 21 novem- bre, ont été ajournées. Une communication sera faite ultérieurement à ce sujet. dés qu'il sera possible. II. ORDRE DU JOUR Mardi 19 Novembre 1946 Quatrième Commission: Huitième Séance Examen du Rapport du Comité de Rédaction Cinquième Commission: Quinzième Séance Examen du Projet de Rapport de la Commission Committee Il: Tenth Meeting Deuxlère Commission: Dlxième Séance Consideration of the report of the Technical Sub- Examen du Rapport du Comité Technique committee. 130 131 III. SUMMARY RECORD OF MEETINGS Committee II: General Commercial Policy (Restructions, Regulations and Discriminations) Tenth Meeting Meeting postponed until Tuesday 19 November 1946 (See Programme of Meetings) Joint Committee on Industrial Development Fourth Meeting Held on Monday I8 November 1946 at 5.oop.m. and 9.oo p.m. Chairman: Mr. H. S. MALIK (India) Mr. B. W. HARTNELL (Australia) The Joint Committee considered the Report of its Drafting Sub-committee, a Draft Chapter on Industrial Development which is to be incorporated in the Charter. a Draft Message to Committee II, relating to measures of industrial protection, and a Draft Resolution to the Economic and Social Council. asking clarification as to the allocation of positive functions for industrial development. These documents were discussed and adopted with minor alterations. Some Delegates made reservations pertaining to certain points, but in general the Committee reached substantial agreement on the Report, Draft Chapter and other documents under consideration. The Joint Committee then adjourned sine die. IV. DOCUMENTS DISTRIBUTED Monday 18 November 1946 Symbol No. Title E/PC/T/CI/18 - Committee I: Summary Record of the Fourth Meeting. E/PC/T/CII/52 Committee II-Drafting Sub-com- mittee on State Trading: Summary Record of the Fourth Meeting. E/PC/T/CII/53 ... Committee II-Drafting Sub-com- mittee on State Trading: Summary Record of the Fifth Meeting. E/PC/T/CII/54 ... Committee II: Draft Report of the Technical Sub-committee. E/PC/T/CII/54 Corrigendum to Draft Report of the Corr. z Technical Sub-committee of Com- mittee II. E/PC/T/CII/54 Document issued in French only. Corr. 2 E/PC/T/CI & II/17 Joint Committee: Draft Chapter on Economic Development. E/PC/T/CI & II/18 Joint Committee: Report of the Drafting Sub-committee. E/PC/T/CIII/19 ... Committee III: Summary Record of the Ninth Meeting. E/PC/TCIV/10 ... Committee IV: Draft Report of the Committee. E/PC/T/CIV/11 ... Committee IV: Draft of Chapter VI. E/PC/T/CIV/12 ... Committee IV: Report of the Drafting Sub-committee. E/PC/T/CIV/13 ... Committee IV: Statement by Brazilian Delegation with regard to Fluctuation in Prices in Agri- cultural Countries. E/PC/T/CIV/15 ... Committee IV: International Rubber Arrangements. E/PC/T/CV/18 ... Corrigendum to Summary Record of Corr. I the Seventh Meeting of Committee V. IIl. PROCES-VERBAUX DES SEANCES Deuxiéme Commission: Politique Générale Com- merciale (Restrictions, réglementations et measures dlscrimlnatoires) Dixiéme Séance Séance ajournée au mardi 19 novembre I946 (Voir le programme des séances) Commission mixte du developpement industrial Quatriéme Séance Tenue Ie Lundi 18 Novembre 1946 à I7 hers et 21 heures President: M. H. S. MALIK (Inde) M. B. W. HARTNELL (Australie) La Commission mixte examine le Rapport de son Comité de Reduction, un projet de chapitre sur le développement industrial qui doit être incorporé à la Charte, un projet de communication à la Deuxi me Commission concernant les mesures de protection de l'industrie et un projet de resolution a soumettre au Comite Economique et Social, demandant des éclaircissements sur la répartition expresse des attributions en matiere de développement industrial. Ces documents sont discutes et adopts avec de légères modifications. A exception de réserves faites par quelques Délégués sur certains points. la Commission approuve dans l'ensemble le Rapport. le projet de chapitre et les autres documents examinés. La Commission mixte s'ajourne alors sine die. IV. DOCUMENTS DISTRIBUES Cole E/PC/T/CI/18 E/PC/T/CII/52 E/PC/T/CII/53 E/PC/T/CII/54 Corr. 1&2 E/PC/T/CI & II/17 E/PC/T/CI & II/18 E/PC/T/CII/19 E/PC/T/CIV/10 E/PC/T/CIV/ii E/PC/T/CIV/12 E/PC/T/CIV/13 E/PC/T/CIV/15 E/PC/T/CV/18 Corr. 1 E/PC/T/CV/29 Corrigendum to Summary Record of E/PC/T/CV/29 Corr. 2 the Twelfth Meeting of Committee V. Corr.2 E/PC/T/CV/31 E/PCIT/CV/32 ... Committee V: Summary Record of the Thirteenth Meeting. Committee V: Summary Record of the Fourteenth Meeting. E/PC/T/CV/31 E/PCIT/CV/32 Lundi 18 Novembre 1946 Titre Première Commission: Procès-verbal de la quatrième séance. ... Deuxiéme Commission - Comité de Rédaction: Procès-verbal de la quatrième stènce. ... Deuxième Commission - Comité de Rédaction sur le Commerce d'Etat: Procés-verbal de la cinquiéme séance. Deuxième Commission: Projet de Rapport du Comité Technique. Corrigenda au projet de Rapport du & 2 Comité Technique de la Deuxiéme Commission. I/I7 Commission nixte: Projet de chapitre sur le développement économique. I/i8 Commission mixte: Rapport du Comité de Redaction. 9 Troisième Commission: Procés- verbal de la neuvième séance. o Quatrième Commission: Projet de Rapport. . Quatrième Commission: Projet de text du chapitre VI. Quatrième Commission: Projet de rapport du Comité de Rédaction. . Quatréme Commission: Déclaration de la Déleégation du Brésil concer- nant les fluctuations des prix dans les pays d'éonomie agricole. Quatrième Commission: Note relative aux accords internationaux sur le caoutchouc. Corrigendum au procès-verbal de la Corr: I septième séance de la Cinquième Commission. Corrigendum au procès-verbal de la rr. 2 douzième seance de la Cinquiéme Commission. ... Cinquième Commission: Procès- verbal de la treixiéme séance. ... Cinquiéme Commission: Procès- verbal de la quatorzieme séance. 132 V. MISCELLANEOUS Corrigenda to Documents (1) E/PC/T/CII/53 (Committee II-Drafting Sub-committee on State Trading: Summary Record) Page I, heading: for " second meeting" read " fifth meeting (2) E/PC/T/CIII/16 (Committee III: Summary Record of the Eighth Neeting) Page I, item I-heading: and Page I, first paragraph, line i: for" President" read " Observer " (3) E/PC/T/CIV/10 (Committee IV: Draft Report of the Committee) Page 10, first paragraph, line 6: .for " voting" read " non-voting" (4) E/PC/T/CV/10 (Committee V: Summary Record of the Fourth Mfeeting) Page 5. third paragraph, line 2: for " legal formality" substitute "a formality having no legal effect" COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 4I3 (French text); telephone extensions: 255 and 29. V. DIVERS Corrigenda aux Documents (1) E/PC/T/CII/53 (Deuxième Commission-Comitè de Rèdaction sur le Commerce d'Etat: Procés-Verbal). Page I. titre: au lieu de: "deuxiéme séance" lire: " cinquième séance " (2) E/PC/T/CIII/16 (Troisième Commission: Procès-verbal Séance). Page I, paragraph I, dans le titre et à du texte: dc la Huitième la première ligne au lieu de: " Président" lire: "Observateur' (3) E/PC/T/CIV/10 Cele rectificatian n s'applique pas. as texte français (4) E/PC/T/CV/10 (Cinquième Commnission: Procès-verbal de la Quatrième Séance) Page 7, paragraph 2, ligne 2: remplacer: " une simple formalité juridique" par: "une formalité n'ayant pas d'cffct juridique" CONMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent ètre adressées au Bureau 414 pour le texte anglais et au Bureau 4I3 pour le texte français (téléphone: pastes 255 et 29). (3s68o) (27) - Zao 11/46 D.L. G.335

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yb843rs8478

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/yb843rs8478

yb843rs8478_90240049.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 32 No. 32 London: Wednesday 20 November 1946 Londres: Mercredi 20 Novembre 1946 I. PROGRAMME OF MEETINGS Wednesday 20 November 1946 A. Committee Meetings Time Room 3.00 p-m. Committee II: Eleventh Hoare Memorial Meeting Hall 5.oop.m. CommitteeIV: NinthMeet- Committee ing Room V (Convocation Hall) B. Sub-committee Meetings 10.30 am. Committee II-Prcedures Room 230 Sub-committee: Fifteenth Meeting 8.30 p.m. Committee II-Sub-commit- tee on Quantitative Restrictions and Exchange Control: Seventh Meeting Hoare Memorial Hall II. AGENDA Wednesday 20 November 1946 Committee II: Eleventh Meeting Consideration of the: report of the Technical Sub- committee (continued). Committee IV: Ninth Meeting Consideration by the Committee of the Rapporteur's revised report. I.PROGRAMME DES SEANCES Mercredi 20 Novembre 1946 A. Séances de Commissions Heure 15 heure Deuxième Commission: Onzième Séance Salls Hoare Memorial Hall I7 heures Quatriime Commission: Salle de Com- Neuvième Séance mission No. V (Convocation Hall) 10 h- 30 20 h. 30 B. Séances de Comités *Deuxième Commission- Salle 230 Comité de Procédure: Quinzième Séance Deuxième Commission- Hoare Memorial Comité des Restrictions Hall quantitatives et du Con- tróle des changes: Septième Séance II. ORDRE DU JOUR Mercredi 20 Novembre 1946 Deuxiéme Commission: Onxième Séance. Examen du Rapport du Comité Technique (suite). - Quatrième Commission: Neuvième Séance Examen par la Commission du nouveau texte du Rapport. * Cette séance sera consacrée à la discussion du Memorandum concernant les "Négociations d'accords ,commermiaux multilatéraux . Toutes les Délégations sont, prices denvoyer leurs. Observateurs à cette séance. This meeting will be devoted to the discussion of the Memorandum on "Multilateral Trade Agreement Negotia- tion ". All . Delegations ' are -requested to send their Observers to this Meeting.-* 'S I '34 Ill. SUMMARY RECORD OF MEtTINGS Committee V: Administration and Organiaton Fourteenth Meeting Held on Friday I5 November I946 at 3.00 p.m. Chairman: Mr. L. R. EDMINSTER (United States) The Committee considered and approved recommenda- tions of a Drafting.Sub-committee relating to the general functions of the Organization as set out in Article 50 of the United States Draft-Charter. A provision empowering the Conference to develop and recommend for acceptance of Members conventions and agreements on matters within the competence of the Organization was also approved, together with the addition to Article 57 of a special provision obliging the Executive Board to invite Representatives of Non-Member Govern- ments to be present when matters of particular and substantial concern to such Governments are under discussion. Further reconsideration was given to Article 76 (Inter- pretation and Settlement of Disputes), particularly with reference to the question of arbitration procedure. A revised text which was satisfactory to all Delegates was eventually agreed upon. The Report of the joint Rapporteurs on Voting and Membership in the Executive Board was then considered and approved: - Fifteenth Meeting Held on Tuesday I9 November 1946 at 10.00 a.m. and 3.00 p.m. Chairman: Mr. L. R. EDMINSTER (United States) At its fifteenth and final meeting, the Committee con- sidered and approved the Draft Report to the Preparatory Committee which had been prepared by the Joint Rap- porteurs with the assistance of the Secretariat. A number of suggested changes were accepted, and it was agreed that points of a minor editorial nature should be communicated directly to the Secretary. who was authorized by the Committee to prepare the report in final form, in con- sultation with the Rapporteurs and the Chairman. In the light of the discussion in Committee II, a further drafting amendment was made to Article 79 for the purpose of clarifying the position so far as Withdrawal is concerned. It was agreed that a document embodying certain instruc- tions to be conveyed to the Interim Drafting Committee, which the Secretariat had prepared, should be circulated to Members of the Committee as soon as possible, and that any suggested amendments to this document should be communicated directly to the Secretary of the Com- mittee. Appreciation was expressed of the services rendered by the Chairman, Secretariat and Interpreters. Committee IV: Intergovernmental Commodity Arrangements Eighth-Meeting Held on Tuesday 19 November 1946 at 10.30 a.m. and 3.00 p.m. Chairman: Mr. J. R C. HELMORE (United Kingdom) The Committee met in the morning and in the afternoon to consider the report of the Drafting Sub-committee. The new draft of Chapter VI was submitted. After a detailed examination, agreement was reached on most of the points, and the remaining doubtful points were noted for inclusion in the Report to the Interim Drafting Com- mittee which is to meet in New York., The Committee, with one exception, agreed to make certain recommendations to the Preparatory Committee regarding Commodity Arrangements pending the estab- lishment of the ITO. I11. PROCES-VERBAUX DES SEANCES Cinquière Commission: .Admlnistration et Organisation Quatorzlène Séance Tenue Is Vendredi 15 Novembre 1946 à 15 heures Président: M. L. R. EDMINSTER (Etats-Unis) La Commission étudie et approuve les recommendations d'un Comité de Rédaction concernant les functions générales de l'Organisation, telles qu'elles sont prévues à l'article 50 du Projet américain de Charte. Elle approuve également une disposition donnant quality à la Conférence pour établir et recommander à l'acceptation des Etats membres, des conventions et des accords portant sur des questions qui relèvent de la compétence de l'Organisation. Elle approuve encore l'addition à l'article 57 d'une disposition expresse obligeant le Comité Exécutif à inviter les gouvernements non membres à se faire représenter lorsque viennent en discussion des question d'un intéret particulier et important pour ces gouvernements. La Commission réprend l'examen de l'article 76 (Inter- prétation et réglement des différends), particulièrement en ce qui concerne la procédure en matière d'arbitrage. Un nouveau texte qui donne satisfaction à tous les délégués, est finalement adopté. La Commission examine ensuite et approuve le Rapport commun des Rapporteurs sur la question du vote au Comité Exécutif et sur la composition de celui-ci. Quinzième Séance Tenue le Mardi ig Novembre 1946 à rI heures et I5 heures Président: M. L. R. EDMINSTER (Etats-Unis) A sa quinzième et dernière stance, la Cinquième Com- mission étudie et approuve le projet de Rapport à la Commission Préparatoire élaboré en commun par les Rapporteurs avec le concours du Secrétariat. Elle adopte un certain nombre des modifications proposées et décide de signaler directement au Secrétaire certains détails de rédaction. Elle charge ce dernier de donner au Rapport sa forme définitive, de concert avec les Rapporteurs et le Président. Compte tenu de la discussion qui a eu lieu au sein de la Deuxième Commission, la rédaction de l'article 79 est à nouveau modifiée de façon à rendre plus claires les modalités du " Retrait ". La Commission décide qu'il y a lieu de distribuer le plus tôt possible à ses membres un document contenant certaines directives préparées par le Secrétariat à I'intention du Comité provisoire de Rédaction, et de communiquer directement au Sécretaire de la Com- mission tous les projets d'amendement à ce document. La Commission exprime au Président, au Secrétariat et aux Interprètes sa reconnaissance pour les services qu'ils ont rendus. Quatrième Commission: Accords Intergouverne- mentaux sur lea products essentials Huitlème Stéance *Tenue ka Mardi I9 Novembre 1946 àIo h. 30 et 15 haures President: M. J. R. C. HELMORE (Royaume-Uni) La Quatiéme Commission se rèunit dans la matinée et l'après-midi afin d'é,tudier le Rapport du Comité de rédaction. Saisie du nouveau texte du Chapitre VI, la Commission l'étudie en détail et l'accord se fait sur la plupart des points. Elle fait le relevé des questions qui .restent en suspens, afin de l'inclure dans. Ie Rapport au Comité provisoire de Rédaction, qui doit se réunir à New-York. Les membres de la Commission, à exception d'ua seul. conviennent de soumettre à la Commission Préparatoire des recommendations au sujet des accords sur les producits essentials qui seraient conclus avant la constitution de I.OI.C. 135 The Committee went on to discuss the Draft Report submitted by the Rapporteur. It was agreed that this should be redrafted in the light of the changes made in the Draft Chapter, and the Rapporteur was asked to do this in consultation with the Delegates for the Netherlands and the United States. At 3.00 p.m., a Sub-committee composed of the Vice- Chairman and the Delegates for Cuba. the Netherlands and the United States met with the Representatives of the International Chamber of Commerce in order to discuss a statement of the latter. Committee II: General Commercial Policy (Restrictions, Regulations and Discriminations) Tenth Meeting Held on Tuesday 19 November 1946 at 2.30 p.m. Chairman: Dr. H. C. COOMBS (Australia) The Committee considered the report of the Technical Sub-committee. It agreed to suggest that the report, after having been considered by the Preparatory Com- mittee, should be sent to the Interim Drafting Committee in New York which, within its term of reference, would use the report as a working document. Subsequently, the substance of the report was considered. The discussion was to be continued at the next meeting of the Committee, which is to take place on "Wednesday 20 November I946 at 3.00 p.m. IV. DOCUMENTS DISTRIBUTED Tuesday 19 November 1946 Symbol No. E/PC/T/CII/54 Corr. 3 E/PC/T/CII/54 Corr. 4 E/PC/T/CIV/16 ... Title Corrigendum to Draft Report of the Technical Sub-committee of Com- mittee II. Document issued in French only. Committee IV: Existing International Commodity Arrangements (Note by Secretariat). Note: Document E/PC/T/15 (Report of Committee III), and Document E/PC/T/16 (Report of Committee I) have received a limited distribution. They will be circu- larized fully to the Press and Public when the Reports of all Committees are completed. * COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text) telephone extensions: 255 and 29. La Commission passe ensuite à la discussion du projet de Rapport soumis par le Rapporteur. Elle décide qu'il y a lieu de le remanier en tenant compte des modifications apportées au texte provisoire du Chapitre et le Rapporteur est prié de procéder à cette nouvelle rédaction de concert avec les Délégués des Pays-Bas et des Etats-Unis. A 15 heures, un Comité compose du Vice-Président et des Délégués de Cuba, des Pays-Bas et des Etats-Unis. tient une réunion avec les représentants de la Chambre de Commerce international, afin de discuter une déclaration faite par cet organism. Deuxième Commission: Politique Commerciale Générale (Restrictions, réglementatlons et measures discriminatoires) Dixième Seance Tenue le Mardi 19 Novembre 1946 à I4. 30 Président: M. H. C. COOMBS (Australie) La Commission examine le Rapport du Comité Technique. Elle décide de proposer que le Rapport, après avoir été étudié par la Commission Préparatoire, soit- envoyé au Comîté de Rédaction de New-York, qui, aux terms de son mandat. l'utilisera comme document de travail. La Commission examine ensuite le Rapport quaint au fond. Elle en poursuivra la discussion au course de sa prochaine séance qui aura lieu le mercredi 20 novembre 1946 à 15 heures. IV. DOCUMENTS DISTRIBUES Mardl 19 Novembre 1946 Cote E/PC/T/C1I/54 Corr. 3 E/PC/T/CII/54 Corr. 4 E/PC/T/CIV/16 ... Note: Titre Corrigendum au projet de Rapport du Commité Technique de la Deuxième Commission. Corrigendum au projet de Rapport du Comité Technique de la Deuxième Commission. Quatrième Commission : Accords internationaux concernant les pro- duits essentials, actuellement en vigueur (Note du Secrétariat). Les Documents E/PC/T/15 (Rapport de la Troisième Commission) et E/PC/T/16 (Rapport de la Première Commission) ont fait l'objet d'une distribution restreinte. Une diffusion plus large. à la Presse et au public, aura lieu lorsque les Rapports de toutes les Commissions seront achevés. COMMUNICATIONS A LA RZDACTION Les communications à la Redaction doivent ètre adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français(téléphonee: posted 255 et 29). (S368o) (a8) - 10 11/46 D.L G. 335

GATT Library

bf051xp3013

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/bf051xp3013

bf051xp3013_90240052.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 35 No. 35 London: Saturday 23 November 1946 Londres: Samedi 23 Novembre 1946 I. PROGRAMME OF MEETINGS Saturday 23 November 1946 Committee Meetings Room. Committee II: Thirteenth Hoare Memorial Meeting Hall Committee II: Thirteenth Hoare Memorial Meeting (continued) Hall Future Programme of Meetings Sunday 24 November 1946 Committee II : Fourteenth Meeting ... 10.30 am. Committee II: Fourteenth Meeting ... 3.00 p.m. (continued) II. AGENDA Committee II: Thirteenth and Fourteenth Meeting I. Consideration of reports of the Sub-committees on: (a) Subsidies (b) State Trading (c) Quota preferences (d) Quantitative Restrictions and Exchange Control z.Consideration of the report on Relations with Non- Members 3. Paragraphs to be entered in the Report of the Committee, with reference to the work of the Technical Sub-com- mittee III. SUMMARY RECORD OF MEETINGS Committee II: General Commercial Policy (Restrictions, Regulations and Discriminations) Twelfth Meeting ~ om~i .. at .1.0..30 Held on Fridty 22. November 1946 a 10.30 a.m. and 3.00 p.m. Chairman: Dr. H.C. COOMBS (Australia) The Co mittee considered the'report of the Procedures S b1coiiitte, coveri,g 'Article- 8. I8, 29. 30 and 33. le report was adopted- aft r the introduction of' a number of':rin6r changes ;' I. PROGRAMME DES SEANCES Samedi 23 Novembre 1946 Heure Io h. 30 I5 heures Stances de Commissions Salle Deuxitme Commission: Hoare Memorial Treizieme Stance Hall Deuxieme Commission: Hoare Memorial Treizilie Sdance (suite) Hall Programme des prochalnes stances Dimanche 24 Novembre 1946 Dèuxitée Com1ission: Quatorzi6me Stance I0 h. 30 Dèuxi&ée Commission: Quatorzieme Seance 15 heures (suite) II. ORDRE DU JOUR meuxitme Commission: Treizlzte et Quatorzime Staces I. Exaémen des Rapports des Comits: (a) des subventions (b) du commerce d'Etat (c) des contingents pr6ftrentiels (d) des restrictionsôqeantitatives et du contr6lc des - changes 2. Examen du rapport sur les relations avec les Etats non-membres 3. Paeagraplms heinstrer dans lc rapport do la Commission mi éujet des travaux du Contt6 Technique II. PROCES-VERBAUX DES SEANCES Deuxitménéommission:' Politique Gtntrale Coèmerciale (Restrictions, rtglementations et mesures discriminatoires) Douzlime Stace Tenue le Veà 1ndredi02etNovembre 1946 0 h. 3o c I5 heures President: M. H. C. COOMBS (Australie) La Commission etuéie le Rapport du Comit6 de Pro- ctdu18 sur les Arti3.es 8, IS, 29, 30 et 3-, Le Rapport est édopt avec quelques ltgtres modifications. '4' Time I0.30 amn. 3.00 p.m. 142 A decision was taken to the effect that since the detailed report of the Technical Sub-committee was not going to enter into the Report of Committee 11, a summary should be entered in this Report. Subsequently, the Committee dealt with the report of the Procedures Sub-committee on Multilateral Trade- Agreement Negotiations. The report was adopted with certain amendments. It was agreed to cancel the meeting contemplated for 8.30 p.m. on Friday, 22 November 1946, and to hold meetings on Saturday and Sunday until the programme of the Committee had been concluded. IV. DOCUMENTS DISTRIBUTED Friday 22 November 1946 Symbol No. Title E/PC/T/I7 E/PC/T/17 Corr. *E/PC/T/19-22 Corr. I E/PC/T/CII/57 Corr. I. E/PC/T/CII/58 English text distributed on 2I.11.46. Corrigendum to Report of Commit- tee- IV. Change of Symbol Nos. and Classifi- cation. English text distributed on 21.11.46 English text distributed on 21.11.46. *E/PC/T/CII/59 ... Committee II: Report of the Sub- committee on Quantitative Restric- tions and Exchange Control. E/PC/T/CII/59 Corrigendum to the Report of the Corr. I. Sub-committee on Quantitative Restrictions and Exchange Con- trol of Committee II. *E/PC/T/CII/60 ... Committee Il: Report of the Sub- committee on Subsidies on Manu- factured Goods. *E/PC/T/CII/61 ... Committee II: Report of the Joint Drafting Sub-committee on Sub- sidies on Primary Products. *E/PC/T/CII/62 ... Committee II: Report of the Sub- committee on State Trading. E/PC/T/CII/63 ... Committee II: Note from the Belgo- Luxembourg Delegation regarding Article 8. E/PC/T/CI & II/20 Joint Committee: Summary Record of the Fourth Meeting. E/PC/T/CI & II/2I Joint Committee -Drafting Sub- committee: Summary Record of the Fourth Meeting. E/PC/T/CV/33 ... English text distributed on 21.11.46. E/PC/T/CV/34 ... Committee V: Summary Record of the Fifteenth Meeting. E/PC/T/CV/35 ... Committee V: Memorandum on Settlement of Disputes (Articles 54: 4 and 76: 2), submitted by the Belgian, French and Netherlands Delegations. * Note.-Documents E/PC/T/CII/59-62 were issued wrongly as E/PC/T/19-22. They are listed here under their correct symbols. V. MISCELLANEOUS Mr. E. Wyndham-White, Executive Secretary, will give an " off the record " background talk to all journalists on Monday 25 November 1946 a 11.30 am. (Committee Room V-Convocation Hall). COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. (53680) (3x) - 1200 11/46 D.L. G. 344 Etant donné que le Rapport détaillé du Comité Technique ne doit pas être compris daus le Rapport de la Deuxième Commission celle-ci decide d'en donner un résumé dans ce Rapport. La Commission passe ensuite à l'examen du Rapport du Comité de Procedure sur les négociations relatives aux accords commerciaux multilatéraux. Le Rapport est adopted avec certains amendements. La Commission decide de supprimer la séance envisagée pour vendredi soir. et de siéger le samedi et le dimanche. jusqu'à ce qu'elle ait épuisé son programme. IV. DOCUMENTS DISTRIBUES Vendredl 22 Novembre 1946 Cote E/PC/T/17 E/PC/T/I7 Corr *E/PC/T/19-22 Corr.1 E/PC/T/CII/57 Corr.1 E/PC/T/CII/58 *E/PC/T/CII/59 Titre Rapport de la Quatrième Commis- sion. Corrigendurm au Rapport de la Quatrième Commission. Changements de cote et de catégorie. Amendements au projet de Rapport du Comité de Procédure de la Deuxième Commission. ... Deuxième Commission-Comité de Procedure: Memorandum sur les négociations eu vue d'accords commerciaux multilatéraux. ... Document non encore distribué en français. E/PC/T/CII/59 Document non encore distribué en Corr. I français. *E/PC/T/Cll/60 *E/PC/T/CII/61 *E/PC/T/CII/62 E/PC/T/CII/63 E/PC/T/CI & II/20 E/PC/T/CI & II/21 E/PC/T/CV/33 E/PC/T/CV/34 E/PC/T/CV/35 ... Deuxième Commission: Rapport du Comité sur les subventions aux produits manufactures. Document non encore distribué en français. ... Document non encore distribué en français. ... Deuxième Commission: Note de la Délégation belgo-luxembourgeoise concermant l'article 8. Commission mixte: Procès-verbal de la quatrième seance. Document non encore distribué en français. ... Cinquième Commission: Note du Secrétaire au sujet des instructions au Comité provisoire de Rédac- tion. ... Cinquièeme Commission: Proèces- verbal de la quinèiemeéstance. ... Cinqèieme Commission:éM6moran- dum present par lesélé16gations de la Belgique, de la France et des Pays-Bas au sujet duèr*gle- ne't des litiges (articles 54 (4) et 76 (2) ). *Ne c.-Les documents E/PC/T/CI59sg-62 oné éte pubéids. par erreur sous les cotes E/PC/19ig-22.tIls figurent n--. la liste ci-dessus sous leur cote deréiéfrence exacte. V. DIVERS M. E. Wyndham-White, Seréctaire Eéxcutif, fera, le lundi 25 novembreà II h. 30, une causerie sans caracèèere official, devant tous les journalistes, dans la salle de commission no. V (Convocation Hall). MMUNICNTIIAONS A LA REDACTION Les communicationàs laé Rdaction doivenêêt6tre- adréesses au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte fçranaisé é(tlphone: posted -255 et 29).

GATT Library

wc596gc1884

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/wc596gc1884

wc596gc1884_90240055.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 38 No. 38 London: Wednesday 27 November 1946 Londres: Mercredi 27 Novembre 1946 ~~~~~~~~~~~~~~~~~~~~~~~~ I. PROGRAMME OF MEETINGS Verbatim Reports of Plenary Meetings Fifth Plenary Session Held on Tues10y 26 .m.ember 1946 at IO.30 ane. Chairman: Mr. M. SUETENTS (Belgium) Report by the Chairman on Credentials The CHAIRMAN (Interpretation): Gentlemen, the meeting is open. The first Item of our Agenda is the Chairman's Report on Credentials. I have myself examined, with the help of the Vice- Chairman, Mr. Augenthaler, and M.r. 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 E/PC/T/8. We can now pass to the second Item. I presume this point does not give rise to any comment. The Report is, therefore, adopted. Resolution convening a meeting to negotiate a Multi- lateral Trade Agreement embodying Tariff Con- cessions, submitted by the -United States Dele- gation, The CHAIRMAN (Interpretaion): The second Item is the adoption by the Committee of the Resolution. submitted by the United States Delegation, aiming at the convocation of a meeting which would negotiate Multilateral Commercial Agreement concerning mostly tariff concessions. The relevant document, which you have in front of you, bears the reference EIPC/T/27. Are. there any, remarks to be made concerning this Resolution? The Resolution is adopted. Adoption of Resolutions The CHAIMAN (IrDrprfcation): The third Item of the Agenda 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). I. COMPTE RENDU DES SEANCES Compte réndu in eéteènso des. Seances Pl6nires èinquieme Seance PlMniere Terwe I Maàd1026 Novembie 1946 d IO h. 30 President: M. M. SUETENS (Belgique) Rapport du President Séléleé Pouvoirs des D616gubs Le PRESIDENT: La seance est ouverte. Le premier point de notre ordre du jour est le rapport du President séréleé pouvoirs des del6gu6s. J'ai examine moi-meme, avec l'aide du premier Vice- prbsident, M. Augenthaler et de M. Renouf. du service juridiquéléglés pouvoirs des d&6gueé. et je les ai trouv6s en bonne et due forme. : Cette question fait l'objet du rapport E/PC/T/8. II ne peut, jà pense, donner lieu a aucune observation. Si personnà n'a d'observations a presenter, ce rapport est adopt. Resolutéoé soumise par In D6lbgation des Etats- Unis tendant & laéconvocation d'une reunion charge de nbgocler an accord commercial multilateral portant notamment sur les, con- cessions tarifaires. Le PRESIDENT: L'ordre du jour appelle l'examen d'une resolutélé soumise par la Dbingation des Etats-Unis, tendant a laéconvocationéed'uneéreunion charge de negocier un accord commercial multilateral portant notamment sur les concessions tarifaires (Document E/PC/T/27). Y a-t-il des observations sur cette resolution ? La éesolution est adopted. Adoption de Resolutions Le PRESIDENT: L'ordre. du jour appelle ensuite 1'examen de trois resolutions. La xere est relativè au rapport de la iere session de la Commission pr6paratoire (E/PC/T/28). 46 53680 (34) A 147 The second Resolution concerns the appointment of a Drafting Committee (Document E/PC/T/29). The third concerns the Second Session of the Preparatory Committee (Document E/PC/T/25). Are there any remarks concerning these Resolutions ? The three Resolutions are adopted. Presentation and Adoption of Committee Reports and Resolutions The CHAIRMAN (Interpretation) : The fourth Item on the Agenda is the presentation and adoption of the Resolu- tions 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 error in document E/PC/T/16, on page 12, seven lines from the bottom, in regard to the draft resolution on international action relating to employment. The words, " the Pre- paratory 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 Com- mittee this Report of Committee I. to which is appended the text of the suggested Chapter on Employment, con- taining seven Articles. At the same time, you will see that there is also included in the Report a draft resolution 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 Committee I. Are there any remarks ? 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 (Interpretation): Everybody has been able to become acquainted with that document Are there any remarks ? Is everybody agreed to adopt it ? The Report is approved. In the absence of Mr. Malik, the Chairman of the Joint Committee, composed of Committees I and II, I call upon the Vice-Chairman of that Joint 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 behalf of Mr. Malik, the Chairman of the Joint Committee, I have the honour to present the Report for the con- sideration 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 Com- mittee III, I call upon Mr. Gonzalez, the Vice-Chairman of that Committee, and I ask him. to present the Report of that Committee. Mr. GONZALEZ (Chile) (Interpretation): Mr. 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 (Interprettions): 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 Committee IV, to present that Committee's Report. Mr. HELMORE (United Kingdom): Mr. Chairman, I have the honour to present the Report of Committee IV, which was appointed to consider the policy of 'inter- governmental commodity arrangements. La 2ème résolution est relative à la constitution d'un Comité de Rédaction (E/PC/T/29). La 3ème est relative à une seconde session de la Com- mission Preparatoire Quelqu'un demande-t-il la parole ? Ces trois résolutions sont adoptées. Presentation et adoption des rapport et des résolutions des Commissions Le PRESIDENT: Le 4ème point de l'ordre du jour est la présentation et l'adoption des Rapports et des Résolu- tions présentés par les Conmissions. La rère Commission a été présidée par M. Wunsz King. Ambassadeur de Chine en Belgique. J'invite M. Wunsz King à présenter le Rapport de sa Commission. M. WUNSZ KING (Chine) (Interprétation): M. le President. avant de vous présenter le Rapport de la rère Commission, je dois attirer votre attention sur une erreur de dactylographie qui s'est glissée dans le document E/PC/T/16. page 14, dans le passage concernant le projet de résolution relatif à l'action internationale en matière d'emploi. les mots: La Commission préparatoire de " devraient etre supprimes. Ils ont trouvé place dans le text à la suite, sans doute, d'une inadvertence; il 'agit très nettement d'une erreur. Ce point étant dclairei, j'ai l'honneur de présenter à la séance plénière de la Commission le Rapport de notre ière Commission. Nous y avons annexé le texte d'un projet de chapitre comprenant sept articles sur la question de l'emploi. II comporte également un project de résolution sur l'action international en matière d'emploi. Ces textes, comme le Rapport lui-même, ont été unanime- ment adopts par la sere Commission. J'ai donc l'honneur de vous les soumettre en vue de leur adoption. Le PRESIDENT: Je remercie M. Wunsz King et je demande aux Délégués s'ils ont des observations à. presenter sur le Rapport de la ière Commission ? Personae ne demande la parole ? Le Rapport de la ière Commission est adopte. Le PRESIDENT: J'invite le President de la IIème Commission, M. Coombs. a presenter son rapport M. COOMBS (Australie) (Interpvation): Monsieur le Président, le rapport de la IIèrne Commission fait l'objet du document E/PC/T/30. qui a été distribué. J'ai 1'honneur de le soumettre a l'examen de la Commission. Le PRESIDENT: Est-il présenté des observations sur ce rapport ? Personne ne demandant la parole. je conclus qu'il rencontre l'approbation générale. Le Rapport est donc adopté En l'absence de M. Malik, President de la Commission mixte constitute par les rère et 2ème Commissions, j'invite le Vice-président de cette Commission mixte, M. Coombs, a présenter le Rapport de cet organisms. M. COOMBS (Australie) (Interprétation): Le rapport de la Commission mixte du développenent industriel a été distribué. Au nom de M. Malik, qui était Président de cette Commission mixte, j'ai I'honneur de présenter le Rapport de celle-ci, pour examen, à. la Commission. Le PRESIDENT: Avez-vous, Messieurs, des observa- tions à presenter sur ce rapport? Personnel ne demandant la parole, le rapport de la Commission mixte est adopté. Le PRESIDENT: En l'absence de M. Dietérlen, Prési- dent de la IIIème Commission, j'invite M. Gonzalez, Vice-président de cette Commission, à nous en presenter le rapport. M. GONZALEZ (Chili): J'ai l'honneur, Monsieur le Président, de présenter le rapport approuvé par les membres de la IIIème Commission. La PRESIDENT: Avez-vous, Messieurs. des observa- tions à présenter sur ce rapport ? Aucune observation n'étant présentée, ce rapport est adopté I J'invite M.llm eore, éPrdsident de la èIVme Commission, a éresenter le Rapport de cette Commission. M. HELMORE (Royaume-Uni) (ientrétaration): J'ai l'lionneur, Monsieur le érbsident, de érEsenter le Rapport de la èV~me Commission, constitute pour examiner les questions relatives aux accords inergouvernementaux sur les produits de base. 148 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 few minutes. 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 o that Committee. The EXECUTIVE SECRETARY: 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 circu- lated 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 called upon to present this Resolution. Dr. COOMBS (Australia): Mr. Chairman. I understand that the terms of the Resolution are before the Com- mittee. 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 intergovernmental 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 an amendment suggested by the United States-Delegation. Mr. HELMORE (United Kingdom): 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 23 of document E/PC,/T/I 7. The CHAIRMAN (Interpretation): The United States Delegate might wish to speak on his amendment. Mr. WILCOX (United States): Mr. Chairman, I propose the-amendment to this resolution which is set forth on page 3 of document E/PC/T/z4. The resolution as originally proposed by the Committee requests the Executive Secre- tary of the Preparatory Committee to keep in touch with. such consultation with respect to intergovernmental com- modity arrangements. The only change that is made in this- resolution is to request the Secretary-General of the- United Nations to appoint an Interim Co-ordinating Com- mittee 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-Geneal to be concerned with non-agricultural primary commodities. An identical resolution is being presented by my Government at the session of the Food and Agriculture Organization's Commission which is now meeting in Washington.. L; :The CHAIRMANIn er (trpretation): Is everybody ac- qu ainted with the text of this Note? The EXECUTIVE SECRETARY: Mr. Chairman, as representing the Economic. Department of the United Nations, and, in that capacity, the Secretary-General, I merely wish to enter a slight reservation on the form, without insisting that from the point of view of 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 Jcdesire attirer l'attention de la Commission sur le fait que nous avons incnu dars notre rapport un project de resolution surelequol, si je suis bien iéénform, la Commission pl6niere reviendra dans quelques instants. Le PRESIDENT: Estéil pécsent6 des observations sur le Rapport deèla IVeme Commission ? Aucune observation na6aét présentee, le rapport de èaeIVemc Commissitn es. édopte. En lnabseuce du President et des Viée-presidents de la YVme Commission, je demànde & M. Wyndham-White. Secr6taire Exesutif, de bien vouloér presenter le rapport de le V~mc Commission. Le SECRETAIRE EXECUTIte (Iétrprdlation): Monsieur ée President, en l'absence du President et des Viée-prtsidents deèla Verne Commission, càest a moi qu'incombe l'honneur ée presenter devant la Commission èleniere le rapport diséribu6 sous le no. E/1C/T.x8. Le PRESIDENT: Est-él présente des observations sur ce Rapport ? Aucune observatién n'6tant présent6e. le rapport de la Veme Commission est édopts. Nous avons a céasiderer maintenant éne resolution relativeéau developpement industrial qui êoit 4tre propose par ée President de la Commission mixte conséeitute par les IEre èt IIeme Commissions. (Doc. E/PC/T.26.) En l'absence d M. -Malié, President de la Commission mixte, j'invite son Viée-pr6sident, M. Cooàbs, a presenter cette resolution. M. H. CM COOIBS, Australie (Ineerprdtation): Le texte de cette resolutiéné a et diséribu6 et j'ai l'honneur de la preseàter a la Commission. Le PRESIDENT: Avez-vous, Messieurs. des observa- tàons a presenter sur ceéte resolution ? Personne ne demandant la parole, ceéte resolution est édopt6e. Le PRESIDIlT: 11 nous reste, Messieàrs, a examiner une note du Secretariat, concernant la distribution d'une resolution relative aux consultationà et a l'action inter- gouvernementales ayant trait aux problems concernant les produits de base avaét l'6tablissement de l'Organisation Internationale du Commerce. Cette resolution êoit Otre présent6e par M. Helmoré. President de èaeIVemc Com- mission,êen meme temps qu'un amendmeét prêsent- par lé D6l6gation des Etats-Unis. M. HELMORE (Royaume Unn) (Iséerprdtation): J'ai I'honneur, Monsieur ée President, ée presenteréla rdsolu- éion emise par notre Commission qui l'a joànte a son rapport. Le passage de notre rapport ayant tàait & cette resolution poêrra 6tre reérouve par éeé dél6gu6s au paragraphe 23 du document E/PC/T/I7. Le PRESIDENT: La paroleàest h M.élé Dél6gue des Etats-Unis poér presenter son amendement. M. WILCOX (Etats-Unis) (Intertpretaion): L'amende- àent a cette resolution queéje desiée presentem forne la page 2 du document E/PC/T/24. Dans son texte original,éla resolution demandait au Secr6tairét ex6cutif de la Commissién Pr6paratoire de garder les contaéts n6cessaires et deéprecàder a des con- sultations, chaque fois que ce séra necessaire, lorsqu'il sera question d'accords intergouvernementaux sur les produits. Le seule modificaàion a ceéte resolution péeopose par la delegation des Etats-Unis consàste a demander aré Secrtaire Gen6ral des Nations Unies de nommer une commission provisoire écharge des questions relatives aux accords intergouvernernentaux. LeéSecretaiée executif de la Commissién Preparatoire serait President de cette Com- mission, tandis qu'unérepr6sentant de l'lQ.A. s'y occu- perait des produits agricoles, et qu'une personae choisie par leéSecretaéré general s'y occuperait des produits essentials non agricoles. éne resolution analégue eét présentee par mon gouverne- àent aéla reunion de la Commission de l'O.AéA. r6unie actuelleàent a Washington. Le PRESIDENT: Avez-vous, Messieàrs.éa presenter des observations au sujet de cette note, dont vous avez tous eu connaissance ? LeÉSECR1TAIÉE EX9CUTIF (Inetaerordtion): Mon- sieur ée President, en ma qéalityedeéropr6nsentat des services 6conomiques des Nations Uniesé et 6galement en raison de mes fonctions deéSecr6taiée ex6cutif de la Commission Prdparatoire.éje desire indiqueà qu'& mon avis, il conviend- ait d'apporter ici oéeèlegere modification. J'ai en effet impression que cetée resolution devrêit etre intérérdt6e de etell èaniere qu'elle puisse permettre au éecr6taire 53680 (34) A 2 149 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 interpretation of the resolution that may be necessary in carrying it out. Mr. WILCOX (United States): Mr. Chairman, that inter- pretation is entirely acceptable. The CHAIRMAN (Interpretation): In view of these remarks, I take it there are no observations. The document is therefore adopted. Final Statements on the work of the First Session of the Preparatory Committee 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 owes 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 Conference on Trade and Employment for the purpose of promoting the expansion of production. exchange and con- sumption of goods and, in preparation for this Conference, " to constitute a Preparatory Committee to elaborate an annoted Draft Agenda, including a Draft Convention. for consideration by the Conference." This Preparatory Committee brought together the dele- gations of eighteen countries, which were selected in such a way as to represent the various groups of interests par- ticipating in world trade. The government of the USSR was unable to be represented at this session, but we all hope that it will send a 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 aJord 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 Organization, called in advance the ITO, which would enable nations to co-ordinate their policy and which, further, would be responsible for supervising the working of the Charter and ensuring that its rules were respected. The United States Government went further and elaborated a concrete Draft Charter which was submitted to the various governments. After proceeding to a general exchange of views, the Preparatory Committee decided to take this draft as a basis for discussion. Our work was considerably facili- tated by this and it is impossible to thank the American Government enough for the effective assistance it rendered us on this occasion. The Preparatory Committee worked without interrup- tion 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 dis- cussions which revealed both the high quality of the experts sent by the various nations and a desire for sincere and open collaboration. The Committee-and this is worth emphasizing-did not work in a sealed chamber. It obtained all the collaboration which seemed necessary to it and did not fail to make contact both with the specialized inter-governmental institutions, particularly the International Monetary Fund, and with a certain number of extra-governmental Organizations such as the World Federation of Trade Unions and the International Chamber of Commerce. We can only congratulate our- selves on our relaions with-these Organizations. général d'appliqucr cette résolutiou de la manière qui lu paraltra la plus appropriée au point de vue constitutionnel. J'ai l'impression que c'est plutôt au Conseil Economique et Social qu'il appartient de prendre des decisions dans ce domaine. Je ne fais cette déclaration que pour douner une indica, tion sur l'interprétation pouvant ètre donnée à cette résolution. M. WILCOX (Etats-Unis) (Interpretation): Cette inter- pretation est tout à fait acceptable. Le PRESIDENT: Est-il préseuté d'autres observations? Personne ne demandant la parole. Ia résolution. modifiée par l'amendement de la délégation des Etats-Unis. est adoptée. Déclarations finales concernanit les travaux de la première Session de la Commission Préparatoire. Le PRESIDENT: La Commission que j'ai l'honneur de présider. est à la veille de terminer sa premiere session. Je rappellerai qu'elle procède d'une resolution du Conseil économique et social de I'O.N.U. en date du 18 février 1946, laquelle decida de convoquer une conférence inter- nationale du commerce et de l'emploi, en vue de favoriser le développement de la production, des échanges et de la consummation des machandises et, aux fins de preparer cette conférence, " de créer une commission préparatoire chargée d-élaborer un projet d'ordre du jour, accompagné de commentaires, et un projet de convention destiné à etre examine par la Conférence ". Cette commission préparatoire réunit les délégations de 8 pays, qui ont été choisis de manière à représenter les différents groupes d'intérêts participant échanges inondiaux. Le gouvernement de l'U.R.S.S. na pu se faire réprésenter à cettu session, mais nous espérons tous qu'il enverra une délégation à la session suivante. II n'est que juste de dire que si la décision du Conseil dconomique et social est l'acte de baptême authentique de notre Commission, celle-ci doit son existence avant tout à l'action continue et efficace du. Gouvernement des Etats- Unis ainsi que du gouvernement anglais qui, en novembre 1945. en annexe à l'accord financier qu'ils conclurent entire eux, proposèrent un ensemble de principes devant permettre une action collective en vue de donner aux échanges inter- nationaux la sécurité qu'ils requièrent et assurer leur développement. Après avoir montré que le commerce, la production, l'emploi et la consommation ne pouvaient s'accroltre que si on s'entendait sur les principes devant régir les échanges, ce document propose d'une part, la conclusion d'une charte ixant cos principles et, d'autre part. Ia création d'une organisation spéciale dénommé par avance O.I.C.. permettant aux nations de consultor leur politique et chargée, d'autre part, de veiller au fonctionne- ment de la Charte et au respect de ses règles. Le Gouvernement des Estats-Unis alla olus loin et fit un project concret de charte qui fut soumis aux différents gouvernesnents. La Commission préparatoire. après avoir procédé à un échange de vues général, décida de prendre ce projet commne base de discussion. Nos travaux furent grande- ment facilités et on ne pourrait assez remercier le Gouvene- ment américain de l'aide eflicace qu-il nous donna à cette occasion. La Commission préparatoire travailla sans relàche depuis le 15 octobre. Repartie en commissions d'après les objets généraux de son ordre du jour, odle out sur toun les problèms qui lui furent soumis une discussion approfondie qui mit en lumière d'une part, la haute qualité des experts qu'envoyèrent les différentes nations et, d'autre part, une volonté de collaboration sincère et sans arrière pensée. La Commission-ceci vaut la peine d'etre souligné-ne travailla pas en vase clos. Elle sentoura. de tons les concoums qui lui parurent nécessaires et ne manaqua pas d'entrer en con- tact. d'une part avec les institutions intergouvernementales spécalisées, notatnment le Fonds Monétaire International, et d'autre part avec un certain nombre d'organisations extra-goavernementales parmi lesquelles la Fédération Mondiale des Syndicats et la Chambre de Commerce inter- nationale. Nous n'avons eu qu'à nous louer de nos rapports avec ces organisations. 150 Thanks to these efforts, this goodwill and this colla- boration, the Committee. after' six weeks, has succeeded in drawing up a certain number of concrete proposals and recommendations which I shall have the honour of sum- marizing for you, following the order of the Committees. The object of Committee I was to consider problems of employment. That was an object of major importance as employment appears in the 'title of the Conference, on the same looting as International Trade.' The Chapter of the suggested. Charter dealing with this problem has been considerably developed. It has been unanimously agreed that States should undertake concerted action for the attainment and main- tenance of full productive employment of their labour and of a high and stable level of 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 precise undertakings, for certain countries might experience diffi- culties in assuming 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 to main- tain 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 specialized inter- national institutions can- each within the framework of its respective duties, make' a direct contribution to the 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 sponsorship the various national governments and specialized international institutions can collaborate 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 industrialization and general economic development of new countries. By reason of the repercussions it may have on world economy and international trade, the Com- mittee considered it necessary to have this problem con- sidered by a Special Committee and to insert a new Chapter on this subject in the Draft Order. It has been unanimously agreed that the development of economic resources in all parts of the world " will improve opportunities 'for employment. enhance the pro- ductivity of labour, increase the demand for goods and services, contribute to economic stability, expand inter- national trade, and raise levels of real income. thus strengthening the ties of international understanding and accord ". It has been unanimously agreed that this general economic development should be achieved not only through individual action on the part of each state, but through the collaboration of all states. Far from opposing the advancement of countries whose resources are still in an early stage of development. as might suggest a short-term policy, the more advanced states should not prevent them from acquiring capital. raw materials. plant, modern technical means, specialized personnel and competent technicians. For their part these states should not take any measure prejudicial to the interests of the states assisting them. Collaboration of the same order is neces- sary to facilitate the recovery of countries whose economies 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 agree ment with. the ITO. the establishment or recovery of certain industries. The Committee-decided to continue considertion of this important problem with the assistance and in confermity with opinions of the Economic and Social Council.' Committee II which dealt with Commercial and Customs policy was certainly faced with the most difficult task. by reason of the variety. number and 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 a body of equitable rules which would become law in these matters. The text of the draft provided a very useful basis for dis- cussion in this connection. The drafting was revised at numerous points. In many cases the proposed modifica- tions are of a technical nature and do not alter the spirit of the Charter. Certain other modifications are of wider Grace à cet effort, à bonne volonté et à cotte collaboration, la Commission, après six semaines, parvint à mettre sur pied un certain nombre de propositions con- crètes et de recommandations que je vais avoir l'honneur de vous résumer en suivant l'ordre des Commissions. L'objet de la première Commission état d'étudier les problèmes de l'emploi. C'était Ià un objet d'impoitance majeure car l'emploi apparaft dans le titre de la Confér- ence, cur le meme que le commerce international. Le chapitre du projet de Charte relatif à ce problème a été très sensiblement développé. Il y a eu unanimité pour reconnaltre quo les Etats devraient entreprendre de concert, une action destinée à réaliser et à maintenir le plein emploi productif de leur main-d'oeuvre ainsi qu'un volume ample et stable de la demande affective sur leur territoire. Il y a également eu unanimité pour reconnaftre que cette action ne. devait pas être laissée à la discrétion des différents gouvernements mais faire l'object d'engagements precis. En effet, certains pays pouraient éprouver des difflcultés & assumer les obligations prévues par la Charte en matière commerciaÌe, s'il n'existait pas, do la part d'autres pays, l'engagement de faire de leur mieux pour maintenir un volume ample et stable de la demnande effective. Main I'action individuelle des différents Etats risque de ne pas ètre suffisante. Les institutions internationales spécialisées peuvent, chacune dans le cadre de leurs attributions respectives, apporter une contribution directed au maintien du volume de l'empboi et de la stabilité de la demande dans Ie monde. Il faut donc prévoir un organismne international sous les auspices duquel les divers gouvernements nationaux et les institutions inter- nationales spécialisées peuvent se concerter en vue d'une action coordornée pour maintenir le volume do l'emploi. L'organisme qui paraft le mieux convenir pour cetto tåche est le Conseil Economique et Social des Nations Unies. Un projet de résolution dans ce sens est annexé au Rapport de la Commission. Une attention toute spéciale a été donnée au problème de l'industrialisation et du développement économiquc général des pays neufs. En raison des répercussions qu'il peut avoir sur l'économie mondaile et les échanges inter- nationaux. la Commission a estimé nécessaire de le faire étudier par une commission spéciale et d'ajouter au projet de Charte un nouveau chapitre sur cet objet. Il y a eu unanimité pour recommaître que le développe- ment des ressources économiques dans toutes les parties du monde "amélicrera les possibilitiés d'emploi, augmentera la productivité de la main-d'oeuvre,.accroitra la demande de produits et de services,. contribuera à la stabilité écono- mique, accroîtra les échanges internationaux et rehaussera le niveau du revenu réel, consolidant ainsi les liens inter- nationaux d'entente et d'accord". Il y a eu unanimité pour reconnaître que ce développe- ment économique général devait se réaliser non seulernent par l'action individuelle do chaque Etat, mais par la colla- boration de tous les Etats. Loin de s'opposer au développe- ment des pays dont les ressources sont encore peu développées, comme pourrait le leur suggérer une politique à courte vue, les Etats plus évolués ne doivent pas les empècher de disposer des capitaux, des matières premières, de l'outillage, des moyens techniques modernes, du per- sonnel spécialisé et des cadres compétents. Do leur côté ces Etats no devraient prendre aucune mesure préjudici- able aux intréréts des Etats qui les aident. Une collabora- tion du mêmo ordre est nécessaire pour faciliter lc relève- ment des pays dont l'économie a fortement souffert de la guerre. - Independamment de cette aide générale. - des mesures de protection particulières, pouvant porter.déroga- tion à certaines obligations de la Charte. auront sans doute a être envisagées pour faciliter, d'accord avec l'O.T.C., l'établissement ou le relèvement de certaines industries. La Commission est décidée.à. continuer l'étude de cet important problème avec l'aide et d'après les avis du Conseil Economique et Social. La 2ème Commission qui s'occupait de la politique com- merciale et douanière avait certainement la- tåche la- plas lourde, à raison de la variété du nombre et de la complexité des problèmes qui lui étaient soumis. II s'agissait de déter- miner pour tous les points qui figurent ordinairement dans les traités de commerce. on qui sont essentiels pour l'échange des marchandises. un ensemble de règles équit- ables qui fixeraient le droit en ces matières. Le texte du project a fourai ici une base de discussion très utile. En de nombreux points la rédaction a été revisée. Dans beaucoup de cas les modifications proposes sont do caractère technique et n'altèrent pas l'esprit de la Charte. 151 import. I have especially in mind the new draft proposed for quantitative restrictions which authorizes a wider use of these practices, especially if it is a question of correct- ing a disequilibrium in the balance of payments, the modi- fications 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 succeed, 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 granted among other states. According to the now wording of this Article. the consolidation of customs tariffs effected by nations whose tariff is low will be considered as equal to the reduction of a high customs tariff or to the elimina- tion of a preference. In this connection. the Committee has studied a memorandum 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 most important points. Discussion of others must be continued. Committee III dealt with Restrictive Trade Practices. By this term is meant, generally speaking, the operation of individual enterprises or groups of enterprises acting jointly. which by fixing prices, limiting the volume of pro- duction and distributing commodities, curb competition, restrict access to markets or promote controls of a mono- polistic 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 in so far as the practices were contrary to the general pur- poses of the Charter they should be avoided. Since it is impossible to determine precisely and in advance which practices are reprehensible, the Committee decided that the ITO should be empowered to hear complaints and to initiate inquiries. 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 continuation or the recurrence of indictable practices, and should it deem it advisable it will recommend appropriate measures. Each member state, obviously, will act in - scornce with its own legis- lation 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. Committee IV was instructed to consider and define a general policy relating to primary commodities in con- nection with the purposes of the ITO. This work was carried out mainly with the co-operation of the Food and Agricultural Organization. It was unanimously admitted that greater stability of the price of raw material and of the real income would greatly help to maintain a satisfactory level of inter- national 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 agree- ments governing exports, imports, 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 followed 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 determining the status of the new ITO, of defining its competence and power -d of outlining the scope of its future activities. The results achieved, though incom- plete, are noteworthy sin an agreement on principle dealing with a draft charter of the Organization was reached. Certains autres modifications ont une portée plus grande. J'ai en vue surtout la nouvelle réaction proposée pour les restrictions quantitatives, qui autorise un plus large usage de ces pratiques, surtout s'il s'agit de corriger un déséquilibre de la balance des comptes; les modifications apportées pour tenir compte des recommendations de la Commission mixte du développement industrial. J'attire également l'attention sur la grande importance de l'Article 18 par lequel les Gouvernements s'engagent à entrer en négociations pour en arriver, par des conces- sious mutuelles, à la reduction des tariffs douaniers et à la suppression des régimes discriminataires. Faute de se conformer à cet engagement, un Etat pourrait se voir retirer le bénéfice des concessions que se soraient faites les autres Etats. D'après la nouvelle rédaction de cet Article une consolidation de droits de la part de pays dont le tarif est bas sera reconnu comme ayant une valeur égale à la reduction d'un droit de douane élévé ou à l'élimination d'une préférence. Dans le même ordre d'idées, la Commission a examiné un memorandum fixant le programme de ces futures négociations et la procédure à suivre à ce sujet. Dans ce vaste domaine l'accord a pu être réaIisé sur les points les plus importants. Pour d'autres la discussion devra être continuée. La III° Commission avait à s'occuper des pratiques com- merciales restrictives. On entend par ce terme, d'une manière générale, I'action d'entreprises individuelles ou de groupes d'entreprises agissant de concert, qui, par la fixa- tion de prix, la limitation du volume de la production et la répartition des produits, restrignent la concurrence, limitent l'accès des marches ou favorisent les contrôles à caractère de monopole. Une certain divergence de vues est apparue en ce qui concern le jugement à porter sur ces pratiques et le moment à partir duquel elles pourraient être préjudici- ables aux échanges, mais toutes les délégations ont été d'accord pour reconnaitre que, dans la mesure où elles s'opposaient aux objectifs généraux de la Charte, elles devaieut être empêchées. Dans l'impossibilité où l'on est de déterminer exactement par avance les pratiques à condamner, la Commission a décidé que l'O.I.C. devrait avoir qualité pour recevoir les plaintes et procéder à des enquétes. S'il apparaît à la suite de cetre enquête, que I'objet de la plainte est fondé, l'OI.C. communiquera ses conclusions à tous les Etats membres en leur demandant d'agir en vue d'empêcher la continuation ou le retour des pratiques incriminées et recommender, si elle le juge opportun, telles mesures approprides. Chaque Etat membre agira, naturellement conformément à sa propre législation et à sa procedure. L'O.I.C. d'autre part poussera plus loin l'étude de cette question et, le cas échéant, organisera à ce sujet des conférences entre Etats. La IV° Commission a eu comme mission d'étudier et de définir une politique générale relative aux produits de base, en liaison avec les objectifs de I'Organisation Inter- nationale du Commerce. Cette étude a été poursuivie avec la collaboration notamment de l'Organisation de l'Alimentation et de l'Agriculture. II a été unanimement reconnu que si l'on parvenait à assurer plus de stabilité dans le revenu réel des producteurs de produits de base, ainsi que dans le prix des matières premières, l'on aiderait grandement à maintenir â un niveau satisfaisant l'empioi et Ie commerce international. A cette fin la Commission recommaude l'établissement de groupes d'étude dans tous les cas où des difficultiés surgiraient on seraient à la veille de surgir dans le marché d'un produit de base. Si les moyens normaux ne pouvaient amener un redressement de la situation. les arrangements inter-gouvernementaux réglant l'exportation. l'importa- tion, la production on le prix, pourraient être conclus sons les auspices de l'O.I.C. d'après les conclusions d'une conférence où tous les aspect du problème auraient été examinés. Les régles à suivre sont indiquèes tout au long dans le rapport de la Commission et dans les documents annexée. La Commission est arrivée à un accord complet sur la plupart des questions. Un certain nombre de points ont fait l'objet de réserves et leur étude ser poursuivie ultérierement. A la 5ème Commission était dévolu le ròle complexe de fixer le statut de la nouvelle O.I.C, de déterminer sa compétence et ses attributions, de tracer le cadre de ses futures activities. Les résultats obtenus, sans être complets, sont considérables puisqu'un accord de principe a été réalisé sur un projet de constitution de l'Organisation. 152 Various matters, however, still remain pending; they include the exact tabulation of the purposes of tho 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 last 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. Finally the various principles of the Charter, will have to be harmonized particularly with a view to defining the internal power of decision of the ITO in disputes, and in the settlement of differences between countries with refer- ence 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 work 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 proposals concerning employment, the development of new countries, assistance to be rendered countries affected by the war. In general, the scope of economic collaboration is extended by the e-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 8 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 solutions Furthermore, the work of the second meeting will be greatly facilitated by that of a Drafting Committee which will meet on the 20 January and will draw up draft texts for clauses where agreement has been reached and prepare alternative texts for all the others. Moreover. 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 suppress discrimination. This will be the most important attempt ever made in this field and, if successful, it will bring about stabilization of the tariff status relating to trade dealings among the 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 or our plans will doubtless undergo change. Already, however, we have achieved this result: the im- portant 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. 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 Dele- gates following alphabetical order. I shall begin with Mr. Coombs, the Head of the Aus- tralian Delegation. Dr. 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 Aus- tralian Delegation, I outlined, five basic principles which it seemed to us should be embodied in the work of this Con- ference. They may recall also that the statement of those five principles followed a statement by the leader of the United States Delegatin of also five principles which his Toutefois, diverses questions restent pendantes, telles l'éuumératiou Précise des buts de l'O.I.C., le nombre et la determination des fonctions spéciales des diverses Commissions, et le grave problème du vote au sein du Comité exécutif et de la Conférence. En ce qui concerne cette dernière question, il incombera aux représentants des pays, à la deuxième session, de trouver une formule d'eatente susceptible de concilier le principle d'égalite de toutes les nations avec la nécessité d'assurer une activité efficace et féconde des organes de l'O.I.C. Enfin, il y aura lieu d'harmoniser les divers principes de la charte, notamment en vue de définir le pouvoir de décision interne de l'O.I.C. dans les conflits, et le réglement do différends entre pays par rapport aux solutions externes, telles l'arbitrage et le recours à la Cour International de Justice. In est évidemment difficile de faire à présent le bilan de notre travail, parce que, comme je vous l'ai dit, il n'est pas encore achevè. Sans doute, pour en arriver à un accord, le texte primitif. surtout en ce qui concerne la poitique commerciale proprement dite, a-t-il dú être essoupli et les règles prévues rendues moins rigides. Cela signife-t-il un recul? Je ne le crois pas. Les règles de politique commerciale ne doivent pas être considérées comme constituant une fin en soi, mais comme des moyens d'en arriver à un but supérieur qui est le développement de la prospérité économique mondiale. Or, il est certain qu'un grand progrès a été fait dans cette vole par des propositions concretes concernant l'emploi, le développe- ment des pays neufs, l'aide à porter aux pays atteints par la guerre. Dans l'ensemble, les remaniements proposés par la Commission étendent le champ de la collaboration économique, ce qui ne pout qu'aider à atteindre le but que tons nous recherchons. Tel quel, notre travail, sera réaxaminé au cours d'une deuxième session qui s'ouvrira à Genève, le 8 avril 1947. Dans l'intervnlle, les questions restées en suspens, ainsi que celles sur lesquelles un acord n'a pas pu se réaliser, auront le temps de murir. Les Gouvernements pourront les considérer à nouveau et à la lumière de ce nouvel examen, proposer de nouvelles solutions. Le travail de la deuxième Session sera d'ailleurs grande- ment facilité éépar celui d'un Coméite deéR~daction qui ésigerà a partir du02o Janvier prochain et aêretera des projets de texte pour les clausesùoh un accord a pu se faire, et, pour toutes les autres, éreparera des textes alternatifs. Cn' West pas tout. Au cours de cette deuèieme Session, confoémemenà A une proposition du Gouvernement des Etats-Unis, approévde par la Commission, desénfgociations s'engageront, eéperons-le, entre les Etats-membres du Comét6 provoisoi,e. pour laéreduction des rraèsires douaènires et l'abolition dee disicrminations. Ceeram la plus vaste entreprise de ce genre qui aura maraié éte teéthe et qui conduira, si elleéreuss,tà a fixer le statut douanier deés changes commercial entre les principles pssauinces economiques du monde. Ce sera la complement de la Charte, le comélement qui donnerà a celle-ci toute sa poét~e et sa valeur pratique. Aères cette deuèiemeé rdunion, la Commission aura érE- pérE les voiesà 4 la CoéffrencI international sur le Com- merce et l'Emploi, laquelle donnerà a ses travaux une for dedefinitive. Bien deésèvenements se produiront d'ici IA et sans doute certain changements interviendront dans nos plans. Mai ,-dores etédàj&,nuaérdsultat est acquis. C'est que les principles puissanceé economiques dmonmode convaincues de l'unUtilétf d'unluintte éterile, sontédicédies a collaborer entrelee~ls pour la éctiaiéo d' unmon de poèspre et heureux. C'est sur cette note cptimiste et de confiance que je termine mon expése. semsieu, . les diéfdrenteséDélEgations ont demaénà A prendre la parole pour donner leur impression sur le rEultat de nos travaux. Je donnerai la parole en suivant I'ordre alphaégtique. Je commence par M. COOMBS, chef de la édéEgation de 'lAustralie. M. COOMBS uuAstralie) Insterpéitution): Monsieur le Péesident, les membres de la Commission se seuviendrent peutê6tre que dans la premirre declaration quej 'ai fiate evant cette Commission, au nom de la délegation de l'Australie, j'ai énocé cinq principels fondanentaux qui, à notre avis, devaient être incorporés dans le travail de cette Conférence. Je me permettrai 'de veus rappeler également que cet a'noncé avait suivi un exposé fait par le délégué 153 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 five principles upon which our approach to the questions before us was based are in fact embodied in the work of the Conference and I am also pleased to say that I believe that it has been possible to achieve that result without impairing to any significant extent the five principles stated by the United States Delegation. That. I believe, may well have been the, experience of other Delegations,. It is. I consider, an achievement of con- siderable importance. Out of this Conference bas come a set of reports in which the area of agreement is so large as to be dull enough to delight Mr. Wilcox's heart. 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 my delegation been a most exciting experi- ence. 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 appear to be as irrational, as unpredictable and beyond human control as catastrophes of nature. Those two major catastrophes 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 on our capacity to build a world which is economically sane and which is progressing steadily towards better standards of life and better justice. Since these catastrophes, I believe real progress has been made. To a greater extent than ever before, particularly within the fields of individual economics, the economic setting in which men and women live their lives is becom- ing a matter within human control. To me, this Conference is important because it continues that process and it continues it where most progress is necessary-in the international field. I believe we have participated here in one of the many battles in the long struggle of human knowledge and human co-operation against ignorance, prejudice and fatalism. We have con- tributed to the development of a world in which the lives and happiness of ordinary people will no longer be at the mercy of blind economic forces but in which the conditions of life will be within the capacity of man to determine, subject only to the limits set by the resources of nature and the capacity of human knowledge and labour. The task of achieving this will not be easy. 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 my Delegation, I would say that it has been a .privilege to be associated in taking these first steps. The CHAIRMAN (Interpretation): I thank Mr. Coombs for his statement. I call upon the Head of the Belgium- Luxembourg Delegation. Mr. KERCHOVE D'HALLEBAS (Belgium-Luxem- bourg) (Translation): The Belgo-Luxembourg Delegation notes with satisfaction that its desire to offer constructive -co-operation in the work of the Preparatory 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-Luxembourg Economic Union long ago demon- strated its faith in plurilateral trade agreements, by the part it played before the war in the agreements negotiated at Oslo and Ouchy. That agreement of a group of economic powers, inspired by an equal determination to forgo policies of economic self-sufficiency and to promote mutual trade, formed, as is well known. the first. experi- ment in the sort of agreement that has occupied us for the last six weeks. - .: des Etats-ùnis, oh il mentiéonnait galementrincipesonruipo qu'i, de lavis éeésa delegétion, dtaient foudamnentaux. Ces priécipeé 4nonces par lea Etaté-Unis etaieét diff6rents des miens en ca qui concerns l'importance qu'il a atàaches i certalè probiomes at aussi dans leur forms meme. Je èais tres heureux de vous dire qéoéla delegation de I'Australie estime que les principes sur lesquels eée fondde nçtre fagon d'envisager nos travaéxéont et6 iésorpores sans les travaux de notée Conference eé él a et6 possible d'arriver aux r6sultatz oDi m,'us dans mettre en danger les principes qui aétéeét 4Oé dnoncds péréla delegation des Etats-Unis. Daétres.dalegatiorns pounent avoir faiêt la m~e observa- tion. J'estime que c'eséUt un suétat vWritablement impor- tant que nous avons atteint iei.éUne serio de rappnrts oat Ut6 6tàblis a la suite des travaux de cetté Conference, rapports sur lesquels l'accord obtenu est aéséz general pour donner satisfaction a M. WILCOX. Teutefoais, j'imerais dire que les travaux que nous évéas ete obliges de faire pour aràiver é ce rdsultat ont conétitute poué éa d6ldgation une dés experiences les plés intkressanees quo nous ayons pu avoir. A deux reprises, le moédé a dt6éplonge dans une catastrophe, dans le cours déuée generation, une fois parunie depreésion economique et une autre fois par la guerre, et cela par. des forces qui, pour l'homme moyen, atparaisseut irrationnelles, imprdvisibles et àu del] du control human. On éonsid6rait ces faits come des catastrophes. comme ées èhenomenes de la nature, mais ces deux catastrophes ne sont pas sans relation entre eIles. 1i est certain pour neusequo rmlos gees do la guerre peéuvent treé trouvs dans la depression et quo lapaix future du ménde ddpendra de la possébilety quo nous aurons de construire un moinde san iconomiquement ot progressant constamment vers un meilleur niveau do vio et vers une justice plus parfaite. Je crois que. depuis que ces catastrophes ont eu lieun des progras éut et6 realises et dans une proportion plus grande qu'autrefois: en particulier dans le domain des economies individuelles. Le cadre economique de la vie des etres humains deviant actuellement un problem quo l'on est capable deôcontr6ler. Cette Conference, pour moi, est importante parce quelle represent une poursuite de ces recherches et dans un domùine oA le progres est absolunent indispensable. je veux dire le plan interna.tional Je crois que nous participons ici a la bataille que livrent la connaissance humaine et la science centre l'ignorance. les prejuges et le fatalisme. Nous avons coétribu6-j'en suis certain-au d~veloppement d'un monde dans lequel la vie de l'homme ne sera plus a la merci de forces economiques aveugles, un monde dans lequel les conditions de vie pourront Itre céntr6l6es et determinees par les homes et ue seront cir- conscnites que par les limites imposees par la nature et la connaissance. La tiche nest pas facile, car notre ignorance est tzds grande et le problem tres complex. n n'y a aucun doute que des fautes aeront commises, pent-etre meme des fates tragiques. mais la route est devant nous et nous avons de ltespoir. Pour moi et pour ma delegation, je crois pouvoir dire que nous commes heureux d'évéir dt6 associes a ces travaux qui constituent le premier pas vers cette marche en avant. Le PRESIDENT: Je remercie M. COOMBS de son expos. Je donne la parole i M. KERCHOVE D'HALLEBASE, chef déléa Dle6gation belgo-luxem- bourgeoisi. M. KERCHOVE D'HALLEBASE (Belgique-Luxem- bourg)é éa D6lagation belgo-luxembourgeoise constate avec satisfaction que son ddsir d'apporter une collaboration con- structive aux travaux de la Commission preparatoire i la Confidence Internationale du Commerce et deo I'rnplo. a reécontr6 de la part des autres deldgations l'accueil le plus comprdhensif. II sst pormai d'esprer quo sortira de nos travaux on instrument contractual mnltilatdral genereux et efficace qui luid vaudra l'adhesion finale do toutes lea Nations. L'Union Economique belgo lu.embourgeoise a nque, il y a long- temps deji. sa foi dans lea accords comaerciani plurila- teraux de la part. qu'ele a praise avant guerre aus arrangements d'Oslo et d'Ouchy. Cette entento d'n group de Puissances economiques animhes d'une Wgale resolutionéde s'6carter des voies de l'autarcie et de ddvelop- per leans changes, a constitue, ainsi qu'on le sait, le premier essai de pact du genre d celui qui nous a reteaus ici pendant six remains. 154 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 the Belgo-Luxembourg Delegation to the agreed texts. 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 proposed and applied, were incapable of curing the ill; today. within the Preparatory Com- mission, a wider, more just and more objective view prevails. The achievement of full employment appears no longer as the result of economic prosperity. but above all as one of its determining factors and 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 onto the only plane on which a solution is possible; the only plane when 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 -an only be realized 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 Employ- ment must not and cannot be limited to an agreement with the draft proposed, but must include the determina- tion 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 improbable that we shall be able to suppress entirely the alternation of periods of prosperity and well being 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 series of measures designed to minimize the effects of a depression and to limit its duration. The Belgian Delegation welcomes the introduction into the Charter of a new chapter dealing with economic development. The nations to-day engaged in a praise- worthy effort to diversify 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 the peoples prepared t0 help them by facilitating the long-term accomplish- ment of that task within the framework of the Charter. We are convinced that the young countries will make reasonable use of the system of privileges and exceptions, which enables them to limit the effect of international competition on their economies. In our view no country should make use of such a weapon to try to evade the obligations which result from world economic solidarity. We firmly believe, on the 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 assign to each country its share la the chain of responsibilities spread out over a period of time, for development and utilization of the resources of the world. May the young countries profit by the experience of countries like our own, which have .been. able to achieve a high degree of industrialization without closing their doors to the trade of other nations. After two hundred years of industrialization we are qualified to state to-day that. the industrial development of a nation is as coma- patible with freedom of exchange as it is with the acceptance of heavy responsibilities in the sphere of international trade. The new draft text proposed for Chapter IV deals with general commercial policy, particularly those Articles relating to most-favoured-nation treatment; tariff reduc- tiors; the elimination of preferences and quantitative restrictions; and the provisians relating to urgent and unforeseen cases. This delegation is of the opinion that the amendments made in the new text relative to these Je voudrais marquer, en lui donnant la forme d'una analyse sommaire des travaux des cinq commissions, la mesure et la portde de l'adhésion de la Delegation belgo- luxembourgeoise aux textes arrètes. Avant la guerre, les diverses politiques de l'emploi so situaient principalement sur le plan social et dans le cadre national. Ce n'est pas s'engager dans la voie d'une critique ou d'uno coutroverse que de constater que les tentatives de solution et les remedes proposes et appliques ont étéé incapables de géerir le anl; aujourd'hui et au sein de la Conforence péevaut une conception plus ample plus just et plus objective. La édalisation du plein employ so ptesente avant tout non plus comme une resultante de la prosé~rite ecouomique, mais comme un des facteurs édter- minants de celle-cit et,àk ce titre, édclame des pouvoirs publics de chaque pays la plus large et plus intelligeute sollicitude. La Conference s'est assigned pour but d'aller plus loin; elle veut transporter la question sur le seul plan qui per- mette de la resoudre: car c'est I1 seulement que peut se trouver une solution qui s'identifie aussi bien avec la prosperite de chaque nation qu'avec l'ensemble de la com- munaué6 iconomique interuationale. u'il s'agisse en effet des pays neufs ou des pays é6oluéd industriellement, il est apparu que le plein emploi ne peut etre rdalise qui si la demande effective mondiale crolt regu- lierement et si los diffrentes politiques économiques à courte ou à longue écbéance sont pratiquement co- ordonnees. L'Union Economique Belgo-Luxembourgeoise est pleinement consciente de ce quo cette approbation qu'elle apporte ainsi aux objectifs de la Commission de l'Emploi ne doit et ue peut se limiter à un accord sur les termes pro- posés, mais qu'elle comporte la volonté de coopéror à tout instant à l'entreprise. Cependaut, l'Union Economique a tenu à mettre en garde le Comité contre le danger qué présenteraient des engage- ments trop precis qui ne pourraient pas etre tenus. Quel que soit le degree de coordination quo nous apporterons à nos efforts nous ne pourrons vraisemblablement pas supprimer entierement l'altemance de périodes de prospérité et d'euphorie avec des pdriodes de depression ou do moindre demanded effective et la Commission a agi sagement en recommandant aux Gouvernements de prévoir ces altern- ances en reservant, pour l'apparition des periodes de crise, une série de mesures destinées à en atténuer les effets et a en limiter la durde. La Delegation beige accueille avec sympathie l'introduc- tion dans la Charte d'un nouveau chapitre traitant du development économique. Les Nations qui entrepren- nent aujourd'hui un effort meritoire en vue de diversifier leur outillage economique, do doter leur population d'un equipement moderne. ou do reconstruire une économie ravage par le guerre, apprécieront la largeur de vues des peoples qui sont disposés a les aider en facilitant l'accom- plissement do cette tiche a longue chance dans le cadre de la Charte. Nous sommes convaincus quo les Nations neuves front un usage raisonni du rdgime priviltigid et exceptionnel qui leur permnet de limiter les effets, sur leurs économies, de la concurrence international. Dans notre esprit, aucun pays ne devra brandir cette arme pour essayer dechapper aux devoirs qui découlent de la solidarité économique mondiale. Nous espdrons fermement. au contraire,' qu'ils s'appliqueront, sous la sage direction de l'O.I.C., à assurer, par ce moyena une expansion harmonieuse du commerce international, en assignant a chaque contrde sa part de responsabilites successives et chelonnees dan. le temps, danas e developpement et l'enploi des resources du globe. Puiissent les Nations jeunes profiter de loepdrience do pays come le nftre, qui ont pu rdaliser un degri elevé d'industrialisation sans ferner les portes au commerce des autres Nations. .Deux sicles d'md-strialisation nous pernettent aujourd'hui d'affirmer quo le ddveloppement industrial d'une -Nation esi compatible aussi bien avec la liberty des changes quavec .i'acceptation de lourdes obligations dans le domain du commerce international. Le nouveau projet do teste proposed pour le Chapitre IV traite de la politiquecommerciale-générale, notammentpour les articles rolatifs au traitement de la nation la plus favorisie; la reduction des tarifs; l'élimination des préfér- ences, cell des restrictions quantitatives ainsi que les dispositions relatives nux cas urgents et imprivus. La Délégation estime que les amendements qui ont été repris 53680(34) B 155 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 con- fidence between members as well as to create confidence in the future International Organization. It behoves them now to give the Charter full play in ensuring the expansion of world trade. This delegation expresses the hope that the negotiations arranged for the sprig will lead to the full realization of this objective thanks to substantial reductions an high tariff rates. Generally speaking, the provisions 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 originally envisaged. When need arouse 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 organization 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 com- parative rulings on given points. Committee III has shown a spirit of great understanding in its work, coupled with a unanimous desire to work out a constructive draft. This draft is intended to prevent the efforts made by the various states to achieve the aims of the Organization being jeopardized by the machinations of commercial enterprises who 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 Organization, at the same time entrusts 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 some slight reservations, has received the almost unanimous approval of the delega- tions present, meets the main requirements of the Belgian Delegation which is responsible on the one hand for up- holding the interests of the home country, mainly a con- sumer of primary commodities, and on the other hand. the interests of the Coloces, 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. Considerable results have been achieved by the Com- mittee for organization. They have, in fact, drawn up a draft constitution for the new Organization. Several questions, however, have been left in abeyance. I shall merely mention the question of the voting procedure in the Executive Board and in the Conference, in view of the particular importance of this matter and the impossi- bility of reconciling the opposing opinions. The Belgian and Netherlands Delegations have sug- gested 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 Commit 's be allotted to the economic powers-that play a leading part in inrternational trade. dans le nouveau texte relativement à ces questions sont de nature à douner satisfaction à de nombreusas objections qui avuient été soulevées à l'occasion des débats. La Délé- gation est persuadée que ces modifications sont de nature à renforcer la confiance reciproque aussi bien entre les membres que vis-à-vis de l'Organisation inteniationale future. il leur appartient maintenant, de donner a ht Charte sa pleine efficacité en vue de l'expansion du com- merce mondial. La Délégation exprine son espoir que les négociations prévues pour le printemps permettront, grace à des reductions substantielles des tarifs élevés. de réaliser pleiniement cet objectif. D'une manitre générale, les dispositions douanières de la Charte et les questions qui sont connexes à celles-ci, tellers qu'elles ont été interprétées ou arnendées en comité ne sont pas en contradiction avec les principes essentiels belges ni avec les lignes directives de la future communauté douanilre néerlando-belgo-luxembourgeoise; cepenidant, si un accord a pu se faire dana un grand nombre de cas, il n'a pas pu être réalisé-et il fallait s'y attendre-pour de noombreux points. Tels que se présentent ces articles actuellencent, ils s'inspirent d'une fagon evidente du desir de tendre vers des changes plus libdraux, et la Delégation belge se félicite d'avoir pu obtenir, pour plusieurs questions, des amnliorations de nature a permettre à Ia reglementation national de jouer avec plus de facilities qu'avec le systime prdvu primitivement. Lorsque la ndcessité s'en est fait sentir, nous n'avons pas hesite I faire des reserves formelles, mais nous sonmnes heureux de le constater, dans les grandes lignes nous avons marqud notre accord. nfin, il convient de mettre en relief initiative frangaise proposant que l'O.I.C prenne en mains l'organisation international des tariff douaniers qui fonctionne actuellement dans note pays, et elargisse son champ d'action, de telle mnanire qu'il y aurait a Bruxelles un bureau permanent charge de assembler, d'analyser et de publier les lois et rglenents relatif an commere inter- national et de presenter des réglementations comparees sur des points donnas. Les travaux de la Commission m oat été marquis d'un grand esprit de comprehension, joint I une volonte unanime d'6laborer un projet constructif. Celui-ci tend a empicher que les efforts faits par les Etats en vue de rdaliser les objectifs de l'Organisation ne soient mis en peril par des agissements d'entreprises cornmerciales abusant d'une influence preponderante dont elles disposeraeent isolement ou par voie d'accord, sur le commerce international. L'accord sans reserve donned par la Délégation belgo- luxembourgeoise sur en tel principle porte églement sur la procedure élaborée qui, tout en chargeant l'Organisation Interuationale d'un rdle important, confie I l'Etat intéressé la part la plus large possible des measures do controle, d'enqulte, de decision et de répression. et tend à Mviter tout conflit avec des difilrentes legislations nationales. Les travaux de la Commission IV ont abouti I une redaction prerqu' entinrement nouvelle du Chapitre lV de la Charter. Le texte actuel qui, a quelques reserves pris, a regu l'approbation de la quasi unanimité des délégations prdsentes, rdpond aus preoccupations essentielles de la ddldgation beIge charge, d'une part, de la ddfense des intdrets de la métropole, consomratrice principalement de matièes de base. et, d'autre part, de ceux de ses territoires coloniaux, grands producteurs de matieres premires. Un équilibre satisfaisat a été réalisé entre lea dispositions visant a la protection des consommateurs et celles destinies à sauvegarder les inthrts des producteurs. Lesa risultats obtenus par la Commission de l'Organisation sont considdrables puisqu'elle a mis sur pied en fait un projet de constitution de la nouvelle Organisation. Diverses questions restent neanmoins pendantes. Je ne mentionnerai ici que le probldme du vote au sein du Comitd Executif et de la Confdrence, en raison de son importance particuliere et du caractere irreconciliable des positions en presence. Les délégations beIge et néerlandaise oat fait une pro- position transactionnelle tendant a l'adoption du principe du vote ignlitaire au sein des organes de l'O.I.C. et A l'attribution de sieges permanent au Comite Exdcutif. aux puissances dcoriorniques jouant un rôle prépondrant dans le commerce international. 156 Furthermore, the Netherlands, French and Belgian- Luxembourg Delegations have submitted to the Secretariat of this Committee a proposal to amend Article 76 in such a manner as to widen 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. Thus it will be seen that subject to some reservations on certain particular points, the Belgian-Luxembourg Dele- gation heartily concurs with the texts which are to be 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 end of our task or 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 realization. This realization does not 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 conviction of the duty, which has devolved on our generation, to see that the principles of solidarity shall prevail over egoism both in the social field and in the economic field proper. With this end 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 repre- sented at this Conference or not, so that when the Charter finally comes into force, its provisions may be known and their inter-connections fully realized. It must be truly considered, as the words of the Charter so happily express it as a code of progress, as an " ensemble " of solemn undertakings implying an irre- vocable decision to abandon the errors of the 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. The CHAIRMAN (Interpretation): I thank the Delegate for Belgium-Luxembourg for his statement. Now I call upon Mr. da Silva, the Head of the Brazilian Delegation. Mr. MOREIRA DA SILVA (Brazil) (Translation): The Brazilian Delegation came here in a spirit of hope and enthusiasm for the task awaiting us, the task, namely, of helping, in collaboration with the other countries invited by the Economic and Social Council of the United Nations Organization, to lay the economic foundations of a lasting peace. A beginning bad already been made by the con- clusion of monetary, financial and other agreements, in the course of the war. The most important question still outstanding is no doubt the regulation of international 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 from 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 improvement, equalization and stabilization of the stan- dard of living of the world's populations. For the practical attainment 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 all the problem of the industrialization of less highly developed countries and of countries whose development has been arrested or set back as a consequence of the war. We are gratified to note that the countries here assembled 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 tight, I think to emphasize the importance of that con- sideration. It means that on the one hand, there has 53680 (34) D'autre part, les délégations néerlandaise, française et bulgo-luxumbourgeoise oat déposé au Secrétariat de la Ve Commission use proposition d'amendement à l'art. 76 tendant à élargir le champ des dispositions relatives à I'arbitrage et à la compétence de la Cour Internationale de Justice, pour l'interprétation et le réglement de tous les différeuds qui pourraient surgir. La Belgique souhaite que ces propositions fassent l'objet d'un examen attentif du Comité de rédaction appelé à revoir nos travaux. On le voit, sauf des réserves sur quelques points parti- culiers, la Délégation belgo-luxembourgeoise adhère cor- dialement aux textes qui vont être sourmis à le Commission plenière. II ne faudrait cependant pas conclure de cette large adhesion au project de charter, tel qu'il va être rédigé à New-York, que nous croyons être sur le point d'entrer au port ou à proximity du but à atteindre. De longues tapes restent de toute évidence encore à parcourir pour que les espoirs qu'a fait naître la noble initiative du Gouvernement des Etats-Unis et la résolution du Comité Economique et Social, puissent approcher de leur realisation. Cette réalisation not dépend pas, même en ordre principal, de la Charte elle-même, de ses dispositions, de ses textes, de son esprit. Elle procédera de l'opinion publique mon- diale, de la conviction croissante du devoir qui est imparti à notre generation de faire prévaloir toujours davantage des postulats de la solidarity sur ceux de l'égoïsme, aussi bien dans le domaine social que dans le domaine economique proprement dit. Il importe dans ce but qu'une propaganda vigilante et habile à la fois associe dans tous los pays représentés ou non à la Conférence. les milieux économiques à nos travaux. de manière à ce que, Iorsque la Charte sera définitive- ment mise en vigueur. ses dispositions en soient connues et leur interconnexion pleinement réalisée. II faudrait qu'eile soit considérée véritablement-ainsi que le mot de carte l'indique si heureusement-comme un code de progrès. comme un ensemble d'engagements solennels. impliquant la décision irrévocable d'abandonner les erreurs du passed; la volonté de limiter à la plus courte durée les misères du présent; la résolution de créer, à la lumière de cette double expérience, un cadre nouveau, digne d'un avenir que tous nous espérons et voulons ardemment meilleur. Le PRESIDENT: Je remercie M. Kerchove d'Hallebase de son exposé. Je donne la parole à M. Moreira da Silva. Chef de la Délégation du Brésil. M. MOREIRA DA SILVA (Bresil): La Délégation du Brésil est venue ici remplie d'espoir et d'enthousiame, pour la tâche qui nous attendait, cell d'aider à établir. en collaboration avec les autres pays invités par le Conseil Economique et Social de l'Organisation des Nations Unies les bases économiques d'une paix durable. Cette tâche avait déjà été abordée pendant la guerre, par la conclusion d'accords monétaires, financiers, etc La plus importante des questions qui restaient, est. sans doute, la réglementation du commerce international, c'est-à-dire I'élaboration d'un statut international qui régira le commerce mondial d'après-guerre. Notre tâche principal, à cet égard, doit être celle d'étudier les moyens de libérer le commerce des entraves créées soit par les gouvernements, soit par les monopoles privés. Toutefois, l'expansion du commerce international n'est point un but mais seulement un moyen d'atteindre les buts véritables. c' est-à-dire le relévement. l' égalisation et la stabilsation du nivean de vie des populations du monde. Il nous fallait donc, pour atteindre ce but d'une manière pratique, ne pas nous bomer aux probIèmes du commerce international proprement dit. C' est ainsi que nous nous sommes occupés aussi des problèms du chômage, de la stabilisation des marchés de matières premises. et sur- tout de celui de l' industrialisation des pays moins déve- loppés et de ceux dont le développement a été arrêté on a régressé par suite de la guerre. Nous sommes heureux de constater que les pays réunis ici, ont, sans exception, reconnu l'interdépendance de ces problèmes ainsi que les conséquences qui découlent de l'existence de profondes différences entre les structures économiques des divers pays. Je pense qu'il est just de souligner l'importance de ce fait. Ceci signifie d'une part q'on est arrivé à une vision plus réaliste des problèmes B2 157 been a more realistic conception of international trade problems, while, on the other hand, a number of practical steps have baen discussed with a view to giving effect to that conception. There has been a readiness to accept. as being in the interest of all, a policy of general economic collaboration of a tangible and continuous nature, over and above the action taken under existing economic agree- ments between nations. The final result of our labours will accordingly be an international statutory settlement, which will not be concerned solely with the world's trade. but will 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 so important a problem: and the Economic and Social Council very properly decided. in accordance with the suggestions of the United States. to distribute the work over two Sessions of the Preparatory Committee, and one Session of a Drafting Committee, before summon- ing the Plenary International Conference. Apart from the drafting of the statutory settlement, there is another task awaiting us at our second gathering-namely, tariff negotiations. That is a practical step, which should in- augurate the new international economic policy, even before the adoption of its fundamental statutory settle- ment. We trust that these negotiations 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 fundamental principles of 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 delegations, we desire to thank them 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 our future meetings to continue this collaboration, which has had so satisfactory a beginning, in the interest 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, now that the Conference is coming to an end, I think it is possible 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 pre- liminary 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 so complex, and the economies of the various countries represented were so diverse, that it seemed unreasonable to expect much greater progress than that. In the upshot, these modest hopes have proved too timid. Not only have the main problems been explored, but a wide area of preliminary agreement has been reached between delegations. Our governments will now have before them agreed draft of many articles of a trade charter, and we turn over to the Interim Drafting Com- mittee a wealth of concrete proposals. Differences, of course, remain. But after the thorough discussions which have taken place here, it should be much easier to com- pose 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 un- ravaged. Some of them are mature industrial economies, anxious to find expanded markets for their manufactures; others are under-developed industrially, and wish to diversify and increase their industrial production. Some of them believe 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 instand there has emerged such wide preliminary agreement is a tribute to the good will and hard work of the delegates. Even more, it is a confirma- tion of the fundamental attachment of the governments represented here to the purposes for which this Conference was called, Differences remain over emphasis and methods; -'7 du commerce international, et d'autre part qu'on a envisagé de nombreuses dispositions dans lesquelles on a concrétisé cette idée, on a accepté une collaboration économique générale réelle et constant, en plus des mesures déjà concerteés dans d'autres accords économiques internationaux, comme étant dans l'intérét de tous. Le résultat final de nos travaux sera doneun Statut Interna- tional qui ne porter pas uniquement sur le Commerce Mondial, mais qui réglementera la collaboration économique internationale dans de nombreux et important domaines. Il n'était ni possible ni nécessaire d'arriver à une formule définitive. Six semaines sont bien peu de temps pour résoudre un problème d'une telle importance. et c'est avec raison que le Conseil Economique et Social, adoptant la suggestion des Etats Unis, a décidée de répartir le travail entre deux sessions du Comité préparatoire et une d'un Comité de Rédaction, avant de convoquer la Con- férence Internationale Plénière. En dehors le l'établisse- ment du Statut. il y a une autre tàche qui nous attend à notre deuxième réunion; ce sont les négociations tarifaires. II s'agit ici d'une measure pratique, qui dolt inaugurer la nouvelle politique économique internationale, avant méme que son statut fondamental ait été adopté. Nous espérons que ces négociations arriveront à des résultats positifs sans délais excessifs, en dépit de la nouveauté et des difficultiés de la procédure envisagée. Ce sera le cas si l'on tient compte. pendant les négociations, des principes fondamentaux de note futur statut, principes justes et équitables, qui reconnaissent les besoins variès des divers pays. En prenant congé de nos collègues des autres Délélga- tions, nous voulons les remercier de l'esprit de compré- hension qui a facilité les travaux de tous, et nous exprimons le souhait de pouvoir, dans nos futures réunions, continuer cette collaboration qui a si bien débuté, dans l'intéret de nos pays et de l'humanité. Le PRESIDENT: Je remercie M. da Silva de son exposé et je done la parole à M. Robertson, de la Déléga- tion du Canada. M. ROBERTSON (Canada): (Traduction) Monsieur le Président, au moment où la Conférence s'achéve, il est possible, je pense, de jeter un regard en arriere, et avec une satisfaction considérable, sur le travail de ces six dernières semaines. Au début de la Conférence, beaucoup d'entre nous estimaient que, si elle réussissait simplement à faire une reconnaissance préliminaire des mesures à prendre avant la création d'une Organisation Internationale du Commerce, ele n'aurait pas abouti à ua échec. Il y avait à résoudre des problèmes tellement complexes et les économies des divers pays représentés s'avéraient à tel point différentes, qu'il paraissait peu raisonnable de s'attendre à un resultat plus complet. Maintenant, nous constatons que de tels espoirs étaient trop timides dans leur modestic même. Non seulement les principaux prob- lèmes ont été approfondis mais un accord préliminaire important a été obtenu entre les Délégations. Nos gouvernements vont avoir devant eux des projets agréés de nombreux articles d'une Charte du Commerce, et nous soumettons au Comité de rédaction intérimaire une quantité de propositions concrètes. Bien entendu, des divergences subsistent. Cependant, après les discussions sincères qui se sont tenues ici, il sera bien plus facile de les faire disparaître lors de la réunion de la Commission à Genève. Cet accord si important sur le plan officiel nous semble plus heureux encore si nous songeons a la variété des situa- tions économiques qui existent dans les pays représentés ici. Certains de ces pays ont été dévastés par la guerre; d'autres en sont sortis indemnes. Les uns disposent d'économies industrielles développées désireuses de trouver des marchés étendus pour les produits de leurs usines; les autres ne disposent pas du. développement industriel sufisant et souhaitent diversifier et accroltre leur produc- tion industrielle.. Quelques-uns font confiance à de vastes plans do nationalisation de l'industrie; d'autres attachent plus de poids à l'initiaive de l'entreprise privée. Tant de diversité aurait pu simplement avoir pour effet la confusion des langues et la confusion des thèses, Si; au contraire, il en eat résulté ma aussi vaste accord préliminaire, on en est redevable à la bonne volonté et au dur labeur des délégués. J'irai plus loin: c'est Ià une confirmation de l'attachement foncier des gouvernements représentés ici aux objectifs de cette Conférence. Des divergences peuvent demeurer sur 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. During the past weeks members of all delegations have had to thread the mazes of a great number of intricate special subjects. To most of the public, perhaps we should remind ourselves, these mazes remain mysterious and occult. To She uninitiated, the problem, for example, of confining the use of quantitative restrictions to balance of payment grounds is as much a riddle as the quantum theory. So that it is wise, I think, occasionally to recall the consequences which would follow, if the work begun here should end in failure, and on the other band the brighter future we can look forward to if these efforts succeed. .During the inter-war period, many of the problems which have been discussed here were considered, although never so comprehensively, at international conferences. Those conferences were abortive. Economic dislocations and depressions set in, which had not a little to do with producing the morbid political and psychological culture in which the seeds of war could sprout. We must see to it that that melanoholy course of events is not repeated. If. on the other hand, 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 hate done much to rid the peoples of the world of the fear of insecurity, want and unemployment. 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 good volume through the arteries of international trade, this lively current will ultimately have a tonic effect on the fortunes and well- being 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 experi- ence and unfailing tact have been constantly at the service of the conference, and have helped it over many diffi- culties. We are also indebted to the hospitality 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 such a carefully prepared draft charter for its consideration. I feel certain that no such rapid progress could have been made if the Conference had not been able to take the United States draft as the basis for its discussions. It is usually held to be a parent's prerogative to dote on his children. But the United States Delegation have looked on unflinchingly while their offspring has been probed and punched. Parenthood catod mn seldom before chve readied such heights of tolerance and forbearance. it is a spectacle whicmh nhas comaded our admiration. We only hope that as a result of this hardening process which has begun so early, the infant will grow up to a long and lusty life. We have made a gtood star. But much still remains to be accomplished, and I am sure that there is no one here who is in dafnger o f allinginto complacency. The Canadian Delegation take the preliminary agreeme nt whichhas been reached here as a good au gury forfinal success when we continure ouxr wokr net yea. TMANhe InterCHAIR (pretation): I thank Mr. Robertson for his speech. I now call upon Mr. Bianchi, the Ambassador of Chile. MrI. BIANCH (Chile): The Chilean Delegation has followed with great satisfaction the deliberations of this Preparatory Conference on Trade and Employment, during which the representatives of seventeen countries have, with efficiency and entire frankness, exchanged points of view on the many economic problems, the importance of which illno one w deny. ce que sl'èon conidre commee essentil et sér les methodes; mais chacun icl s'àccorde i penser que les gouvernements doivent entreprendre une actionéconcertldeépour ibdrer les voies du commerce et maintenir un niveau déempéoi OlevO et stable. Au course de cès dernieres semaines. les membres se touted lea delegationsàeuéeêl a ddmn!er ê'eachevetrenent d'ua grand nombre de séjets spdciaux et complexes. Pour la plus grande partie du publiê,-peut-etre conviendrait-il de nous en souvenir-ceê enchevftrement demeére mysterieux. et occulte. Pour les nén inities, èe probltme par exemple qui cànsiste & limiter l'usage des restrictions quansitative a des caésesàliees & la balance des paiements constitue un rebus aussi difficile qué la thdorie des quanta. Aussi bien me parait-il sage de rappeler au passage lés consEquences qi'entratn'éait lNechec du travail éommence ici et d'autre pért, d'evoquer l'avenir plus clair qui nous attend en cas de reussite. Pendaét la pdriode de l'entre-deux guerres. beaucoup des eproblemsédiscutdê ici meme aéaéent eteéexàmines a des conferences internationales, mais jamais aussè complete- ment. Ces conferences n'aboutirentlpas. I1 s'ensuivit une disagrdéation economique eé une serée de depressions dont les effets ne fureét pas stràngers a la formation d'un bouillon de culture politique et psychologique morbide dans lequel les semences de la guerre pouvaient germer.àC'est & nouê d'emp~chéréla r~pdtition deécette Evolution navrante des evdnements. Si, par contre, ié nous etait posséble d'ddifier une institu- tionéedàstine & mettre hors la loi des pratiques dont les effets sur le commerce mondial dans é e pass furent si ddsastreusàs,éet a regler les diéficultis comemeréials pdriodi- ques. nous aurions fait beaucoup péur libdrer les peuples du monde de la peur dé l'inéecurite, deèla misere et du chOmage. Tous les pays se trouventéaffecbts par les changeeents do volume ét de mdthodes du commerce mondial et mon pays tout le premier. Aussi devons-nous vàiller h ce que le commerceésoit développd au maximum. Si l'on pouvait aàriver A ce que les produits circulent libre- meat et en éuantitds suffiàantes & travers ièes arthres du commerce international, ce courant Avace devrait en definitive exercer un effet toniqle sur jes revenus et le bien-6tre des individus, d'ud bout #uàml'onde A autre. La dElegation canadienne estime, Molsieuér ie Prsident. que èe sécàeséddjkércalisE voms encos;ubs da unelarge mesure. Votre lonéue experiencerettactte ct.ésans defaut ont ete constamment au servlae deféhl Con!renuce ontli t permis de surmonter maintes diffés.lt avonoué &s 4gale- ment conéractE une dette de recnnaissance euvers le gouvernement du Royaume-Uni lontsi'hoepiéalitd a tant fait pour ne comfort et émagrEcentDélég éD)Iues. Nous voudrions rendre un hommage tout partiàler I'initiative deélé Delegation des Etats-Unis pour e Projet du Charte, si soigneusemeét péepare par elle et soàmis C l'examen de laéConference. Je suis certain que des pèogris aussi erapids a'auraient paé pu etre faits si laéConfdrence n'avait pas Ete en mesure de se servir du Projet des Etats-Unis comme base de ces discussions. On coèsidiéré gdneralement qu'un pere a le droit deéprotdger ses enfants. Or,éléa DdEgation des Etats-Unis a aé éstedimperturbable,éaux 6preuves et aux coups iéflàgds a son rejeton. Rarement, dans leépasse, nitéemitd avait-elle, attàent & un telédegr6 de tolerance et de patience. C'àst I& un spectacle qui nous a remplis d'admiration. Noué esperons simplement que céette duca- tion si rude, commenceôsi t6t donàeraéa l'enfant longue et heureuse vie. Nous avons bien coé.enee. Bcauroute àsfa ire et je sûrs s~ que nul ici aieet encaia. i a pli~sance.- La guribfcn -aadiane a~i4wr 1 .:e -preliminaire reaiinest de ion augus raeavs~ e?D;, de ha suit de nos trvux,.l'annEe prech:^a.- Le PRESIDENT: Je romercie M. RPl~-, s o : expose. je donne la parole a N. BianM. a. nrm .*s- 3. BIANCHI (Chili): (TradumcwO) t" . aV',M&Na Chilienne a suivi avec une grande satifacti' e- tionsde cette Conffrece prEparatoire srrun- i et l'Emploi, conference au ccurs de lak`e:1e4 sentants de dix-sept pays ont proc~dE , n .ge 'a vues entidrament franc et constructif- sur lea ulreu - émprobles kconomiques dont l'importance at coéeested. 159 In accordance with the statement I made in one of the first Plenary Sessions of this Conference, the Chilean Delegation has endeavoured to co-operate in every possible way in the discussions which have taken place, 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 preoccupied with ensuring that the Conference should give adequate con- sideration to the main object of the future World Con- ference as set out by the Economic -and Social Council of the United Nations in its Resolution of the 18 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 eliminate present hindrances to world trade. We have made clear that the elimination of any qualitative or quantitative hindrances to international trade must be allied with questions of productive capacity and balance of payments, as these obstacles, at least in Chile, arise out of necessity and only when such necessity is removed will it be possible to eliminate the obstacles resulting therefrom. It is for this reason that the Chilean Delegation proposed so earnestly 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 concise and were, in fact, prepared to formu- late 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 view on this matter and arriving at an agreement sufficiently elastic to include them all, and at the same time concise enough to make the agreement something more than a mere declaration of opinion. We hope that work will con- tinue along these lines, and that shortly the functions of the different organizations of economic co-operation created by the United Nations will be brought into harmony, enabling 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 and the welfare of peoples, would be removed. `With the object of ensuring frank and ample considera- tion of all problems which this Conference must deal with, .the. Chilean Delegation has also endeavoured to see that other questions, which might perhaps be considered in greater detail or more competently at other Conferences, should not be forgotten, since they are also closely inter- woven 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 seem more appropriate than the new proposals put forward by other Delegations. Another guiding principle of the Chilean Delegation has been that the. problems confronting the small nations as well as the great. should be considered on a footing of absolute equality. The Delegation is gratified to note that among the. exceptions to the most-favoured-nation clause, the exceptions in force between neighbouring countries are recognized as being included. As a result, Chile will be able to negotiate the elimination of this exception from her agreements, as other countries will do with similar exceptions. Inspired by the same principle, our Delegation has not accepted new proposals tending to alter the equality of voting within the International Organization which may come into being from these deliberations. With regard to State trading-a matter of some importance to-day, when a large number of enterprises are, to a greater or lesser degree, of that type-the Chilean Delegation has clearly set out its view that such enterprises should enjoy the same liberties and advantages as those of a private character, in so far as commercial considerations are concerned. Conformément à ma déclaration faite au cours d'une des premières séances plénières de cette Conférence, la Délégation Chilienne s'est efforcée de coopérer dans toute la mesure du possible aux discussions qui ont eu lieu. Elle s'est efforcée de mettre en lumière la situation de pays qui, comme le nôtre, se trouvent à la péridoe initiale de leer développement économique et qui, pour cela, n'ont pas encore été entièrement et efficacement incor- porés dans le commerce international. D'une façon générale, note Délégation a été soucieuse d'assurer une consideration adéquate, de ia part de la Conférence, au but principal de la future Conférence Mon- diale tel qu'il a été défni par le Conseil économique et. social des Nations Unies, dans sa résolution du 18 février dernier-à savoir l'augmentation de la production et des échanges ainsi quo la consommation des produits. Elle ne s'est pas simplement bornée à étudier la façon d'éliminer les entraves actuelles au commerce mondial. Nous avons établi clairement la nécessité de lier l'élimination de toute entrave qualitative ou quantitative au commerce, aux questions de la capacité de production et de la balance des paiments. En effet, ces obstacles, du moins en ce qui concerne le Chili, naissent d'une nécessité et ce n'est qu'après avoir écarté une telle nécessité qu'il sera possible d'éliminer les obstacles qui en résultent. Voillà aussi pour- quoi la Délégation Chilienne a proposé avec une tells insistance l'incorporation dans la Charte d'un chapitre sur l'industrialisation. Bien que ce chapitre, tel qu'il a été approuvé en fin de compte, no nous satisfasse pas entiérement, il constitue un grand pas en avant. Pourtant, nous eussions préféré qu'iI fût plus concis. En fait, nous étions disposés à formuler des propositions plus concrètes encore que celles qui ont été énoncées à l'origine. Nous nous rendons pleinement compte des difficultés immenses qu'il y a à concilier des points de vue nombreux et divers en la matiére, et à parvenir à un accord suffisamment souple pour les englober tons et en méme temps suffisam- ment concis pour faire d'un tel accord quelque chose de plus qu'une simple déclaration d'opinions. Nous espérons aussi que sous peu, les functions des différentes organisa- tions de coopération économique créés par lea Nations Unies seront harmonisées les unes avec les autres, ce qui leur permettra d'accomplir leurs tåches d'une maniére efficace et bien coordonnée. On aura ainsi écarté les causes qui obligérent de nombreux pays à adopter des mesures restrictives génantes pour le libre développement du commerce international et du bien-être des peuples. Dans son intention d'assurer un examen étendu et sincère de tous les problèmes poses à cette Conférence, la Délégation Chilienne s'est également efforcée de veiller à ce que d'autres questions, susceptibles peut-être examinées de façon plus détaillée ou plus pertinente dans d'autres conférences, ne fussent pas oubliées, étant donné qu'elles sont étroitement dépendantes des principaux sujets traités au cours de la présent Conférence, et notnament du problème des services. A cet égard, la Délégation Chilienne estime que les termes généraux et plus complets de certain chapitres de la Charte américaine semblent plus appropriés que les nouvelles propositions présentées par d'autres Délégations. Un autre principe directeur de la Délégation chilienne a été de veiller à ce que les problèmes poses aux petites nations aussi bien qu'aux grandes soient considérès sur un pied d'égalité absolue. La Délégation est heureuse de note qu'au nombre des exceptions à Ia clause de la nation la plus favorisée, la nécessité de l'inclusion des exceptions en vigu ur entre pays voisinsq ait été reconnue. En conséquence, le Chili sera en mesure de négocier l'élimination de cette exception de ses accords et d'autres pays pourront en faire autant, à propos d'exceptions similaires. S'inspirant du même principe, notre Délégation n'a pas accepté de nouvelles propositions tendant à modifier l'égalité de vote au sein de l'Organisation Internationale qui pourra naître de nos délibérations. En ce qui con- cerne le commerce d'Etat-question particulièrement im- portante de nos jours où un grand nombre d'entreprises se trouvent être à un degré plus ou moins grand de cet ordre-la Délégation chilienne a clairement exprimé son point de vue: de telles entreprises devraient jouir des mêmes libertés et avantages que cells d'un caractère privé, dans la mesure où il s'agit de ccnsidérations com- merciales. In view of the economic structure of our country and Etant donné la structure économique de notre pays the nature of our foreign trade, similar, moreover, to that et la nature même de note commerce extérieur. semblable 160 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 its satisfaction that the principle of raising the standard of living of the working- classes has been considered. a point to which I had pleasure in referring at one of the inaugural 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 interim 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 admirable sense of justice and the dynamic personality of the Chairman. Mr. Max Suetens, have played the most important part. The CHAIRMAN (Interpretation): I wish to thank M. Bianchi for his speech, and I now call upon Mr. Wunsz King. Ambassador of China. Mr. WUNSZ KING (China): Mr. Chairman, the con- clusion 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 17 different economies, would have no difficulty whatso- ever 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 trade positive measures are as important as, if not more impor- tant than, the negative ones. We are all agreed that to maintain an all-round effective demand for goods and services, industrial development, particularly in the less developed countries, will be as important a contribution as the promotion of full and productive employment policy and 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. I am happy to say that in our deliberations we have placed equal emphasis on individual measures, as well as on effective international action for the promotion of an expanding world economy. We have also recognised the imperative need for making this code of international commercial relations adaptable not only to the existing economic structure, but 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 short-term as well as long- term problems. I venture to hope that the success of the proposed International Trade Organisation in the future is assured. I need not remind the Conference that we are only called upon to do the preparatory work which is of a technical nature, and I think it 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 meeting and guided by the considered opinions of our governments and the public, we may be ready to find a common basis on certain questions on which we have not been able to reach agreement, or which we have had no time to discuss here in detail. What is more, we shall then be able. I hope, to attempt a new international experiment in tariff negotiations which will certainly prove to be a complicated task. We of the Chinese delegation believe that in trade matters as in many other related matters, the success of bilateral or multilateral discussions or negotiations relating thereto can be made possible only if an attempt is made au demeurant à celles de nombroux autres pays de I'Amérique du Sud--axées sur l'exportation de deux ou trois produits essentiels-la Délégation chiliennr a de- mandé que soit envisagée une disposition de sauvegarde à propos du grave problème du coût des matières premières. A propos de la question du plein emploi, notrr Délé- gation désire mentionner sa satisfaction de ce quo l'on ait examiné le principe du relèvement du niveau de vie des classes laborieuses. C'est là un point auquel j'ai eu l'honneur de faire allusion au cours d'une des pre- mières séancos de cette Conférence. Mais il me souvient qu'il y a quelques jours j'ai accepté de ne prendre la parole que pour quelques minutes. Je conclus donc en disant que je souhaite le plus grand succès an Comité intérimaire de Rédaction dans les tâches qui lui sont confiées et qui complétoront le travail commencé à Londres-travail où l'esprit de col- laboration de toutes les Délégations et l'addirable sens de justice ainsi que la personaalité dynamique du Prési- dent Max Suetens. ont joué le plus grand rôle. Le PRESIDENT; Je remercie M. Bianchi de son ex- posé et je donne la parole à M. Wunsz King. Ambassadeur de Chine. M. WUNSZ KING (Chine) (Interpretation): Monsieur le Président, la conclusion de nos travaux à ce stade marque une Pierre miliaire dans netre long voyage de préparation d'un projet d'instrument pour la future Conférence inter- nationale du Commerce et de l'Emploi. On ne pouvait penser que nous, représentant dix-sept éconoomies différentes. no rencontrerions aucune difficulté à trouver un système commun et complexe de " code de la route" applicable à différentes fermes do trafics. et que nous atteindriens notre but du premier coup. Il devait nécessairement y avoir des divergences de hiérarchic con- cernant l'importance des questions, et des différences de méthedes. Malgré cela, I'accord a été realisè daus une large mesure sar un grand nombre de questions importantes. Neus avens constaté que, pour développer le Icommerce international, les mesures positives sont aussi importantes et peut-être davantage, que les mesures négatives. Nous sommes tous d'accord pour dire que maintenir une demande ample et efficace de produits et de services. dans les pays peu développés. apporter la même contribution au développement industriel qu' à l'encouragement a l'emploi total et productif et à I'élimination des barrières douanières. En donnant effet à ces principes, nous assurens, non seulement vis-à-vis de nes peuples; une grande responsabilité matérielle, mais nous nous devons les uns enters les autres une responsabilitd mutuelle. cello de premouvoir le bien-8tre g6n6ral des peuples dans le monde. Je suis heureux de dire qu'au cours de nos ddlhbrations, nous avons insist autant sur des mesuros individuelles que sur une action efficace sur le plan international. en vue de l'encouragement. et de l'extension du commerce mondial. Nou s avens Cgalement reconnu le besom imp6rieux de crder un code des rapports comrerciaux international. adaptable non sculement a la structure economique oxis- tante, mais aussi aux tendances futures du d6veloppement economique. Si nous sommes unanimes sur les principes quo nous voudriens voir appliquer, aussi bien a court terMe, qu'aux probl~mes A- long- term, j'ose espirer que le succ6s do 1'OJ.C. quew len -se propose de cr6er, est assure. Je n'ai pas in-dei rappel a la Conference qu'on nous demanded kimpknen-t- cl'effiiuer un travail preparatoire, un travail de caract~re technique. II es bon, je nois, de recon- naitre quo ce que nous avons discut6 devra 6tre revise par nos gouvernenents respectifs. Lorsque nous. nous rdunirons & nouveau au printemps prchain, ispirs.pa l'esprit quit nous a guides au cours de ces reunions et soutenus par l'avis auterise de nos gouvornements et l'opinion publique, nous. pourrons trouver une base com- mune d'entente sur certaines questions sur lesquelles nous navons pas 6te en mesure de trouver un accord. ou. que nous nWavons pas eu le temps de discuter ici.dans le detail, je dirai plus: nous pourraris alois. je lrespire. demander quMuue nouvelle experience sur lc plan inter- national en matiere de ndgociations tarifairessoit entroprise, qui s'av6rera assurdment compliquee dans sOs effets. La d6l6gation chinoise estiine qu'en mati6re commercial. de m6me .quen beaucoup d'autres, Ie succes de ndg6ca- tions bilaterales, multllaterales. ou des discussions s'y. rapport aut-ne sera possible que si l'en tente de regler cette 161 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 Chairman has guided us through the fruitful discussions of a very com- plicated 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 Secretariat, under the guidance of the Executive Secretary, who have contributed in no small measure to the results we have obtained. I think all my colleagues will agree with m- 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 appreciation for the services rendered by the interpreters. The CHAIRMAN (Interpretation): I would like to thank the Ambassador Mr. Wunsz King for his speech, and I now call upon Mr. de Blauck. Minister of Cuba. MR. 'DE BLANCK (Cuba): Mr. Chairman, the Cuban Delegation wishes to express publicly its recognition of the competence and discretion with which the Chairman of the Preparatory Committee and the Chairmen 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 per gratitude to the authorities of the United Kingdom, to the oicials in London of the United Nations and to other persons and organisations for the kindness and efficiency. with which they have con- tributed 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 peculiar 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 objective which we all pursue. In the course of our deliberations the solution of many problems of funda- mental importance for our country have been left pending. but in the final documents which have been elaborated, the solutions of many other 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 employment. International trade is not an end 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. 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 those who work to secure them. . Cuba, has seen with satisfaction that her earnest desire to establish the general principle of raising the standards of living of the labouring classes and of eliminating the sub-standard conditions of labour have been incorporated 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 fm the unfair copetiflon of having been produced by the exploitation .of human labour. The small number of reservations which .a few disptions have made on this point have been due question sur la base de la reciprocite et daus un esprit d'aide mutuelle. Monsieur le President, mes remarques seraient incom- pletes si je ne disais pas notre sincere admiration pour le tact, la sagicite et les autres qualities eminentes avec lesquelles vous nous avez guides dans les fecondes dis- cussions d'qun problem tres complique. Nous sommes egalement reconnaissants & tous les delegues qui ont fait preuve d'une grande comprehension des difficulties renisritreis par les autres pays. Nous sommes fiers d'avoir eu pour nvus guider un secrétariat extrèmeneent capable et competent, sous la direction du Secritairo exfcutif, ce qui a contribute dans une large muesure aux resultats obtenus. Toes mes colleges seront certaine- ment d'accord avec moi si je dis combien nous sommes aussi redevables au Gouvernemeat qui nous a reus avec une si ainable hospitality. Enfin. j'ajoute quelques mots d'admiration pour les services rendus par les intetprctes. Le PRESIDENT: Je remercie M. I'Ambassadeur Wunsz King pour son expose. Je donne la parole a M. de Blauek, Ministre de Cuba. M. de BLANCK (Cuba) (Interpritation): Monsieur le President, la delegation de Cuba desire exprinmer publique- mant son admiration pour la competence et la discretion avec lesquelles le President de la Commission prdparatoire et les Presidents des diffdrentes commissions se sont acquitted de leur travail pendant cette Conference. Elle desire egalement dire sen admiration pour la collaboration et l'attitude cordiale que notre delegation a trouevles aupres de toutes les autres dflfgations des dix-sept nations repre- sentses ici. Nous voulens. de plus, profiter de cette occasion pour exprimer notre gratitude aux autorites da Royaume Uni. aux fonctionnaires des Nations Uuies a Londres et aux autres personnes et Organisations pour l'amabilitl, l'efficacite avec lesquelles ils ont contribute & rendre le sejeur de notre delegation a Londres extrêmement agréable. On peut dire que ie travail auquel nous nous sommés lives a été conduit dans une atmosphere indiscutable de comprehension des problemes particuliers de chaque pays et de collaboration pour arriver ; une solution pertinente de ces problémes dans le cadre des principes fondamentaux qui nous avaient conduits à nous rémúr, en vue d'élaborer d'une constitution de l'Organisation international du Commerce qui sera placee au-dessus des particularites dconomiques. sans les ignore, et qui etablira des r*glements adequats destinfs a intensifier les changes commerciaux entre les natiorq du monde entier. La delegation de Cuba est tris heureuse des resultats de nos travaux et envisage avec optimisme la suite qui leer sera donate pour atteindre notre objectif final. Un certain nombre de problems sont rests en suspens au cours de nos deliberations. Mais dams les documents élabords, la solution a biea des problemes importants pour l'économie de notre pays a été incorporée. Mon pays a été très heureux de voir que la Charts insistait particullrement sur les probl.mes de Vemploi. Le commerce international no coostitue pas une fin en sei. Ce n'est qu'un moyen de montrer, à travers l'augmentation du volume du commerce, l'accroissement de la production et des possibilities de travail dans chaque pays. Nous avons ranarqu, que ce qui est important pour l'economie de chaque pays c'est que ia some totale de cette dconomie puisce refifter le bicn-être des nations. Ce qui est important, c'est que le bendfice de la production et du bien-etre soit partage au maximum par ceux qui travailleat pour obtenir cette production. Cuba a vu avec satisfaction que l'en insistait partica- lierement 'sur le principe de l'augmentation du niveau de vie des classes laborieuses, problems incorpore dans hs Charter du Commerce et de l'Emoloi ouL il forme un chapitre. Il ne pouvait en etre autrement Comment les nations démocratiques, reprfsentdes ici. pouvaient-elles etre opposees k obligation pour Is monde entier do s'in- t~sser a l'augmontation dui niveau do vie international. ~tant donnei quo cotte obligation exists deja pour cliaque pays en ce qui concerns son propre poupie?. Nous sommes Wgalement tires heureux de constater que I'en a envisage la suppression de la concurrence prevenant de conditions do travail insufsantes. Les quelques reserves exprimees par certaines delegations sur ce point sont dues & des deutes formulas en ce qui concerns la jurisdiction do l'O.I.C. et non pas d'une opposition de 162 to doubts in regard to the jurisdiction of the ITO 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 ITO 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 early stages of their development. The regulatory principles of the ITO could not be inflexibly the same for countries at different economic levels. Our purpose could not be to stop the diversification of pro- duction in the world, but, on the contrary, to increase it to its maximum in every corner of the globe. For this reason, we can point to the Chapter in the Charter dealing with Economic Development as the most important fruit of our work. It is an initial attempt, from the inter- national point of view, to grapple with the specific problems of countries in the early 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 attained 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 intensifica- tion and diversification of their industries and agriculture is the only means which they possess of solving the prob- lems of employment and of increasing the purchasing power of their peoples. Such means do not hinder, but. on the contrary, increase the possibilities of international trade. Nations which have reached economic maturity should consider the advisability of granting the countries which are in the early stages of economic development a free 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 consideration the basic document for the work ef this Conference. The CHAIRMAN (Interpretation): I would like to thank the Cuban Ambassador for his speech, and I now call upon Mr. Kuuosi, of the Czechoslovak Delegation. Mr. KUNOSI -(Czechoslovakia) (Translation): In the name of the Czechoslovak Delegation I would, first of all, like to express our great appreciation of the hospitality extended to us by the British Government. London, once again, has proved, to be an exceptionally suitable place for difficult and important international negotiations, where its atmosphere of balanced compromise is so indis- pensable. 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 Con- ference 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 early, to be dogmatic about principles and methods which are likly 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 an open mind and in a spirit of conciliation. principe. Nous avons pu voir en effet avec satisfaction I que cc principle était unaniniement accepted au cours de cette Conference. LS creation de l'O.I.C. ne pouvait pas impliquer la paralysie, c'est-&-dire le statu que dans Ic do ninne de Ia position dconomioue des differents pays du monde. Cer- tains pays ont atteint la maturity dans le domaine econo- mnique, niais beaucoup d'autres en sent encore a la pre- mi ~re phase de leur d6veloppement. Les principes de l'O.I.C. ne pouvaient pas etre les memes pour tous les pays, qui sent a des niveaux dconomiques differents. Notre but ne pouvait pas ftre d'arreter la diversification de la production du monde. mais au contraire de l'aug- menter jusqu'à un maximum. C'est pour cette raison que nous pouvens dire que le chapitre de la Charte traitant du développement économique constitue le point le plus important de notre travail. C'est une prerniore tentative sur le plan international de traiter ces problems speci- fiques des pays qui seat dans la premiere phase de leur developpemaent iconomiques. Bien des chases restent a fire dans ce domane, mais nous voulons simplement ici saluer le fait que la Commission preparatoire a fait on premier pas vers la solution de cette question. Les nations parvenues a on plain développement peu- vent envisager le probleme de la libre concurrence en toute sécurite car nous ne garantissons pas aux pays qui ne sont pas encore arrives a cette pleine maturity, lutilisa- tion des memes moyens qu'elles ont employes autrefois. Si l'on procedait ainsi, leur economie aurait à butter centre trop d'entraves. L'intensification et la diversification de leurs industries et de l'agriculture constituentele seul moyen a leur disposition pour rdcoudre le problem de leur emploi et augmented le pouvoir d'achat de leur peuple. Ces moyens ne constituent pas des entraves; au contraire, ils permettent de crder, sur le plan international. des possibilities économiques. Les pays arrives a une maturitde conomique devraient envisaged d'accorder a des pays qui sont encore a la premise phase de leur developpe- meat. une aide leur permettant d'arriver au plein dévelop- pement de leurs ressources. La delegation de Cuba est heureuse de constater quoun certain nombre de criteres rialistes ont ete etablis a la suite des travaux de la Commission prdparatoire dans le domaine des relations commerciales entree les difftrents pays. Cuba desire renouveler expression de sa confiance dans le success final de nos travaux, et tient a rendre on hom- mage tout particulier à l'attitude de la delegation des Etats-Unis qui a essays darriver a des solutions bar- monieuses et a pris une part importante à ces travaux puisque le Gouvernement des Etats-Unis a soumis a notre examen, ce document fondarnental pour le travail de la Conference: le projet de Charte. Le PRESIDENT: Je remercie M. de Blanck de son expose. Je donne la parole a M. Bunosi, chef de in Ddl- gation Tchdcoslovaque. M. KUNOSI (Tchicoslovaquie): Au nom de la Délé- gation tchécoslovaque, je tiens tout d'abord à dire combien nous avons appricie l'accueil que nous a réservé le Gouvernemnent britannique et combien Londres, -une fois de plus. nous est apparu comme lendroit qui; convenait tout particulierement a des negociations internationales difficiles et importantes auxquelles et d'une telle ndcessité latmosphbre de conciliation et d'equilibre qui rge dans cette ville. Apres plusieurs semaines d'un dur labeur, i me semble que je vois apparaltre la possibility de trouver an ter- rain dentente international. Je crois que nous pouvons avoir lrespoir. apres notre deuxieme session. a Geneve, d'tre en mesure de soumettre à la Conférence de toutes les Nations Unies le project dun instrument de travail acceptable. Ce que nos discussions ont mis clairement en lumiere, c'est, je crois, qu'il n'est pas possible, et en tout cas, qu'il est prdmaturt de fire preuve de dogmatisme en ce qui conceme les principes et les méthodes qui semblent devoir etre les plus fructueuses pour dtablir cette col- laboration dconornique dont nous avrons tous besoin et que nous souhaitons tous en vue d'augmenter le volume du commerce mondial. Je crois devoir rappeler ici, à en sujet, qu'apsis avoir psisenté des propositions précises; la Délégation des Etats-Unis ne s'en est pas moins penclie, ave one grande larger de vue et beaucoup d'esprit de conciliation, sor lea problimes qui nous Préoccupent. 53680 (34) c 163 Czechoslovakia is the only State from central and eastern Europe taking part in these discussions and in a way its needs and legitimate ambitions are typical of, even though not identical with those of the countries in that region of the work' We shall leave the Conference with the feeling 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 em- phasize 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 evolve 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 Czechoslovakia have not practised in the past, uor do we intend to practise in the future, economic nationalism or protectionist policy, therefore my Govern- me'. is willing to contribute to the reduction and gradual elimination of a number of trade barriers, but we emphasize, 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, and especially bearing in mind the burning problems of economic reconstruction in the countries exploited for long years by Nazi Germany. We should not therefore forget, for the sake 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 and we should not consequently exclude methods which are appropriate to serve this end so far as they are fair and not in contradiction to our moral standards in the international neld. 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 that due regard is paid to our problems of economic recovery. We are grateful to have found, on the part of all the Delegations present here, a great measure of understanding 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 war and Nazi exploitation. We have asked for, and to a great extent have been accorded, a transitional period for the convalescence of our economy and now, in this public session, 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 Staies which have not been occupied by the enemy. I feel that I cannot end without commenting on one point on which we have been most insistent all through the session, and on 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 thne 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 Geneva as will as of that of the future International Trade Organization. In prepring the Charter. we should never lose sight of this point, - *We. submit, 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 - facilitate participation in the Trade Organization by the largest number of countries. La Tchécoslovaquie est le seul pays de i'Eui-pe centrale et orientale qui prenne part a ces debats, et, en un cer- tain sces ses besoins et ses Idgitimes ambition sont typique- ment caracteristiques des besoins et Ies ambitions des autres pays de cette partie du monde, meme s'is ne leur scnt pas toujours identiques. Nous pitterons cette Confirence avei la conviction que si l'on veut codifier les politiqueei commerciales inter- nationales et appuyer sur des sanctions application d'un tel code. il faudra tenir pleinement compte de la situa- tion et des problems reels auxquels ont à faire face les pays qui n'étaient pas représentés ici. Les difficultés de cette tàche n'échappent à aucun d'entre nous, surtout et un moment où il nous faut tenter des expériences pour résoudre nos problèmes economiques intérieurs. Je voudrais souligner ici que nous avons aborde cette tâche dans l'esprit qui convient. et que si nous continuous à faire preuve du même esprit de comprehension et du realisme pour résoudre le problème, nous pourrons. le moment venu, laborer un ensemble de regles vraiement démocra- tiques et efficaces qui profitera b totes les démocraties et favorisera la paix dans le monde. En Tchécoslovaquie, nous n'avons pas pratiqué au cours du passe, et nous n'avons pas l'intention de pratiquer cans l'avenir, une politique protectionniste on de nationalisme économique; aussi mon gouvernement est-il dispose à contribuer à l'abaissemeat et à la suppression progressive d'un grand nombre des barrlres qui s'opposent au commerce. Nous insistons toute-fois, et nous con- tinuerons à le faire, pour que le choix des voices et moyens 'permettaut d'atteindre ce but dans le dormaine inter- national, soit domino par la preoccupation constant d-assurer le plein emploi, et d'dlever le niveau de vie dans les differents pays; il faudra surtout ne pas perdre de 'ue les questions brdlantes de reconstruct-on dconomique qui se posent dans les pays que lAllmagne nazie a exploits pendant de longues annees. N'oublions donc pas, au nom d'aucune thdorie, quc norre objectif principal est lacrollssement du volume du com- merce international, si nous voulons clever le niveau de vie de la grande masse des populations laborieuses cans le monde; ne rejetons pea les m.thodes susceptiblee d'aboutir a ce rdsultat, si elles sont équitables et com- patibles avec les lois de notre morale international. En ce qui concerne la Tchecoslovaquie. nous estimons que nous avons apporte notre contribution aux travaux de cette cession et nous poursuivrons notre collaboration, con- vaincus que les problems que pose pour nous notre relve- ment économique recevront toute la bienveillante atten- tion qu'ils mdritent. Nous sosmes reconnaissants a routes ies delegations ici representees de lesprit de large comprdhension qu'elles ont rnanifestd envers la those que nous avons soutenue lorsque nous avons affirmed que notre premier devoir enters mous- memes et envers la communaute international itait, dans cette pdriode de l'aprst-guerre, de consacrer toes nos efforts A surmnonter les difficult naes de la guerre et de l'exploita- tion nazie. Nous avons demanded, et dans une large rnesure nous avons obtenu, qu'on nous accorde une priode transitoire pour permettre à notre dconomnie de se rdtablir. Je tiens a rdplter ici, en cette seaace publique, que la durde de cette period de transition variera dans la mesure oh les pays qui n'ont pas dte occupds par l'ennemi nous accorderont leur sympathie et leur aide. Le PRESIDENT: Je remercie M. Kunosi de son expose. Je donne la parole A M. Nathan, Délégué de la France. Je ne saurais conclure, sans parler d'un point sur lequel aous sommes revenus avec insistence an course de cette session, et sur lequel il a pare sage de ne pas prendre de decision immnddiate. C'est la question des relations entire les Etats-menabres de 1'Organisation et les pays qui a en font pas parties. Nous sommes convaincus que c'est l'à l'un des problems les plus impo-tants et que le succis de toute notre entreprise depend en grande partie de la solution qu'on lui donnera. I1 ne fait aucun doute. à mon avis, que c'est dans la measure oh les membres des Nations Unies adhéreront à l'Organisation Internationale du Commerce que serout menees a bien les nrgociations entreprises ici et a Genive et que la future Organisation connaitra le succes. En prdparant la Cbarte n'oublions jamais ceda. Tenir compte comme il convient, pendant l'elaboration de la Charte. des diffdrences de structure donomique des pays, de leurs degrés divers de developpement: tell est a notre avis facon la plus efficace d'encourager le plus grand nomnbre possible de pays A donner leer adhesion A l'Organisation Internationale du Commerce. 164 We have found in this session that we have a. common end ia view, to raise the standard of living of the working people everywhere through increased and mutually advan- tageous 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. The CHAIRMAN (Interpretation): I would like to thank ,Mr. Kiunesi for his speech. I now call upon Mr. Nathan. Head of the French delegation. Mr. NATHAN (France) (Translation): Mr. Chairman. it is no doubt natural for one who has taken part in the work of a Committee to be tempted to pass a favourable jaudgme~nt thereon. However, I think no one will deny that we have all worked vejr hard. Indeed we should have been working too hard. if. after so much work, we had not worked to good effect. It behooves us. therefore. at the end of this S ssion. to ascertain whether we bar- made effective progress in the task with which we were entrusted. The answer to that question will enable us to measure the ground we have already covered. and try and measure how much remain In my view. it is impossible not to draw a heartening impression from the work of the Sub-Commnittees. I would say it is all the more heartening since the Sub-Committees had to deal with specific and well-domied subjects. I do not want to review the work that led to satisfactory results. As an illustration. I shall merely point out 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 mure. 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 inter-dependent, and therefore we have to endeavour to prepare a balance sheet of our discussions. considered as a whole. It is thanks to the initiative of the United 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 mons be defined, whereby this unity. waich in theory no one can deny. might be established on a practical basis. It meant thereby to seek agreement that goods of a like nature. wherever they might be produced. are in principle equivalent, and that no distinction should be made be- tween them except on grounds of price and quality. This meant that, on the one hand, it was designed to exclude conversations which .might be attached to goods on account of their place of origin. considerations whir might always be of a specifically economic character. and. on the other hand, to set in motion a machinery whose working should be impeded as little as possible by prob- lems not solely derived from production and consumption. hfL Alpuiand, in a speech which he made at the oen- ing of our discussions, showed that proposals such as these could aot but meet, in principal, with the warm support of France. i feel convinced that. in making these pro- posals. the American Government was rightly conscious of the fact that the world was awaiting them. May I be allowed to add that the world has been waiting for them for a long tame and that their introduction into the realm of practical policy would probably have been easier had it beon made 25 years ago. Since then, financial insecurity. the lowering of those traditions on Re,.ich the activity of the main markets was bult, and the wrr, with its train of physical and moral suffering, have let to 10e developm-t of factors which represent so many obstacles fin the creation of that unity of which the wirld feels both the need and the reality. a reality however whic 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 from day to day. Nous nous somnmes d6couvert au cours de cette Con- firence un but common: clever le niveau de vie do la population ouvridre partout dans le monde en accroissant le v olume des changes commerciaux r6ciproquement avan- tageux. et afiermir la paix par le moyen de lacoLlaboration economqnie. Mais pour atteindre ce but, nous devous tre prets h modifier nos politiques et nos pratiques commer- ciales, aim do £aciliter l'espansion d commerce mondial auquel nous voulons tous participer. .M. NATHAN (France) Monsieur le. President. IL est sans doute hunin lorsque l'on a particip6 aix travaux d'une commission d'etre tente de porter str eux un juge- meat favorable. Je crois cependant que je ne serai con- tredit par personne si j'affirme ici. que nous avons les uns et lea autres beaucoup travaille. Nous aurions meme trop travaille. si avant tant travaill6. Dous n'avions pas bien travaill6. I1 importe doac de savoir. & la fin de cette session, si nous avons fait des progris effectifs dans la tLche qui nous Ltait confi6e. La raponse. a cette question nous conduira & mesurer le chemin que nous avons faith et essayer de mesurer celui qu'il nous rest a parcourir. Je crois qu'il est impossible de ne pas tirer une im- pression rdconfontanto dos travaux de nos Commissions. J'aurais tendance k dire quo l'impression est d'autant moilleure quo lea commissions travailbaient sur des sujets plus prlc s et plus dalii-nitas. Je ne veux pas passer en revue les travaux qui out donned des resultats satisfaisants. A titre d'exemple. je uirai seulemeat qu'il est wremarquable que nous soyons en mesure de soumettre & nos Gouvernements un texte relatif aus dispositions k prendre en -vue do mettre obstacle aux pratiques restrictives commerciales. ces testes ayant ete adopts a l'unanimit6. alors que. au dabut de nos dis- cussions. des divergences de vue fondamentales parais- saient siparer les divers pays. Encore une fois je ne veux pas n'6tendre sur des points particuliers car je suis persuade que la Charte quo nous avons & dtablir constitue un tout dont les diverses parties so commandant entre elles et que. par cons6quent. nous avons a faire un effort pour fair d'un point de wues d'ensemble le bilan de nos dilibfrations. C'est X. l'initiative des Etats-Unis que nous avons ete r6unis ici. Ce que s'ftait proposed le Gouvernement aseri- cain. c'ctait. non seulement que soit affirmt6e l'unite in- trinsaque du monde economique. mais que soicnt agale- ment definis lesa moyens gram auxquels cette unit, que nul ne peut nier en th6osie. pourra etre pratiqueonent 6tabli. It visait par lM. a faire admettre que des mar- chandises de meme nature. o4 qu'elles soient produites. sont en principle 6quivalentes et qu':l ne taut faire de distinctions centre holes qu'en reason des psix et des qualities. Ceci revient a dire que d-une part. il tendait a exclure les consideratioas que l'on pout attacher a des marchandises entenant compte de leur origin. ccnsidera- tions qui peuvent n'etre pas toujours de caractbre sp6ci- fiquement 6conomique. et d'autre part I mettre en marche des m6canismes avec le fonctionnement desquels devraient interf~rer le moins possible les soucis qui nWauraient pas pour unique objet la production et la. consomnmation. M. Alphand. dans le discours qu'il a prononc6 k l-ouverture de nos travaux. a montre que de treles pro- positions ne pouvaient que rencontrer de la part de la France une chaleureuse adhesion de principe. Je suis per- ;sadi que le Gonvernement amdricain en les fiisant, a eu justement conscience que le monde les attendait de Mii. On me permettra settlement d'ajouter. -ue le monde les attondait depuis longtemps et quo leu! introduction danas la rialitE pratque. eO~t EtE sans; doute plus fcile si clle avait etE faito ii y a vingt cinq ans. : Depuis lors, 1'inskcuritE monetaire. 1lliset des traditions qui talent a la base de l'activite des grands marches, la guerre avec le cortege de misbres physaues et morales qui la suit ont permis le ddveloppement de facteurs qui constituent artant d'obstacles a l'etabli ment d'une unite dont tout le monde sent & la fois la rialitE ot le besoi, Mais ne rfait pui parait se dEober quand on veut l'apprahender et un besoin qui ne peut etre satisfait qu'au detriment d'exigencies qui paraissent s'imposer d'une mani~re en quelque sorte quotidienne. The work that has to be done in order to achieve the Le travail qui sem ncessaire pour atteindre les objec- objective which we have all set for ourselves will be tIfa que nous nous assignon tons, ser. donc long et la long, and the wayg we shall have to follow to arrive at voie que nous aurons i suivre pour arriver au but est sem~e 53680 (34) C2 our goal is fraught with difficulties born of the many different ills from which the world has had to suffer since the end of the 1954-1918 war. Be that as it may. the discussions which have been going on for the last month show that it is very difficult and probably impossible to assume that the Convention which we have to draw up might fail to take into account the very iznjportant differences arising from the positions of the various Member States of the United Nations. Every classiticatim does no doubt involve a certain arbitrariness and must essentially be revised in the not too distant future. It appears to me. however, that from our point of view, it might be said that there are at least three categories of State. Firstly there are those who have, reached an advanced stage of economic development and which at the same time enjoy a balance of paymeents showing a surplus which might be described as organic. Secondly there are those States whose economic develop- meat has not. for varying reasons. reached the same degree of advancement and perfection. and whose balance of payments. although more or less stable, seems to be on a level which cannot be considered satisfactory. Lastly. there are those countries whose economic development has not. in the recent past. appeared satisfactory, but who have to take up anew a task which for varying reasons has been interrupted. those reasons having led to dis- turbances of a greater or lesser degree and deeply affected their balance of payments. On the first category. there is nothing to be said. We agree with very many other nations in thinking that nothing is more important in the development of inter- national exchange than the effort which must be tried to develop resources in manpower and raw material in those countries whose economic life has fallen behind those of other States, which. until now, were in a better position to make full use of their natural resources and human ingenuity. It was an effort of this kind. that. in the nineteenth century. led to the improvement of the standards of living. The desire for full employment urges us to improve on this effort of the nineteenth century, renewing it by re- course to other methods. That however. is a very long task which will necessitate the co-operation of all con- cerned. 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 to make up for a limited delay in their economic development. by a very great effort. this work will have .the effect of restoring their balance of payment. They seek only to revert as quickly as possible to a livelihood which will be ensured by the product of the sale of goods of interest to the remainder of the world and their ability to prod-ice capital. The fact that they have at their disposal an industrial. agricultural and economic back- ground of long tradition, technicians immediately avail- able for the work that they are called upon to do. and haighlyr skilled labour, should enable them to bring active assistance to the collective effort within a very short time. I do not believe we should think that we are renouncing universal principles because we are at the same time recog- nizing the existence of particular situations, each giving rise to duties as well as to privileges. none of which are exay alike. Concern for the universal principles should lead us to judge objectively these particular situations and to determine. as it were from an impersonal stand- point, what precisely are the privileges and duties that they involve. There can be no doubt that the effect of our discussions has been to amend in this sense the text prepared before we met. Do the new texts take sufficient account of the diversity of these situations? Do they already possess sufficient elasticitY to allow autonomous economic developments within the common structure? Only after careful examination can we make such a statement. I believe I may say that thanks to the breadth of vision of those who wer responsible for the dafting 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 recognized, and if it were stated at theu same time. in a manner leaving no room for doubt, that our d'embacbes qui ont ete disposes par les maux d'origine trbs diverses don't le monde a eu h soufirir depuis la fin de la guerre 1914-1918. Quoiqu'il en soit, il me semble qu'il ressorte des discus- sions qui ont au lieu depuis un mois, qu'il est trts difficile et probabicuient impossible de considdrer que la Conven- tion que nous avons a 6tablir puisse ne pas tenir compte des diffirences tr~s importance qui resultent de la situa- tion de divers Etats membres des Nations Unies. Sans doete, toute classification cornporte-t-elle un certain degrt d'arbitraire et surtout doit-elle 6tre r6visee i des moments assez rapprochds. Mais il me parast que l'on pent dire que. du point de vuc quiet est le n6tre ici. il y a au moius trois categories d'Etats. n y a a'abord coux qui sont arrives i une grande maturity economique et qui. en meme temps. benificient d'une balance des ccmptes qli pr6sente des excfdents cu dquilibrde d'une manibre que l'on peut qualifier d'organique. I1 y a, en second lieu, ceux dont le ddveloppement eccaomique Sa pas, pour des raisons trts diverses, ete conduit jusqu'au meme degr6 d'achive- ment et de perfection et don't la balance des comptes, mrdne si elle est en equilibre d'une manlcre plus ou moins stable. apparalt coamme equilibree sur un nsveau qui ne peut etre Jug satisaisant. l y a enin les pays dont le developpement dconomique n'a pn, dans un passe encore recent parattre suffisant, mais qui out a repreadre une tiche qui, pour des raisons diverses, a ete interrompue. ces memes reasons ayant pour effet d'apporter un trouble plUS ou moims grand, plus on moins profound dans leur balance des comptes, qui. actuellement, de ce bit, est dtsfquilibrde. n n'y a rien a dire an sujet de la premiere cat6gorie. Mous sommes d'accord avec ur tres grand nombre de nations pour penser que rien n'importe plus au developpe- meat des changes ;nternationaux que 1'effrt qui doit 6tre tented pour mettre en oeuvre les resources en hommes et en matieres premieres des pays doat la vie economique est en retard par rapport a celle d'Etats, qui, jusqu'a present. se sont trouv~s mieux places qu'eux pour tirer parti des richesses naturelles et de l'ingfniositM humaine. Cest an effort de ce genre qus a permis. au zg~me siecle Iramalioration des niveaux de vw. Le souci du plein emploi nous command d'O!axgir cet effort du x9gme siccle en le renouvelant par le recours a d'antres methodes. Mals c'est la une tAche de tres longue baleine et qui exigera la cooperation de tous et surtout des pays aussi bien de la 3&me que de la xtre categorie. On me permettra de remrnaquer que pour les Etats qui doivreat par un tts grand travail. compenser un retard limnit6 apporte a leur developpement conomique. ce travail aura pour dffet de rttalir leur balance des comptes. Ils ne demandent rien que de revenir aussi rapidement que possible une vie qui sera assured par le product de la vente de mardhandises qui intdressent le reste du monde et leur facult6 de former des capitauz. Le fait qu'lls dis- posent d'une experience industrielle, agricole et econoa mique solvent plus que s6culaire, de cadres immediate- ment prEts pour les tlches auxquels on les convie, d'une main d'oeuvre hautement qualifie, doit leur permettre d'6tre trts vite en mesure d'apporter a l'effort collectif une participation tres active. Je ne crois pas qu'il y ait lieu de penser que l'on renonce a runiversel, parce que ron recounait en meme temps qu'il existe des situations particulieres qui dounent chacune, nassance aussi bien a des droits qu'a des devoirs qui ne sont pas excitement ceux des autres. Le souci de l'universol doit conduire a uger avec objectivite de ces situations particuieres et a 6tablir d'un point Ce vue en quclque sorte impersonnel quels sont justemesi.- les draits et les devoirs particuliers que ces situations provoquent. n cst incontestable que nos discussions ont eu pour effet de faire progresser dans ce sens le texte qui avait ete prepare avant notre rSunion. Le textes nouveau tiennent-ils suffisamment compte de la diversity de ces situations? Sont-ils ddjA suffisamment souples pour permettre les developpements econaomiques autonomes a l'interneur d'un mouvement commune. c'est ce que seuL leur examen attentif, nous azutorisera a affirmer. Jc crois pouvoir dire que grice I la largeur de vues dont ont fait preuve les hautes personnalitds qui avaient rddige les textes primitifs. un trEs grand pas a ete fait. Peut-6tre serait-il bon que la diversity des situa- tions fMt plus explicitement reconnue et que. en meme temps soitA nouveau affirre d'une manihre qul me laisse I66 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. For my own part I 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 ex- ceptional treatment are prepared to accept the automatic control that would be 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 certain that it is of the utmost importance that steps should be taken to prevent customs frontiers becoming fixed in their present shape. The enlarging of customs territories must lead to acceleration and multiplication of trade relations. If we are to promote these, we must authorize the intermediate measures which will facilitate it. I am happy to see that provisions inspired by these requirements have been introduced into the Draft Convention, even though only in a somewhat timid fashion. There is another point to which I would now like to draw your attention. If it be admitted that, above all at the time of the entry into force of the Organization. elasticity should be the rule, and the greatest possible account should be taken of individual circumstances, it is essential that the Organization itself should be in a position to institute such enquiries as would enable it to assess the irreducible essence of these circumstances. This is what makes the question of the Statutes of the Organization a matter of particular urgency. I believe that valuable experience in this matter has already been gained in these discussions. It is absolutely indispensable that the 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 leading 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 department it was said of the next: " I don't know anything about it, except that that is where the beggars come from." This idea is as true as it is profound. I believe it would be as exact if the sentence were changed to run as follows: " I don't know anything about the next department, except that is where the police come from ". It is therefore neces- sary, if the International Organization 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 Conference of the ITO, 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 made for permanent seats on the Executive Board of the Organization. There is no doubt that under any regime. and this applies both to home and to foreign policy, trade is directly affected by politics. This influence will be brought to bear in a thousand ways, some brutal, some subtle to the point of being almost imperceptible. It is to be wondered whether it would be advisable to go on increasing this inluence. In any case, we believe that in determining the relationhip between the ITO and the wider and less specialized councils, the fact should be borne in mind that this influence will always make itself felt whatever steps are taken. In the initial stage, however, what will be the duties of the Organization? 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. place a aucun doute quo l'objectif à atteindre est commun et que si chacun ne peut marcher vers lui qu'à une allure qui lui est propre, le sens du movement doit être un. Je crois que pour ma part que s'il est important. comme je viens de l'expliquer que soit tenu compte des situations individuelles, celles-ci ne s'amélioreront d'une manière stable, qu'à la condition que soit accepé par ceux qu: bénéficieront d'exceptions justifiées, le contrôle auto- matique que constitue la concurrence des pays étrangers jusque chez soi. Je suis peruadé qu'il n'est aucun pays qui n'ait plus à gagner qu'à perdre à entrer largement dans le commerce international. II est d'autre part certain qu'il y a le plus grand intérêt à ce que des dispositions soient prises à l'effet de permettre que ne soient pa cristallisés sous leur forme actuelle les frontières douanières. L'élargissement des territoires douaniers doit conduire à une accélération et à une multiplication des échanges. II faut donc les favoriser en autorisant les moyans intérmédiaires qui peuvent le randre plus facile. Je me féìicite que des dispositions inspirées par cette préoccupation aient été introduites dans les projects de convention, d'une manière bien timide il est vrai. II est un autre point sur lequel je voudrais maintenant attirer votre attention. Dès l'instant où il est admis que surtout au moment de la mise en oeuvre de l'Organisa- tion. la couplesse doit être de règie, et qu'il sera tenu le plus grand compte des situations individuelles, il est- nécessaire que l'Organisation elle-même soit en measure de procéder aux enquêtes grâces auxquelles elle pourra ap- précier le caractère en quelque sorte irréductible de ces situations. C'est ce qui confère aux problèmes du statut de l'Organisation une importance toute pasticulière. A ce sujet je crois que nos discussions apportent déjà une expérience précieuse. II est absolument indispen- sable que les méthodes auxquelles nous aurons recours reçivent l'adhésion compìéte des opinions publiques de tons les Etats membres. A cet effet il eat nécessaire que les raisons qui conduisent à adopter ces méthodes et celles qui peuvent aboutir à ce que soient acceptées des excep- tions, fassent l'objet de discussions aussi publiques que possible. Nul ne m'en voudra, je pense, si je dis que nous connaissons pas assez bien les uns et les autres. Un grand écrivain politique anglais a affirind dans un livre célèbre, qu'iln'y avait pas de gouvernment parlementaire possible danr un pays où dans chaque département on disait du département voisin: " Je ne sais rien de lui. sinon, que c'est de là que viennent les meadiants." Cette idée bien que profonde est parfaitement vraie. Je crois qu'elle serait aussi exacte si la phrase était trnsformée de la manière suivante: "Je ne sais rien du départe- meat voisin, sinon que c'est de là que viennent les gendarmes." II faut donc, pour que l'oranisation inter- nationale du commerce, donne tous les résultats que l'on est en droit d'en attendre, que l'on sache dans chaque Etat membre qu'aucun autre état membre ne joue le rôle soit de mendiant, soit de gendarme. Seules les discussions publiques peuvent apporter ce resultat. Il faut ajouter, je crois l'idée d'une égalité parfaite entrè tous les états membres, ce qui revient à dire, que, sous réserve de réflexions ultérieures, il m'apparaft souhaitable, dans l'état actuel de nos discussions, de penser qu'à la con- férence de l'I.T.O chaque Etat bénéficiera- d'une voix. Mais rien n'est plus important, dès ìors qu'il s'agit d'arriver è mettre en marche des mécanismes économiques, que d'assurer la continuité des vues at de donner aux Etats qui ont dans le commerce mondial, une part plus importante, le sentiment exact de leurs responsabilités. C'est pourquoi il me semble qu'il devrait être prévu, qu'il y aurait au Conseil de l'Organisation, des sièges perma- nents. II est bien certain qu'en tout régime. et qu'il s'agisse de vie intérieure ou de vie internationale, les échanges subissent l'influence directe de la politique. Cette influence s'exerce de mille manières, tantôt brutale, tantôt subtile jusqu'à être presque insensible. On peut se de- mander s'il serait sage d'angmenter encore cette influence. C'est en tout cas, en ayant toujours présent à l'esprit qu'elle se manifestera toujours quoiqu'on fasse qu'il con- viendra selon nous de régler les relations entre l'organi- sation internationale du commerce et les conseils plus vastes et moins spécialisés. Mais que va fire, an début, du moins l'Organisation? Elle va s'enquéir de donner à chaque Etat-membre, le moyen indispensable d'information sur la situation et les besoins do tous lea autres Etats membres. Ces renseigne- ments et les conclusions qu'on en tirera feront l'objet de discussion. 167 That is the very basis of a sort of parliamentary system, of a parliament whose duties will consist in making recommendations rather than in enacting laws. Does that mean that the ITO must be powerless? I do not think so. If its authority, however, is to appear justified and based on reality. decisions which one or several member states might sanction or condemn 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 eliminate 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 from more or less stable combinations having achieved a majority. To sum up. it is. in my opinion. essential to crown the structure with a supreme court which, taking into account the intentions upon which the ITO is barred, would render de facto rather than de jure decisions. Drawing 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 to a combination of the influence of customs and the recognition of the principle that adaptions are necessary, that what is known as Common Law in Great Britain. owes its efficacy and authority. That is oIne of the examples which it would be well to ponder. I do not propose. of course, to give an outline here of what the ITO should be. I only wish to draw attention to the complexity which will be required in this Organization. Most of the processes of economic life used to consist of a mo.-e or less unconscious groping towards a state of balance, never clearly defined, and now these adjustments which came about gradually, and which were justified or invalidated. but always corrected in the course of time, are to be replaced by institutions empowered to apply those methods which we are attempting to make clear. The passe from reflex action to voluntary action offers grave risks, and always calls for great precautions. For my part, I ihink that the reflex actions which have taken place in the last twenty-five years, that is to gay in a time of poverty and uncertainty, should at least be cor- rected, 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 close without reiterating my faith in world unity and in the possibility of a wide measure of international agreement and co-operation. Often, in reading the Draft Charter, or in listening to our American colleagues, I have found myself thinking that they were inspired by a concern for logic which is more usually considered French; and I have felt that the appeals to empoirm made by my colleagues of the French Delegation and myself, and the thesis which we have sus- tained, 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 that our discussions have largely contributed to define and we are now far better equipped to start building than we were a mouth ago. 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 precisely three o'clock. Tea speakers have spoken this morning. Ten more sneakers 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. Sixth Plenary Session Held on Tuesday, 26 November, r946, at 3.00 P.nm. , C-hairnan: Mr. M. SUETENS (Belgium). The CHAIRMAN (Interpretation): Gentlemen, the meeting is open. I call upon Mr. Nehru, Head of the Indian Delegation. Voila in base mfine d'une vie en quelque sorte parle- meuntire, d'uu parletuent qui sera appeal a faire plutbt des recomm-Axdations ques des lois. Est-ce A dire que l'organisation international du commerce doive etre dopourvue d'autoritd? Je ne le pense pas. Mais si l'on veut que cette autorit6 apparaisse comme acquise de bon droit et au contact des rdalits, il faut, dans on domaine od les lois ne pourront 6tre promulgudes que peu a peu. et probablement tres lentement, que les decisions qui com- porteraient des sanctions ou une coadamnation d'un ou plusieurs Etats membres, soient lc fait d'un corps com- pose de telle maniere que ces jugements ne puissent donner lieu, k personae, de penser que leurs considerants dissimulent des interets, mime si ces intedets ont pour certains Etats membres un intdret national ou resultent de combinations plus ou moins stables, ayant determine une majority. Ceci revient a dire qu'une court supreme m'apparait indispensable pour couronner l'edifice. Cour suprA me, qui, en tenant compte des intentions qui sont a l'origine de l'organisation international du commerce jugerait plutbt en fait qu'en droit. Minspirant d'un discours recent de sa Majesty la Reine d'Angleterre, je dirai que si la supre- matie de la loi doit etre recormue, la loi doit ftre au service de la society et non pas la tyranniser. IU semble bien que ce soit a la combinaison de l'influence des coutumes et de la reconnaissance que des adaptations sont nicessaires que ce qu'on appelle en Grande Bretagne, le Common Law, doit son action et son autorite. C'est Ia un des examples qu'il y aurait lieu de mediter. , Je ne pretends pas naturellement, faire ici le dessin de ce que devrait etre l'organisation international du com- merce. Je veux seulemeat attirer attention sur la com plexit6 que devra comporter cette organisation. La plupart des actes de la vie economique constituaient des tatonnements plus ou moins inconscients vers des equilibres jamais difinis et voilk. qu'A ces ajustements qui se faisaient dans le temps et qui dtaicnt justifies ou infirmes. mais toujours corrig6s par le temps on va s'efforcer de substituer des institutions chargees d'appliquer des mrthodes que nous tentons de faire clairas. Le passage du reflexe au geste reflechi, qui presente de snrieux risques. exige tou- jours de tr&"s grandes prdcautions. Je crois pour ma part que les reflexes nis depuis 25 ans, c.est4A-dire nds de la pauvrete et du doute, doivent etre pour le moins, cor- rigfs, et qu'ils ne peuvent l'etre qu'en etant amenes A la lumiere de la conscience. C'est pourquoi je crois si opportune l'initiative des Etats-Unis. Je ne voudrais pas terminer, sans dire a nouveau quelle est ma foi dans l'unite du monde et dans les pos- sibilites d'une entente et d'une cooperation aussi large- ment internationales que possible. Souvent en lisant le projet de Charte ou en 6couta-t nos collbgues amencains, il nr'est arrive de penser qu'ils dtaient animes par le sucd d'une logique que le plus souvent on declare fransaise. Et j'ai le sentiment que les appels que mes collbgues de la delegation franpaise et moi- mime avons faits a ltempirisme et l'idee que nous avons soutenue qu'il fallit tenir compte de toutes ies situations, aussi bien de celles qui etaient momentanement perdues, que de celles qui dtaient acquises. pourrait paraltre inspire par la prudence que l'on prete gindralenment aux anglo-saxons. Voilk qui montre bien qu'il y a entre nous tons un terrain common, je crois que les discussions que nous avons cues ont permis de le mieux definir et que par consequent, on est plus pret qu'il y a un mois a construire. Le PRESIDENT: Je remercie M. Nathan de son exposed. Messieurs, je propose maintenant de suspendre la sdance et de la reprendre a trois heures precises. Dix oratours ont parl6 ce matie et dix autres deivent encore prendre la parole est apres-midi; avec un peu de chance et de la bonne volente, nous pouvons espdrer en terminer ce soir. La seance est suspended et reprendra A 3 heures pr6cises. Sixinme Sdancec PIdnibse Tenue Ic Mardi 26 Novembre, 1946 i r5 heures PrEsidcnt: M. M.M. SUTENS (Belgique) Le PRESIEDENT: La seance est ouverte. Je donned la parole a M. Nehru, D1eltgud de l'Inde. I68 Mr. R. K. NEHRU (India): Mr. Chairman, the results of our work in this Committee have been reviewed by some of my distinguished colleagues. You also, Sir, in your capacity as Chairman-and, might I add, a Chairman who has won our very deep respect by his unfailing courtesy and sense of fairness-have made some observa- tions on the subject. We have decided, Sir, to publish the results of our work in the form of a report which will be placed for consideration before our respective govern- ments and peoples. I do not propose in this final meeting to attempt a detailed exposition of the proposals, for we are, most of us, tired men, and there must be some interval for reflection before we make any such attempt. I would like, however, to say a few words of an explanatory character on this subject as a possible aid to the study of the report. If my remarks are not wholly confined to points on which complete agreement has been reached, I trust that my motive will not be misunderstood. If I might explain, Sir, some of us who were a bit sceptical as to the outcome of this Conference are now inclined to take a somewhat different view. The first point I would like to refer to is the scope and character of our discussions in the present session of the Committee. Since most of our meetings have been held in private-although I must say, in fairness to ourselves, that the Indian Delegation has always been in favour of maximum publicity being given to such discussions-it is possible that some misunderstanding may have been caused. This will be cleared up when the report is pub- lished, but I take this opportunity to repeat that we came here not to enter into any kind of commitment, but merely to exchange views and ideas with our colleagues from other countries. We have not departed from that position and the views expressed by the various delegations, including our own, as set out in the report, will be placed, on our return to India, before our Government and people. The entire problem will then be examined in the light of these views and of other expressions of opinion, and also perhaps of new developments in the economic and other fields, in preparation for the later meetings. The drafting process is largely mechanical, but in the Spring meeting of this Committee we hope to be able to go a step further in elucidating points of doubt and resolving differences of opinion. The fact that on a number of points divergent views have been expressed is not an unhealthy sign and we may still be able to confound the pessimists who are doubtful about the prospects of the Conference. Let them not forget that the task allotted to us by the Economic and Social Council is one of major dimensions, covering the preparation of a draft agenda, including a draft convention, for considera- tion by an International Conference. We have been asked by the Council to bear in mind that the purpose of this Conference is to promote the expansion of production, exchange and consrnnption of goods in all countries and to pay special attention to the needs of countries which are still not fully developed. If we have been able to complete the exploratory stage of this vast labour in the short space of six weeks, I think, Sir, that this is an achievement of which we have no reason to be ashamed. " Much haste, less speed" is a maxim we would do well to remember, for we are dealing with an intricate problem and no country-least of all one in the position of India, which has still to develop its resources to the full-could be expected to enter into long-term commitments affecting the development of the national economy without studying the prospects carefully. I said, Sir, that this report would soon be presented for consideration to-our respective Governments and peoples. What their reactions will be it is too early to say, but I would like to assure the Committee that, so far as India is concerned, the views put forward by every dele- gation will be examined by us with the utmost care. Our general approach to this problem has already been indi- cated in the first plenary session and the later meetings. We have made it clear that the primary objective to which all our efforts and planning in India are increasingly being directed is a broad social objective, namely, the liquida- tion of Indian poverty and the raising of the standards M. NEHRU (Inde): (Traduction) Monsieur le Président, Les résultats de nos travaux ont été examinés par un certain nombre de mes collégues; vous aussi, Monsieur le Président, vous avez participé à ces travaux de revision et je crois pouvoir ajouter que vous méritez tout notre respect pour votre courtoisie. Nous avons décidé. Mon- sieur le Président, de publier les résultats de nos travaux sous la forme d'uu rapport qui sera soumis à l'examen de nos gouvernements et de nos peuples. Je n'ai pas l'intention, au cours de cette dernière réunion, de pro- céder à un exposé détaillé de nos propositions; j'aimerais dire queìques mots à tire d'explication ou comme une contribution à l'étude de ce rapport. Si mes remarques ne sont pas entièrement limitées à des points au sujet desqueìs un accord complet a été obtenu, j'espère qu'il n'y aura pas de malentendu au sujet des motifs qui les ont inspirées. Si je puis dire, Monsieur le President, que certain d'eutre nous, qui étaient un peu sceptiques, sont maintenant tentés d'avoir une attitude un peu dif- férente, vous comprendrez très bien mon point de vue. La première question dont je voudrais parler est l'objet et le caractère des discussions que nous avons eues au course de la présente session de la Commission. Du fait que la plupart de nos séances n'ont pas eu de caractére officiel-bien que je doive dire, en toute équité, que la Délégation de l'Inde a toujours été en faveur de donner à ces débats le maximum de publicité-il est possible que certains malentendus se soient produits. La clarté se fera quand le rapport sera public. mais je profite de cette occasion pour redire que nous sommes venus ici, non pour contractor des obligations, quelles qu'elles soient, mais simplement pour proceder a des changes de vues et d'idees avec nos collegues des autres pays. Nous ne nous sommes pas dipartis de cette attitude et les vues ex- primdes par les diverses delegations, y compris la n6tre, seront exposes, telles qu'elles figurent au rapport, d&s notre retour en Inde a notre Gouvernement et a notre people. L'ensemble du problem sera etudie alors, compte tenu de ces points de vue. des autres opinions. exprimees et peut-Atre meme egelament des nouveaux diveloppe- ments survenus dans le domain économique et dans d'autres domaines, et cela, en vue préparer les 'travaux des sessions ultbrieures. Le travail de rtdaction suit, dans one large mesure. un processus mecanique, mais au cours de la session de la presente Commission qui se tiendra au printemps prochain nous esp6rons pouvoir fare un pas en avant, apporter la lumiere sur certains points equi- voques et consilier certaines divergences d'opinion. Le fait que sur un certain nombre de points des vues divergentes aient été exprimdes n'est pas un signe de mauvais augure et nous sommes en droit de confondre les pessimistes qui mettent en doute les perspectives d'avenir de la Confdrence. Qu'ils n'oublient pas que la tlche que nous a confide le Conseil Economique et Social est d'envergure et qu'elle consisted A mettre au point un projet d'ordre du jour. y compris un projet de convention devant etre exannin6 par une Conference Internationale. Le Conseil nous a demanded de ne pas oublier que le but de la prssente Conference est de faciliter I'expansion de la production. les changes et la consommation des produits dans tons les pays. et. d'accorder une attention toute particuliere aux pays qui nWont pas encore completement achev6 leur plein developpement. Le fait d'avoir'reusai a franchir l'Ktape d'exploration de cette lourde tiche. en l'espace de six semaines seulement. est a mon avis. Monsieur le President, un rdsultat dont nous n'avons pas lieu de rougir. " Hate-toi lentement ". ce*t Ia uile maxime dont nousferions bien de noussouvenir. carleprobleme dontnous nous occupons eat on probl~me compliqu6 et il ne faut pas s'attendre qu'on pays-ecore moins on pays qoi comma l'Inde Wta pas encore pleinement devaloppd sea ressources -qu'un pays. dirais-je, contracte one obligation a long terme en ce qui concern le developpement de son econ- ontie national sans en etudier soigneusement- lea incidences dans l'avenir. J'ai dit, Monsieur le President, que le Rapport de la Commission serait bient6t soumis a l'examen de nos governments et de nos peoples respectifs. II est encore trop tot pour prdvoir leurs reactions mais, pour cc qui est de l'Inde, 'aimerais donner & la Commission I'assurance que les vues exprimnes par chaque delegation front chez nous l'objet d'un examen des plus minutieux. Notre attitude gtndrale A l'6gard de ce probleme a ddji et6 expose au course de la premiere sdance pleniere et des seances qui I'ont suivie. Nous avons precis6 que le but essential vera sequel tendent de. plus en plus tons les efforts et tons les projets de notre pays, est un objectif d'un ample I69 of living of our vast population. In order to reach this objective, we must increase production and create a better balance between industry and agriculture, which means that we must adopt a policy of rapid industrialisation and the modernisation of our methods of production. There are other considerations also: first, economic pro- gress must be rapid, for our population is expanding fast and we are constantly threatened by famine and shortage; secondly, the benefits of economic progress must be passed on rapidly to the people; and, thirdly, our resources which are not unlimited must be used in the best interests of the community as a whole. It is for these reasons that we are trying to build up a type of economy which while giving adequate scope to private enterprise will place the control and direction of the larger aspects of economic activity in the hands of a Government whìch represents the broad mass of our people. These facts have been stated before, but I would like to emphasize again that our attitude to the problem of foreign trade is not quite the same as that of certain industrial countries which are represented in this meeting. In the past, we been compelled to aim at an export surplus in order to meet our varied foreign obligations. The position has now changed and instead of being a debtor we have become an important creditor nation. Although we still need a very large export trade; our primary interest in the future will be the development of our own vast internal market. Many of our products are in world-wide demand, and the problem of finding a market for them which faces, or is expected to face, certain exporting interests in the leading industrial countries in respect of other types of products might not perhaps affect us seriously for a number of years. Since we also consti- tute one of the biggest potential markets for a large variety of imported products, it might not perhaps be difficult for us to adopt a trade policy which is wholly of our own choice, subject of course to our adhering strictly to the objectives that we have in view. Nevertheless, Sir, it would be a mistake to suppose that we have at any time considered the possibility of adopting an autarchic trade policy. We fully appreciate the benefits of multilateralism, and since as a creditor nation we are anxious to secure the smooth and speedy liquidation of our claims, we are vitally interested in the expansion of world trade on a non-discriminatory basis. We also recognize that there is a close inter-dependence between our country and other countries in economic and other matters and that the success of our own programme of development would to some extent depend on the attainment of a high level of employment and economic activity in the rest of the world. Finally-and I would like to emphasize that this is a point to which we attach the greatest possible importance-we believe firmly in the principle of international co-operation and so long as we are members of the UNO, it will be our constant en- deavour to promote the cause for which it stands by participating in any scheme of cooperative relationship which meets the vital requirements of all countries and is based on respect for the principle of equal rights and self- determination of peoples. It is against this background, Sir, that some of the pro- posals of this Committee will be examined by our Govern- ment and people. We have covered a great deal of ground in the present session and have registered a number of gains. Unquestionably, the most important gain is the opportunity which these meetings have given us of estab- lishing contacts and making personal friendships and exchanging ideas with our colleagues from other countries. We have learnt a great deal from them and have en- deavoured to give them an insight into our own problems and difficulties. We came here to educate ourselves and to prepare the ground for the later Conference, and I think we can reasonably claim that our mission has not been unsuccessful. The number of points on which agreement has been reached at an expert level is commendably large. We have not committed our Governments in any way, but I do not think that much fault will be found with the agreed views put forward in the report on such subjects as employment policy, commodity policy, the character and functions of the proposed organisation and certain aspects of commercial policy. caractère social, c'est-à-dire is disparition de la pauvreté et I'amélioration des conditions de vie de l'énorme popu- lation de l' Inde. Pour atteindre ce but, il nous faut augmenter la production et réaliser un meilleur équilibre entre l'industrie et l' agriculture, ce qui revient a dire qu'il nous faut adopter une politique d'industrialisation rapide et moderniser nos méthodes de production. II y a aussi d'autres considérations: d'abord, le progrès économique doit ètre rapide, car notre population s'accroft rapidement, et nous sommes sous la menace constant de la famine et de la pénurie; ensuite, les avantages du progrès économique doivent ètre répartis équitablement dans la population; enfin, nos ressources, que ne sont pas illimitées, doivent ètre utilisées au mieux de l'intérèt de l'ensemble de la communauté. C'est pour ces raisons que nous essayons de mettre sur pied un type déconomie qui, tout en laissant à l'entreprise privée un champ d'action suffisant, place le contrôle et la direction de l'activité économique entre les mains d'un gouvernement assuré de l'appui de la population. Nous avons déjà expose cette situation, mais je voudrais souligner encore une fois que notre attitude à l'égard de is question du commerce extérieur n'est pas tout-â-fait is même que celle do certains pays industrials, ici représentés. Dans le passé nous avons dû nous efforcer de produire un excédant pour l'exportation afin de faire face à nos diverses obligations extérieures. Aujourd'hui, la situation a changé; au lieu d'être un pays débiteur, nous sommes devenus un pays créancier important. Bien que nous ayons encore besoin d'exporter beaucoup, il nous faudra avant tout à l'avenìr, développer notre vaste marché intérieur. Beaucoup de nos produits soat demandés sur les marchés mondiaux, et la question des débouchés, qui se pose, ou qui va probablement se poser pour l'exportation des principaux pays industrials pourra peut-etre ne pas nous toucher sérieusement d'ici un certain nombre d'années. Comme nous offrons aussi virtuellement les plus vastes possibilitiés d'importation d'une grande variété de produits. il nous sera peut-etre pas difficile d'adopter la politique commercial de notre choix, pourvu, naturellement, que nous nous en tenions strictement aux objectifs que nous avons en vue. Pourtant, Monsieur le Président. il ne faudrait pas croire que nous ayions à aucun moment envisagé d'adop- tion d'une politique commerciale autarcique. Nous nous rendons pleinement compte des avantages du système multilatéral et puisque, en tant que nation créancière, nous sommes désireux d'obtenir le réglement aisé et rapide de nos créances, il y a pour nous un intérêt essential à se que le commerce mondial se développe dans un esprit de non-discrimination. Nous reconnaissons également qu'il existe une inter-dépendance étroite entre notre pays et les autres dans le domaine économique et pour d'autres questions; pour que notre programme de développement puisse être réalise, il est, dans une certaine mesure, indispensable que dans le reste du monde, l'emploi et l'activité économique atteignent un niveau élevé. Enfin -et je voudrais souligner qu'il s'agit Ià d'un point auquel nous attachons la plus haute importance-nous croyons fermement au principe de la collaboration internationale, et, aussi longtemps que nous serons membre de l'Organisa- tion des Nations Unies, nous nous efforcerons constamment de contribuer au succès de sa cause en participant à tout programme de collaboration répondant aux besoins essentials de tous les pays, et se fondant sur le respect des principes de l'égalité des droits et du droit des penples à disposer d'eux-mèmes. C'est sous l'angle de ces considérations, Monsieur le Prési- dent, que notre Gouvernement et notre peuple examineront certaines des propositions de cette Commission. Nous avons parcouru un vaste domaine, au course de la présente session, et nous avons enregistré un grand nombre de gains. Le plus important de ces gains est, sans conteste, l'occasion que nos réunions nous ont fournie d'établir des contacts et d'échanger des idées avec nos collègues d'autres pays. Nous avons beaucoup appris d'eux, et nous nous sommes efforcés de leur faire comprendre nos problèmes et nos difficultés. Nous sommes venus ici pour nous instruire, et pour préparer le terrain pour la future Conférence; je crois que nous pouvons prétendre, avec raison que notre mission n'a pas échoué. Le nombre des points sur lesquels l'accord s'est fait entre experts, est relativement considér- able. Nous n'avons engagé nos Gouvernements en aucune facon, mais je ne pense pas qu'on puisse trouver beaucoup à redire aux points de vue adoptés, tells qu'ils sont exprimés dans le rapport, sur des questions comme la politique de l'emploi, is politique des produits essentials, le caracère et les activités de la future Organisation, et certains aspects de la politique commerciale. 170 Even more important from our own point of view is the new draft Chapter which has been prepared for considera- tion and study by member Governments on the subject of economic development. In our comments on the United States proposals for the expansion of world trade and employment, which were subsequently presented in the shape of a draft charter, we deplored the fact that so little understanding was shown of the problems and needs of the undeveloped countries. We also gave expression to the view that the entire approach of the proposals was of a negative rather than of a positive character. We recognise, Sir, that an attempt has been made to meet this criticism and that there is a welcome change in the attitude of the more advanced countries. There is now a clearer recogni- tion of the right and duty of all members to promote what has been described as " the continuing industrial and general economic development of their respective countries." Members have been advised to agree to give an undertaking that they will co-operate in such matters as the provision of capital funds, technical assistance and equipment, needed by the less developed economies. Finally, some advance has also been made in other direc- tions, e.g., the right of member countries to give special assistance to particular industries in the shape of protec- tive and other measures has now been fully recognized. We have undoubtedly moved forward, Sir, but the question that is likely to be asked in India is, have we moved far enough? Certain objectives and principles have been accepted and the draft chapter on economic develop- ment provides some measure of freedom to use tariffs and subsidies for the purpose of protecting industry. But a developing country which is faced with special problems of the type so often discussed in our meetings may not find it possible to give up its right to use more direct methods of trade regulation which may be vitally neces- sary for the execution of its development plans. The suggestion has been made that if it wishes to use such methods it should ask for release from its obligations from the Trade Organization and an elaborate procedure has been suggested for enquiries into such applications. This is not the time, Sir, to discuss these matters in detail and the proposals will in any case soon be released for publication. It does seem to me, however, that it is not by imposing such restrictions and laying down a pro- cedure which may lead to delays and prove a source of conflict and irritation that the cause of economic develop- ment and industrialisation can be advanced. In India, Sir, we have had some experience of outside interference with our trade and tariff policies and of the hampering effect of certain procedures which have been followed in this connection. We have won our fiscal freedom after a long struggle and are planning to use it for the purpose of developing our national economy in the interests of our people. Certain suggestions that we have put forward for consideration are designed to ensure that these rights are exercised for the purpose of development in a rational manner, subject to any international criteria which may be agreed upon and with due regard to the legitimate interests of other countries. I have not the time, Sir, to go further into this matter, but i would like to say, before ending my speech, that having achieved so much in the present season we must make a determined effort to reach some agreement on .w e pont . .hc t... tther poiizs on which theaelso on certainohe o ts hr jastil, some digrence Of opinion. so that the great task which has been entrusted to us by the Economic and Social Council may be successfully accomplished. dn cionc usios. cir. I woult lke -to acsoeiate myself cordiallywith'the tribute of thanks and gratitude which has mbeen publicly paid by soie of my colleagues to the miny officials of the United Nations, led by our worthy ard able Executive S cretamy, and to whose. untiring labours we owe much of the success -which we have achieved. The CHAIRMAN (Interpretation): I thank Mr. Nehru for lhis statement Gentlemen, withyour.-rmission I shall interrupt for the time being the series of statements given by Delega- à lus important encore,bL notre point de vue, est le nouveau projét de chapitre sur le ddveloppement couoinque àql'ui doit etre àumis a attention et ba I'examen des Gouvernements des Etats-Membres. Dans nos commentaires sur les propositions des Etats-Unis pour le developpement du commerce et de l'emploi dans le monde, qéiéort présentésuite, et6 preseans sos forme d'un projet ée Chaéte, nous avinsd6plored que l'on alt tenu si peu compete des problemés et des besoins des economies iésuffisamment developpeésé Nous avons souligne dgalement le ôaractere nfgatif plut6t que positif de toutes ces pro- positions. Nous nous rendons éompte, Monsieur le Prdsi- dént, qu'un effort a et6 fait en vue d'aller au devant de ces critiques et qu'un certain changement s'est produit dans attétudeédes pays plus 6veluds. On se rend micux compte actuellement que tous les Etats-membres ont le droit et le devoir de stimuéer ce éu'on a appelM le" dd- veloppement constant de leurs pays respectifs au point de vue industrneé ét economieue en gdnbral ". Los Etats- mémbràs out et invites a prendre l'engagement de collaborêr en oatilre de prets, de capitaux, d'aide tech- niqué. et d'outillaée n6cessaires aux economies moins dvoluees. Enfèn, aé éeréalnséràges a ete r&aLiad a d'autres egards; par exempée, le droit accorde aux pays-membres de fourniré& des éendustries detérmines une aide speciale sous forme de mesures de protection ou autres, est main- tenant pleinerent reconnu. Nous avons ceértainement progréss, Monsieur le Prisi- dent, mais la quesûion qu'on posera sdrement aux Indes est la suivante: éavons-onus progress suffisamment? Nous avons accept certains buts et principes et le projet de Chapitrmm suér le developéeent6conomique prfvoit une certaén liberty en matidre de tarifs et de subventions. en vue de protdger l'industrie. Mais on peut difficilement attendre d'unépays en voie de developpement et qui doit fairè faceé& des problems splciaux du genre de ceux qui ont Rteési solvent discuteséau sours de nos reunions, qu'il renonce a son droitéd'appliquer des methodes plus directes de reglemeentaéion commeìcial, metêodes qui peuvent etre d'une necessité vitale pour l'execution de ses plans de mise en valeur. é'aucuns out estime qué si pareil pays desire faére usa,e de ces methodes. ià levrg s'adreser & 1'Orran- isationêdu Commerée pour 6tre releve de ses obligations et une éroceéuée compléquee a ete proposfe en vue de 1'examen de pareilles dema'edes. Le moment nest pas opportén, Monsieur le Presiden , de discuter ces'questions en detail et quoi qu'il en soit, ces propositions seront bient6t livédesli la publi,ité. I1 me,semble. neanmoins. que ce n'est pas en imposant pareilles restrictions et en 6dictant ées regles de procednre éui provoquerost neces- sairement dee rétèrds et qn s reveleront une source de conflits et d'irritation que nous pourrons servir la cause éu delveloppenent economlque ít de l'industrialisation. Aus Indns,enous avoéns, nM,opsiour le Prsidet. une longue expdienCe des' ingbireaces extfrieures dans notre politique coerciale ot tarifaire et de l'effet paralvsant de certaines methodes qui oat ete suivies en ce romaine. . Nous avons conquis notre liberty fiscale. apres une longue .Iutte et nous nous proposons d'en fire usage en vue de-d6velopper notre dconomie national dans l'inter~t de. notre peuple.. Certaines des propositions que nous-avons sou- mises a 1'examen de la Commission Prdpasatoire viseat a ce que ces droits soient exerces dtfune. manihre raison- nable. compte tenu aussi bien des criteres internationaux qu'on aurait adopts que des intretts legitimes des autres pays avec lesquelsenous entretenons des relations comnmer- cialesc. Le temps me fait defaut. Monsieur le Prdsident. pour developper davantage ce sujet, mais j'aimerais a dire, avant de reprendre ma place, qu'ayant tant accompli au cours de. Ia presente session, noues devons faire'un effort sdrieux pour arriver a un accord sur cette question comnme sur d'autres & propose desquelles il subsiste. une certaine divergence de wues pour qu'ainsi:lagrande tiche que nous a confiCee le Conseil. Economique et Social se trouve heureusement accompoie. Pour concl'ue. je m'associe tr~s cordialement aux honL- mages qui oat -te rendus publiquement ici -ur fonction- naires des Nations Unies et en particulier au Secretaire Executif A-quli nous devons, pour une grande pertie, le succEs que noUs avons obtenu. Le PRESIDENT: Je remercie M. Nehru pour son eox- pose. _ Avec votre-, permission, Messieurs, je vais inter- rompre provisoirement la sren des exposed des chefs de DelEgations pour tonner la- parole aus representants de 53680 (34) 171 tions in order to call upon the Representatives of two non-governmental agencies. the International Chamber of Commerce and the World Federation of Trades Unions, who have asked to -be allowed to state their opinions at the begining of the afternoon. I therefore call upon Mr. Phillips, the Representative of the Intemnational Chamber of Commerce. . Mr. PHILJLIPS (.cternationI Chainber of Commerce): Mr. Chairman, as Delegate of the International Chamber oi Commerce I have followed with aabsorbed interest the day to day developments of the work of the several Comn- nuittees, and speaking as the Tepresentative of world busi- ess may I be permitted to congratulate the members of this Conference on the successful results achieved, which have only been possible due to the enormous amount of work and time devoted to this meeting by everyone participating. The membership of the International Chamber of Commerce includes 31 countries, each with a National Committee, and, . collectively, representatives of these Committees comprise the Council of the Chamber.. In each od these groups are the leaders of Trade, Industry and.Banking of their respective countries. The Chamber has established a number of Committees for the purpose of studying and submitting proposals on many phases of International Trade, and. of course, has considered carefully the original United States proposals which have eventuated in.this Conference. -In studying the Report of Committee I, the Inter- national Chamber of Commerce observes that no mention is made of consultin with non-governmental organisa- tions, although our, non-governmental organisation in par- ticular is uniquely equipped to make a substantial con- tribution on methods best adapted to assist employment. The Intemational Chamber of Commerce Committee on Methods to Maximize Employment numbers amongst its members several world authorities on this most important subject and much -study has been given to it. I am very' pleased to note that in the Report of Com- mittee-V, provision is included covering suitable arrange- ments for . consultation and co-operation with non- governmental -organizations. When the International Trade Organization becomes an accomplished entity, it will be the duty of the members of thea-Iternational Chamber of Commerce to carry out its 4ecisioris. and I can assure the Delegates here present that the Chanbr will co-operate to the fullest extent and every effort ill be- made by the leaders of world trade to ensure success to this most important Organization. - In conclusion, may I express to you, Mr. President, to the heads of the -Delegations-and to the Delegates, my grateful appreciation and thnk for-the unfailing courtesy and consideration that has been afforded to me by every- one. Ia addition, I desire to thank Mr. Wyndharn-White and Lhis bard-worked staff for the assistance they have rendered to my associates and myself. I thank you. The CHAIRMAN (Interpretation): I thank Mr. Phillips. and I call upon Mr. Duret. the Delegate of the World Federation of Trades Unions. Mr. DURET (Wcrld Federation - of Trades Unions) (Trassla1ios): Mr. Chairman, -in view of the importance - and multiplicity of -the tasks facing the Preparatory Con- ference on Trade and Employment, the World Federation of Trade Unions desires to state itsposition on the problems which have been under discussion. The unequal development of world economy after two great wars has resulted in a considerable increase in the ,specific weight of the economies-of certain countries, whose national' income hars become-much greater than that of all mother States. Thie-distribution of this income, which is also -more unequal, -constitutes' a source of crises of under- consumption, the onset of which is to be foreseen and the effects of which will be more dangerous than a crisis in - -poorer countries whose national income is more equally distributed. * The limitations of consumption in the former countries also reduce the opportunities for investment in their in- dustrier- - There the danger of a crisis is all the greater as duux organisations extra-gouvernementales, ia Chasnbre de Commerce luturnationalul t la Fddratioii Syndicale Mondiale, qui out demand 3 pouvoir exposer leurs points de vue au d6but de l'aprds-midi. Je donned la parole a M. B. Phillips, Delegue de la Chambre de Commerce Internationale. M. PHILLIPS (Chambre de Commerce internationale: (Traduction) Monsieur le President, come ddldgud de la Chambre de Commerce interuationale, j'ai suivi avec un profound int6rit. lus progris quotidiens des travaux des diverses commissions. Qu'il me soit permis,' A titre de reprdsentant et de porte-parole du monde international des affaires,. de feliciter les membres de cette Conference des heureux risultats obtenus. que seule a pu rendre pos- sible la somme deorme de travail. et. de'temps consacrde a la presente session par tous ceux qui y out particip6. La Chambre de Commerce international comprend des reprdsentants de trente-et-un pays, dont chacun a son comity national. et ce sont les representants de ces comirts qui. pris collectivement, composent le Conseil de la Chanmbre. Chacun de ces groups compte les dirigeants du commerce. de l'industrie et de la banque dans leurs pays respectifs. La Chambre a institu6 un certain nombre de comites, charges d'etudier divers aspects du commerce international et de soumettre des propositions A leur sujet; elle a, cela va sans dire, examine attentivementles propositions pnmiT tives des Etats-Unis. qui ont abouti A la prssente Con- ference. La Chambre de Commerce international constate. k l'examen du rapport de la Premiere Commission, qutil n'y est fait aucune mention de consultations avec les organi- sations non-gouvernementales: notre propre organisation. en particulier. est exceptionnellement outillte pour apporter une contribution importante a l'etude des mithodes les plus propres a favoriser l'emploi. Le Comite que la Chamber de Commerce international a constitu6 pour l'dtude des m6thodes permettant de porter le volume de l'emploi a son maximum compte parmi ses membres plusieurs autorites mondiales sur ce sujet tres important. qu'il a largement 6tud'e. Je suis tres heureux de constater que lamrapport de la Cinqmleme Commission prevoit les mesures appropriees a prendre en vue de la consultation des organisations non- gouvernementales et de la collaboration avec elles. Lorsque l'Organisation Internationale du Commerce aura pris corps, les membres de la Chambre de Commerce Internationale auront le devoir de donner suite a ses deci- sions, et je puis donner aux Dadguds ici presents l'assur- ance que la Chambre accordera A cette organisation si importante la collaboration la plus etroite et que les diri- geants du commerce mondial ne negligeront aucun effort pour assurer son sucebs. En terminant, qu'il me soit permis de vous exprimer. a vous Monsieur -le President, aux chefs de Delegations et aux D1e6gues, ma reconnaissance en mnme -temps que mes remercienments pour la courtoisie et la consideration constantes dont chacun a fait preuve A mon egard.- Je tens egalement a remercier M. Wyndham-White et son personnel, qui a dd fournir un effort considErable, de l'aide qu'ils nous oat pretee, A mes colleagues et a moi- mEme. Le PRESIDENT: je remercie M. Phillips de son ex- pose. Je done la parole A M. Duret. DdlgeuE de la Federation Syndicale Mondiale. M4. DURET. (FEdEration syndicate mondiale): Dovant l' importance et la multiplicity den t~ces incomb~ant A is Conference Preparatoire du Commerce et de l'Emploi,- la F~dEration Syndicale Mondiale tient a affirmer sa posi- tion sur l'onsermble des prolmes qui y ont et6 discutes. Le d6veloppement inegal de l'economie mondiale a i suite des deux grandes guerres a about A l'augmentation considerable du poids spdcifque des Economies de cer- tains pays don't le revenue national est devenu beaucoup plus important quo celui de tons les autres Etats. -Sa distribution qui est aussi plus inegale constitue uno source de crises de- sous-consommtion .dont. l'eosion cst a prevoir. et dont les effets seront plus dangereux qu'une crise dans les pays plus pauvres et dont le revenu national est plus. egalment riparti. Les limites de la consonmmation dans les premier pays reduisent dgalement les possibilitis d'investissement de leurs industries- Le danger d'une crises y est d'autant 172 all controls are progressively abandoned and reserves of purchasing power, accumulated during the war, are reduced by the rise in prices, For this reason, an energetic policy of full employment in those states is necessary to assume the prosperity of world. economy. The fundamental defect in the initial proposals made to this Conference was that they were essentially negative. In short, it was a question of a return to the doctrines of economic automatism, a source of economic wellbeing and stability, a doctrine which was, however, proved to be a failure in the twentieth century. " If restrictions are abolished, everything will be all right." Such seems to be the leitmotif of Neo-liberalism. However, this formula in no way solves present-day economic antagonisms, as crises are essentially due to the contradiction between large-scale production and the limitation of the purchasing power of the masses, a con- tradiction which is the dominant feature of our epoch. Therefore, the World Federation of Trade Unions stresses the necessity of establishing an order of precedence among the various problems discussed at the Conference, founded on their importance and their scope. In its opinion, one problem must enjoy priority over all others; that of a policy of full employment. We recall briefly the arguments we have already had the opportunity of developing in Committee I. The World Federation of Trade Unions considers that a policy of full employment must be pursued on a world scale and be imposed in all countries whose Trade Union Organizations are its Members. However, the policy of full employment can take on different aspects according to the specific conditions in each country. In certain countries, it is essentially a question of assuring regular employment for the whole labour force, or, in the well-known formula, of attaining a situation in which the demand for labour is slightly higher than the number of workers available. A policy of full employment in those countries has a bearing on the limitation of working hours and on the remuneration of labour, and is accompanied by a policy of the re-distribution of purchasing power so that the greatest part of production can be absorbed by the home market. In other states, economically backward, the problem presents itself in a different way. Such countries can employ all their labour resources to the full and yet the situation cannot be judged satisfactory. In fact, if pro- duction methods are archaic, absence of apparent un- employment can co-exist with a very low level of national income and wretched living conditions for the whole population. In those circumstances, the policy of full employment consists of developing national income to the maximum, supplying those nations with modern equipment and, at the same time, ensuring full employment of the labour force on this new basis. Starting from these considerations, the WFTU considers that, in those countries, special importance should be accorded to the level of wages. It warns against a dangerous interpretation of the idea that the special economic conditions of those States necessitate the main- tenance of wages at a low level. The low level of wages retards the progress of industrialization by making less urgent the substitution of the machine for men and in general the adoption of all technical refinements. Now it is necessary for those nations to be able pro- gressively to bridge the gap between their own economic development and that of countries economically most ad- vanced. Therefore, it is a question of a veritable reversal of the present-day tendency, as, for twenty years, this gap has constantly tended to increase. Finally, there are States in which the possibilities of economic development far surpass their reserves of labour, and which cannot, therefore, fully employ their production potential except through the importation of foreign labour. In the case of those countries, it cannot be considered that full employment is achieved when all domestic labour is fully employed. plus grande que tout controle y est progressivement aban- donn6é et quo les réserves de pouvoir d'achat accumulées pendant la guerre sont réduites par la hausse des prix. Pour cette raison, une popolitique énergique de plein emploi dans ces Etats est nécessaire pour assurer la prospérité de l'économce mondiale. Le défaut fondamental des propositions initiales faites é cette Conference était d'être essentiellement negatives. Il s'agissait en some d'un retour vers les doctrines de l'automatsime économique, source de bien-ètre et de stabilité économique, doctrine don't échec a pourtant été consacré au cours du 20ème siècle. Si les restrictions sont supprimées, tout ira bien: Tel semble être le leitmotiv du néo-librélismne. Cette formula ne résout pourtant nullement les antagonismes actuels de l'économie, les crises étant dues essentiellement à la con- tradiction entre une production massive et la limitation du pouvoir d'achat des masses, contradiction qui est le trait dominant de notre époque. La Fédération Syndicale Mondiale insiste donc sur la nécessité d'établir une hiérarchie entre les diftérents prob- lemes discutés à la Conference, une hiérarchie fondée sur leur importance et leur portée. A son avis, un problème doit primer tous les autres: celui d'une politique de plein emploi. Nous rappelons brièvement ce qu'il nous a déjà été donné de déopper devant la Commission No. I. La Fédération Syndicale Mondiale considère qu'une poli- tique de plein emploi doit être poursuivie a l'éhelle mon- diale et qu'elle s'impose dans tons les pays dont les organisations syndicales se trouvent groupées en son sein. Cependant, suivant les conditions spécifiques de chaque pays, la politique du plein employ peut revètìr un aspect different. Dans certains pays. il s'agit essentiellement d'assurer un employ régulier à la totalitè de la main d'oeuvre. ou, suivant la formule connue. d'aboutir à une situation telle que la demande de main d'oeuvre soit légérement supérieure à l'importance des travailleurs disponibles. Une politique de plein emploi dans ces pays porte sur la limitation du temps de travail et sur sa rémunération et s'accompagne d'une politique de redistribution du pouvoir d'achat, destinée à faire absorber la plus grosse partie de la production par le march intérieur. Dans d'autres Etats, économiquement arriérés, le prob- léme se pose de façon différence. De tels pays peuvent employer pleinement toutes leurs ressources de main d'oeuvre sans que la situation puisse être jugde satis- faisante. En effet, si les modes de production sont archaiques, l'asbence de chòmage apparent peut coexister avec un revenu national très faible et des conditions de vie misérables pour l'ensemble de la population. La politique de plein emploi, consiste alors à developper au maximum le revenuu national, à doter ces nations d'un équipement moderne, tout en assurant sur cette nouvelle base, le plein emploi de la main d'oeuvre. Partant de ces considerations, la Fedération Syndicale Mondiale estime qu'il faut alors dans ces pays accorder une importance particuliére au niveau des salaires. Elle met en garde centre une interpretation dangereuse de l'idée selon Laquelle les conditions économiques particuliéres des ces Etats imposent le maintien des salaires á un nivean bas. Le niveau has des salaries retarde les progrés de l'industrialisation en rendant moins urgente la substitution de la machine à. l'homme et en général tons les perfec- tionnements techniques. Or. il est nécessaire que nations puissent progressive- ment combler l'écart existant leux developpement économique et celui des pays économiquement les plus avancés. Il s'agit donc d'un véritable renversement de la tendance actuelle, car depuis une vìngtaine d'années, cet écart tend au contraire à s'accrostre constamment. Il existe enfin des Etats où les possibilities de développe- ment économique dépassent considérablement les réserves en main d'oeuvre. et qui ne peuvent donc pleinement employer leur potential productif que gråce à un apport de main d'oeuvre étrangère. On ne sanrait pour ces pays estimer quo le plein emploi est réalisé au moment où la botalité de la main d'oeuvre indigéne est pleinement employée. 53680 (34) 173 -The economic development of those nations is often thwarted, moreover. and especially since the war and enemy occupation, by an insufficiency of industrial plant and raw materials. The policy of full employment must aim, at patting at their disposal more abundant labour and more elaborate plant which, by allowing them to develop their production possibilities and increase their national income. will greatly serve the cause of inter- national trade. But it will only succeed if the two aims defined above are pursued. Certainly improvement in technique will diminish the need for labour, but often not so much as to allow those States to dispense with foreign labour. Therefore, in a word, we consider that for them the policy of full employment must not be limited to assuring full employment for domestic labour but also full em- ployment of their production potential and their economic possibilities. The policy of full employment, as we have just defined it, possesses therefore, a general significance. It implies in countries a policy of increasing national income and redistributing purchasing power in favour of the working classes. It also necessitates a redistribution of purchasing power among the various nations of the world, between the rich nations and the poor nations. A whole system of international loans should be contemplated. However. these loans, rationally conceived, should not result ulti- mately in subjecting the economy of countries economically weaker to that of countries possessing great industrial and financial power. We consider that for countries economically backward or weakened by the War and occupation, it is indis- pensable, if the policy of full employment is to be assured. to give a very wide application to the transitional period clause and to allow them to use quantitative and dis- criminatory protective methods (including qualitative discriminations), until they can compete on an equal footing with their most favoured rivals. In fact. the imposition on their economies of the tempo of industrialisation and reconstruction necessary for this purpose, cannot be contemplated without their being allowed to use methods of directed economy and planned organization. Any method based exclusively on freedom of trade. market operations and monetary demand cannot assure for those countries the priority of social needs. The very recognition of the necessity of a transitional period proves that the most convinced supporters of a return to the methods of economic liberalism understand that the complete application of their doctrine would in practice result in catastrophe. In fact, there are too many countries where are- nunciation of the practices of planned economy would quickly lead to an aggravation of the disequilibrium in their balance of payments, to a reduction in effective demand on foreign markets and to the impossibility of putting into practice the policy of full employment. Finally, the .planned and co-ordinated development of countries which, through insufficiency of their wealth and the poverty of their economy, must by specific methods, makce it possible for theselves to apply a system of larg-scale production, will be irreducibly. compromised. If the -measures proposed to the Conference are not moodi- fied, those countries would be no longer able to re-organize rationally their production structure. : In short we believe that a country is ina transitional period as long as it remains in a position-manifestly inferior to that enjoyed by i s-most favour d-competito,s. as lon - as there exist -between its economic thecnique and potential and those tffhe most favoured nations a gap the bringing of which must be the main objective of the economic policy of-the state in a transitional period. A state must Therefore be ia position to accelerate the ythmhy-o - ts. conomic development - by ' opting measures of economic control. i: however, of primary importance to nce tknow whether ries in a i inperiod nsitional penod should in fact relinquish a part ofsovereigntynomic s oereigns. ée divelopement 6conomique de ceus nations se trove ié,uvent contzarid, en outre, et surtout depuis la guerre et l'occupation ennemie, par une insuffisance d'outillage remié matures premi6res. La politique de plein emploi doit se donner pouràbut de mettre & leur disposition une main d'oeuvre plus abondante et un outillage plus per- fectioune qui. leur éermettant de d6velopper leurs pos- sibilitds de production et d'accroltre leur revenu national, serviront puissamment la cause du commerce international. Mais elle àela rfussira qu' condition de poursuivre les deux bués cé-dessus precisis. L'amslioration de in technique diminuera. certes, les besoins de main d'oeuvre, mais solvent pas dans une measure te~le que ces Etats puissent se passer de la main é'oeuvre etrangere. Nnus estimons doac, en un mot, que pour eux la poli- tique du plein emploi ne doitàpas sa borner & assurer le plein employ de la mainéd'oeuvre indigine, mais encore le plein emploi de leur potential de production et de léursépossibilities 6conomiques. La politique du plein emploi, ainsi que nous venons de la - dèterminer. possedé doécèune portde gendrale. Elle' inplique, dans les pays,d'augmentation d'augmentation du revenue national et de redistribution du pouvoir d'achat en faveur des classes laboéieuses. élle n6cessite dgale- ment une redistribution du pouvoir d'achat entre les differentes nations du globe, entre les nations riches et les nations pauvreè. Tout uê systeme de prdts inter- natêonauW devraét etre envisage. Têutefois ces prets, conaus de fason rationelle, ne doivent pas aboutir en fin de comupte é assujettir l'ecoéomie des pays economique- menà plès paibles & I'dconomié des pays possedant une grande puissance industriélle et financiere. Nous estimons qua éour les pays iconomiquement arrieres ou aflaiblis du fait de la guerre et de l'occupation, il est indispensable, pour assurer la politique du plein emploi. de fair jouer tres largement la clause dite de lapdriode de transition et de leur permettìre de se servir de mdthodes de protection quadiscrimina-is discrimina- toires (discriminatinosiscriminations qjusqu'auves), jusqu'au moment o ils pourront lutter sér un éied d'dgalit6 avec leurs riveaux leséplus favorisds. On ne peut en éffet songeé i imprémer i leurs Economies ndustrialisationtrialisation et de reconstruction necessaire i cet effet, san leur permettre de se servir des éinthodes. d'iéonomie dirigte et d'orgaée.ation plane. Touteémethode ìasie exclusivement sér la liberty de .rans éctions le mfcaniém e du march et la demande monsaurait ne sauraàt assurer i ces payséla primaute des besoins sociaux. La reconêaissance méme de éa nfcessét6 d'une poriode de transition prouve que les partisans les plus convaincus du rétour aux m6thédes dumlib6ralisne economique comprenneat que l'applégra3tion inteale de leur doctrine aboutirait pràtiquement a la catastrophe. Trop nombreux sont, en effet, les pays pour lesquels la renonciation aux pratéques de I'.conomiéue dirigde conduirait àapidement h l'aggraévétion du dsesquilibre de la balance deà compées, a la reduction de la demande effective sué les éarchds extàrieurs et & l'ièpossibilite de prz tiquer phe eex lapolitique du plein emploi. Eénfin, le dveloppement plan eé coordoane des pays qui, par l'insuffisance de leur richesse etél'exiguite de leur &conomie, doivent, par des méthodes spkcifiques, s'assurer la éossibility d'un mode de production massif, sera irreductiblement compromis. Si les mesures proposes la Conference ne se trouvent épas modifies, ces pays ne serontéplus enéodtat de rrationnellementnnellement leur structure de production. En rdsumed, nous pensons qu'un pays se trouve dans eune pdriodtansition aussi longtemps qu'il esét en dtat d'infuéioritd manifestà-vvis-&.is de ses concsurrent les plus fèvorisds, aussi longtemps qu'entre sa technique et son poteétial 6conomique et ceux des pays lss plu$ févorisds, il eiisée un ecartque la poliéique economique de l'Etaé en p6riode de transition doit se donner pjectoblet essential de combler. Un Etat doit donc par ées mrthodes d'6conomie éirigde avoir la possiéility de douner ine cadence accélérée d*er au kythmeéde divelopp ementde son economie.-: Toutefois, il est absopument 2rimoridal de savoir si les pays se trouv ant 'enpeeiode do trandevrontOevront en rdalitd sesir essair én éatier'dconomique d'une partie de urveraineté.inete. . . * . * It is for this reason that we asked Committee II to de- cide upon a body capable. if need be, of determining whether a country be in a transitional period, to what extent such a country should enjoy waiving rights and when it should cease to do so. A satisfactory reply has yet to be given to these questions. For our part, we cannot accept a position in which subordinate organs of the ITO or other similar bodies can settle matters for themselves and decide whether or not the measures taken by States are a necessary part of the full employment policy which those states have decided to adopt. On the basis of those considerations, the WFTU is of the opinion that: (I) the guaranteeing of full employment must be the primary consideration. (2) the body set up to carry out this policy should occupy a position of greater importance than that of the specialized monetary and banking agencies, who should adapt their policies to comply with that of the former body. (3) the structure of this body should be such that it could never be accused of sacrificing the interests of countries economically weak to those of the countries economically and financially the most powerful. (4) the Statutes and Charter to be adopted by the FHO must be sufficiently broad and flexible to make them easily acceptable to countries of the most di- vergent economic structures, thereby avoiding the danger of the formation of mutually antagonistic economic blocs. The relations between Member states of the ITO and non-Members should be clearly defined, as should the methods which the ITO intends to use to secure the adherence of countries which have not yet joined the organization. If it is hoped to achieve this by means of sanctions and penalties, the way chosen seems to us to be fraught with danger. Such a method, far from making for normal international economic relations, would in the end result in the creation of the blocs and a state of even greater tension. The solutions advocated by the ITO to achieve full employment must be sufficiently realistic and constructive in character to forestall deflationary crises of under- consumption and not merely to mitigate or localise them. Once a major crisis has developed it is very difficult to localize it and to avoid its spreading across the world. This second task, however, much easier than the first it may appear, is in fact one of the hardest to accom- plish because of the difficulties inherent in the reversal of commercial trends. Since this question is of the almost importance, I must repeat once more: A distinction must be drawn between a policy of ward- ing off crises by means of a policy of full employment as we have defined it. and a policy aiming solely at initi- gating the effects of crises, which would, in our opinion, be a far less efficacious policy and, in spite of appear- ances, one far more difficult to apply. The WFTU believes that the methods at the disposal of the International Monetary Fund to forestall or mini- mize the effects of depressions and economic disturbances cannot prove sufficiently effective, since (a) the prohibition of the export of capital is likely to prove an illusion unless it is accompanied by control of current accounts; (b) devaluation carried out in a period of under- consumption of a deflationary character cannot be con- sidered a sufficiently effective measure; (c) the establishment of restrictions with regard to so-called rare currencies is likely to be-the more belated in view of the fact that rarety of the currencies in question can be determined only after the actual arrival - of the crisis and the spreading in ever-widening circles of diminishing effective demand. As we have already noted. a sudden reversal of com- mercial trends encounters very serious difficulties. C'est pourquoi. nous avons demandé a la Deuxiéme Commission la détermination de l'organisme éventuellement à mème de décider si un pays so trouve dans une période de transition, dans quelle measure ce pays pourra bénéficier de mesures de dérogation, à quel moment il devra cesser de le faire. Jusque là ces questions sont restées sans réponse satis- faisante. Il nous paraft inacceptable, puant à nous, que des organismes issus de l'I.T.O. ou d'autres organismes similaires puissent trancher a eux seuls et décréter si les mesures prises par les Etats sont oui ou non, rendues nécessaires par la politique de plein emploi que ces Etats sont décidées a appliquer. Partant de ces considerations la Fédération Syndicale Mondiale estime que: (I) la préoccupation d'assurer le plein emploi doit avoir le pas sur toutes les autres; (2) l'organisme destiné à assurer cette politique doit avoir une importance plus grande que les organismes monétaires et bancaires spécialisés, lesquels devraient adapter leur politique à celle de cet organisme; (3) la structure de cet organisme devra étre telle que l'on ne puisse lui reprocher de sacrifier les intéréts des nations économiquement faibles à ceux des nations éonomiquement et financiérement les plus puissantes; (4) les statuts et la Charte de l'I.T.O. qui seront adoptés doivent ètre suffisament souples et larges pour que les pays à structures les plus diverses puissent y adhérer avec facilité et que de cette façon soit écarté le danger de la constitution de deux blocs économiques antagonistes. I1 faudrait établir avec précision quels seront les rapports entre les pays membres de l'organisation internationale de l'I.T.O. et les pays qui n'en feront pas partie et de quelles méthodes compte se servir l'I.T.O. pour attirer dans son sein les pays qui jusque I& n'en font pas partie. Si c'est par des sanctions et des pinalisations qu'on espere arriver a ce resultat, la voie choisie nous paralt infiniment dangereuse. Au lieu d'aboutir a la normalisation des rap- ports economiques internationaux. elle aboutirait en fin de compte A la creation de deux blocs et a une tension encore plus grande. Les solutions preconisdes par l'I.T.O. en vue de. rdaliser- le plein emploi doivent 6tre suffisammentrdalistes et con- structives pour que les crises de sous-consommation a cara- tere deflationniste puissent etre pr6venues et non attenuees ou localisies. 'II est en effet tr~s difficile. une fois une crise primaira survenue de la localiser et d'dviter sa propagation A travers' le monde. Cette deuxieme tice, pour plus aisde qu'eIl apparaisse, est en r&alit6 des plus difficiles a cause des: dZfflcaltds inhrentes aux renaversements des courants com,- merciaux. Je r6pbte encore une fois parce que cette question revet une grande importance: .1 II faut dtablir une difference entre une politique de' prevention des crises grAce a une politique de plein employ; telle que nous venouss de la d6finir et une politique visant uniquement A attEnuer les effets des crises, politique A? note avis beaucoup moins operante et, en depit des appar-" ences, beaucoup plus difficile A appliquer. La Federation Syndicale Mondiale estime qua les. mEithodes dont pent se servir le fonds monetaire inter- national pour prevenir on attEnuer les dEpressions et per- turbations economiques ne peuvent s'averer suffisamment efficaces. parce que (a) l'interdiction d'exportation des capitaux risque de "s'avrer illusoire si die n'est pas accompagnEe du! con- tr6le des rzglements courants; (b) la dvaluation effectue dans une periode de sous- consommation A caractre dEflationniste ne saurait etre' considerde come suffisamment efficace; ' (c) pour ce. qui est des restrictions etablies au regard des devises soi-disant rares, leur Etablissement rsque d'etre d'autant plus tardif que la raretE des devises con- siddr~es pent n'etre constatde qu'apres survenance effc- tive de la crise et de .1a propagation par ondes de.ia contraction de Ia demanded effective. Un renversement ;rapide des courants cOmMzCIanX sO heurte a des difficultds trEs sdrieuses, ainsi que nous l'avons ddjA remarqu6. 1$ - The WIFTU wishes also to emphasize that all measures will prove dangerously ineffective if the nations whose financial power is greatest and whose influence prepon- derates in world economy do not carry out a consistent full employment policy based on a redistribution of pur- chasing power in favour of the working classes at home and do not practise abroad a broad policy of international lending and at the same time throw open their markets to the products of debtor nations. The WFTU draws the attention of the Conference to the fact that world peace and prosperity depend primarily on its reaching a solution along really international lines of the problems facing it and in particular of the problem of full employment. I As you are aware, we put to the Preparatory Com- lmittee of the Conference on Trade and Employment a series of questions to which we have had no reply. - We believe that the sessions to be held in New York and Geneva will provide us with more detailed information on all the points which are our special concern and that the bringing together of our respective points of view will be rimh in results. * The CHAIRMAN (Interpretaaion): I thank Mr. Duret for his statement. We shall now resume this series of statements of Delegations, and I shall call upon Mr. Dimechkie, the Delegate for Lebanon. Mr. DIMECHKIE (Lebanon): Mr. Chairman, it was a great honour for us to take part in this Preparatory Committee, and we feel sure that our deliberations here will have a very favourable effect on the economic well- being of the nations and will bring about closer under- standing and cooperation amongst the peoples of the world. Economic strife has always been at the basis of international misunderstandings. Therefore, if our work here has contributed to the amelioration of trade reia- tions and the elimination of economic friction we shall indeed have played an important part in laying one of the main foundations of world peace. t am sure that the purposes that the Organization ba- ;et out in the suggested Charter are in the hearts of all the peopIes' of the' world. Our meeting here was held mainly to discuss the best means of attaining these ends- in other words, to discuss what sort of an Organization we should -establish to help us realize our at Here we have met delegates from different parts of thb world. Stome of us come from highly industrialized court. -tries., others from the war devastated countries of Europe And Asia. others again from countries which are still a the early stages of economic development. We are all met to achieve a higher and fuller state of productive employ.. anent and an increase in the volume of international trade and a higher standard of living for all nations. Naturaly, onr work was not always without difficulties, difficulties arisig from the very different problems which our coun- tries face. Most of these difficulties, however, have been .sunnounted, and dispute the problems that still have to be settled we feel-sure that before long we shall have a ' strong and healthy Organization. fulfilling most effectively the important purposes for which it has been established. but anOrganization which the world very badly needs. '- In ~conclusior the Lebanese delegation would like to offer their thank to you. Mr. Chairman, for the wise guidance you.have- given. to the United States delegation f for preparing the, Charter. to the -United Kingdom for their hospitality, and to the Executive Secretary and the Secretariat for their very efficient work. :The- CHAIRBN . (Inlerpretat): I thank Mr. Dimechlkie for his statement, and I now'call upon Mr. Speekenbrink, the Chief.Delegate for the Netherlands. Mr.- SPEEEBRN (Netherlands): Mr. Chaiima - on the whole, I think I may say we have reason to be content with-the progress made- at this Conference. All of us have contributed to the setting up of constructive rules aiming at the expansion of world trade and employ- ment. this being the principal idea underlying our task. If we have kept to tht leading principle, we have at the same time 'not lit sight of the responsibilities of national requirements and, in doing so, we have had to make certain reservations. These reservations, however, may-be said to have been kept within reasonable bounds. La Federation Syndicale Mondiale tient aussi souligner que touts les mesures s'avereront fatalement iiefficaces si les nations dont le poids specifique au sein de 'dconomie mondiale est le plus considerable et la puissance financicre la plus forte, no pratiquent pas de maniere consdquente une politique de plein emploi basee a l'int~rieur sur la redistribution du pouvoir d'achat en faveur des couches laborieuses et n'appliquent pas a l'exterieur une large politique de preets internationaux. tout en ouvrant tre largement leur march aux products des pays debiteurs. La Federation Syndicale Mondiale attire l'attention de la Confdrence sur l'importance primordiale pour la pros- pdrite et la paix du monde, d'une solution dans un esprit vraunent international des problems qui lui ont et6 soumis, et particulierement de celui du plein employ. Comme- vous avez pu le constater, nous avons posd & ha Conference Preparatoire du Commerce et de 1' mploi une strie de questions auxquelles la r6ponse nc nous a pas ets donnde. Nous pensons que les sessions qui auront lieu a Genave et & New-York nous fourniront davantage de prkcisions sur l'ensemble des points qui nous prdoccupent et que il confrontation de nos conceptions respectives aura des resultats f6conds. Le PRESIDENT: Je remercie M. Duret de son expos. Je done la parole A M. Dimechlie, Deldgu6 du Liban. M. DDdECH1IE (Liban): (Traduction) Monsieur le President, Nous avons ea le grand honneur de prendre part aux travaux de cette Commission Pr6paratoire. Nous avons la conviction que ses delibbrations auront pour le bien-frre economique des nations les effets les plus favo- rables et aboutiront a une comprehension et a une coop~ra- tion plus 6troites entre les peuples du monde. La lutte 6conomique a toujours ete la source de m6sententes entre les nations. Aussi. dans la mesure oa nos travaux ont contribute a l'amndlioration des relations commercials et i la suppression des ddsaccords economiques. nous aurons effectivemeat jowl un r6le important dans l'6tablissement de l'un des fondements essentials de la Paix mondiale. je suis certain que les objectifs assigns par le projet de Carte A l'Organisation repondent aux aspirations de tos les peuples du monde. Vest surtout pour discuter de. inoyens ies plus approprits d'atteindre ces objectifs-e. a'autres terms. pour rechercher quelle sorte d'organisatiou nous devons etablir pour atteindre plus aistiment nos buts -que nous nous sommes reunis id. Nous avons rencontre ici des ddleques venus des dit- fIrentes parties du monde. Les uns appartiennent A de. pays fortement industrialists, d'autres a pays devastes paz la guerre, d' autres enfin a des pays dont le developpement economique est encore a ses debuts. Tous, nous nous sommes rbunis pour realiser le relevement et ia plenitude de lemploi productif, .l'accroissement du volume des changes internationaux, et l'6elevation des niveaux de vie dans tous les pays. fl va sans dire que nos travaux u'ont pas -ete sans difficulttds-dillicultes dues aux diferents problemes que nos pays ont a affronter. Cependant, la plupart d'entre elles oat ett surmoont6es, et malgr6 les problnemes qui restent encore a resoudre, nos sommes curtains que nous aurons bient6t une organisation solide et saine qui remplira de la maniere la plus efficace les importantes t~ches pourlesquelles elle aura et6 etablie, sne Organisation dont le monde ressent si durement le besoi. En terminant la. deildgation libanaise voudrait exprimer ses remerciements a vous, Monsieur le Prisident, pour. la sagesse avec laquelle vous avez dirige nos travaux, a la delegation des Etats-Unis pour ltilaboration du Projet de Charte, an Royauume-Uni pour son hospitality, ainsi qu'au Secretaire exticutif et aU Secritariat pour le concours si efficace qu-ils nous ont apporte. Le PRESIDENT: Je remercie M. -Dimechkie de son expose. Je donne la parole a M. Speekenbrink, Premier Ddldgu6 des Pays-Bas. M. SPEENBEINK (Pays-Bas) (Traduction): Mon- sieur le PRESIDENT, J'ai limprsson que danq l'ensemble nous avons des raisons de nous declarer satis- faite des progres r6alisds au course de cette Conference. Chacun de nous a contribute A l'ilaboration de regles con- structives pour le developpement du commerce et de l'emploi dans le monde, car telle a dtt l'idde directrice de nos travaux. Tout en nous en tenant a ce pincipe directeur, nous n'avons du en garde, en mane temps, dv, perdre de vue les responsabilitts qua nous imposent lks besoins de nos pays respective, et ceci nous a obbigt i cortaines reserves. Mais ces rres, peut-on dire, 'ont pas depassd des limites raisonnables. 176 As a result of all this we may confidently look forward to the next step on our road, but in the case of the Netherlands there are two important points which I have to mention The first point concerns the position of Germany and the second refers to the structure of the Kingdom. Whilst the Netherlands Delegation have wholeheartedly worked together with all other delegates round this table. to arrive at a draft charter aiming at expansion of inter- national trade, at the same time the Netherlands are faced with, next-door factors involving a serious con- traction of international trade, which set special problems to our economy. The very vital importance which the mid-European hinterland has always had for the Netherlands economy is a well known fact. I do not intend to go into details, but I think it necessary to recall here and now that, as matters stand, our economy is in danger of being made subject to an amputation it could scarcely be ex- pected to survive. Cutting off our close economic rela- tions with Germany, isolating German economy and basing its financing on a currency alien to that country, does concern the development of trade in Europe and there- fore our work. For it is clear that such a policy would greatly hamper our possibilities to take part in international trade to our full capacity. What are the Dutch ports going to do if trade should be diverted from its natural routes? What are we going to do with the export- surpluses of our agricultural production, in which through- out the years that lie behind us enormous amounts of capital have been invested, and in which about 25 per cent. oo our population find a living, if traditional con- sumers of major importance, are lost to us?. These are just a few examples of the many questions which are being raised now in my country in this respect and are of grave concern to us. I shall not dwell further on this at present most unsatis- factory situation which at least has a very direct bearing on the transitional period which the Netherlands have to go though. Thus I now ask you attention for the problems my country has to face with regard to anticipated changes in the structure of the Kingdom itself. Here the situation is not yet quite clear, but, on the other hand. I can state that considerable progress appears to have been made in a conference at Batavia where an understanding has been reached on a draft agreement which is being submitted to the parties concerned and may serve as the basis for developing, under the Crown, the future constitutional and other relations between the component parts of the Kingdom in Europe, in Asia and in the Western Hemisphere. In due course we, therefore, will have to consider in which manner the different parts of the Kingdom will adhere to the plans which have been worked out at this Conference. Mr. Chairman, I brought to the notice of all members of this Conference two points of great importance to my country, and, having done this, I think I might be allowed to make, very briefly a few additional observations with a direct bearing on the result of the Conference. The first remark is that the draft Charter as it stands contains a number of what are sometimes called " Escape Clauses." These Escape Clauses, however, have been drafted by various Committees or Sub-Committees or Rapperteurs with the result that the wording is far from being uniform. No doubt the Drafting Committee will see to it that clauses of this kind, the interpretation of which may some day become very important, are worded in carefully chosen terms that are as closely uniform as will prove to be possible. The second observation is that we have an important chapter dealing with Commodities, but it may be that, owing perhaps to pressure of work, our present draft and the sequence of its clauses are not entirely satisfactory from a point of logic. I would like to suggest that there is a very close relation between commodity policy and commodity arrangements, but commodity policy has been dealt with in various clauses of our chapters than the Commodity Agreements. It might prove very useful Dés lors, nous pouvons en toute confiance envisager notre prochaine étape: mais toutefois, en ce qui concerne les Pays-Bas, il est deux points importants que je dois mentionner. Le premier se rapporte à I'attitude de l 'Allemagne, et le second à la structure meme do notre Royaume. Tandis que la délégation des Pays-Bas, ainsi que tous les autres délegués réunis autour de cette table, a travaiIIé de tout coeuràà l'élaboration d'un projet de Charte con- sacré au dévelopment du commerce international, les Pays-Bas doivent tenir compete, dans leur proche voisin- age, de facteurs qui tendent à provoquer une sérieuse diminution des éxchanges et qui mettent notre économie devant des problèms spéciaux. L'importance que l'Europe Centrale a toujours présentée pour I'économie des Pas-Bas en tant qu'hinterland, est un fait bien connu. Je n'ai nullement l'intention d'entrer dans les détails, mais je crois utile de rappeler ici que, dans l'état actuel des choses, notre économie risque de subir une amputation qui peut avoir des consequences mortelles. Une politique qui a pour résultat' de rompre nos relations économiques étroites avec l'Allemagne, d'isoler 1'économie allemande et de fair repose son système de crédit: sur ur-i monnaie étrangère touche de près le développement du commerce en Europe et par consé- quent les travaux de cette Conférence. Car il est clair qu'une politique de ce genre affecterait sérieusement les chances que noua aurions de prendre part au commerce international dans la mesure do nor capacités. Que feront les ports hollandais si le commerce est détourné de ses voies naturelles? Que ferons-nous. de l'excédent de notre pro- duction agricole où, au cours des années passées, ont été investis d'éhormes capitaux et qui subvient aux besoins d'environ un quart de notre population, si ceux qui ont ete traditionnellement nos principaux consommateurs, noun sont retirés? Ce ne sont là que quelques exemples des nombreuses questions actuellement soulevées dans mon pays à ce sujet, et qui y donnent lieu à de graves préoccupations. Je ne m'attarderai pas plus longuement sur cette situa- tion, actuellement si peu satisfaisante, et dont le moins qu'on puisse dire, est qu'elle affecte de do la mamèro la plus directe la période de transition par laquelle les Pays-Bas doivent passer en ce moment. J'attirerai plutot votre attention sur les problèmes qui so posent à mon pays à propos des changements attendus d'ici peu dans la structure du Royaume lui-même. Ici, la situation nest pas encore très claire, mais d'autre part, je puis vous dire que des progrès considérables semblent avoir été accomplis à la Conference de Batavia oû I'on s'est mis d'accord sur la rédaction d'un projet soumis a l'examen des parties intéressées et sur lequel pourra se fonder le développement futur, sous l'empire de la Couronne, de relations, constiutionnelles et autres, entre les parties constituantes du Royaume, en Europe, en Asie et dans l'hémisphère occidental. C'est pourquoi nous devrons en temps opportun, étudier les modalités selon lesquelles les différentes parties du Royaume adhéeront aux plans qui ont été tracés par cette Conférence. M. le Président, je viens de signaler à l'attention de tous les membres de cette conférence deux points qui sont pour mon pays de la plus haute importance, et je crois maintenant pouvoir faire brièvement quelques observa- tions compIémentaires portant directement sur les résultats de la Conférence. Je ferai remarquer en premier lieu, que sous sa forme actuelle, le projet de Charte contient un certain nombre de clauses parfois, appeléees ",de snuvegarde." Or, ces clauses de sauvegarde ontéeée é6diéfes par diverse s com- missions ou divers comiées ou rapporteurs,cer qui fait que leur texte est loin dê6tre uniforme; L -Comié - e éedac- tion veillera sars aucun douteà& cc que les clauses de l'esèec,. dontl'mniterpértation peut devenir un jour tèrs ièmportae,t, soienté edéèges en de. termchsloisis avec soin. et aussi uniforsme que possible.' Je ferai observer, en seco ndlieu, qilu' y a danas-nos textes un chapitre important traitant des proiduts de ba,se mais qu'il pout sea fire q;uà e cau se pe-êuttre e'lhateto de notre travail, notre projet actue ' l' lordrd ans lequel ces clauses noat dispos,s. ne soientap s' enèierement satis- faisants du point dv *ue dla'lo1igieud. eJ 'voudrias signaler qu'il exis ed un rapport èreé 6trdit enter --poli- tique en maèisre de produits de base et les accords relatifs a ces produits, mais que cette politique é ét6 traétee dass I77 indeed if the Drafting Committee should look into the possi- bility of an alternative draft with regard to primary com- modities in which matters relating to commodity policy would constitute one single chapter together with the Commodity Arrangements. In this respect I cannot help thinking of the Washington Conference of the FAO because this. suggestion might facilitate the coordination Of--lTO, FAO and possibly other specilised agencies on such very important matters of commodity policy. Likewise there is the question of the intricate system by which,. since 1930, we have been compelled to conduct our affairs to safeguard vital interests of our agriculture. I submitted particulars of this system to several delegates who played an important part in the drafting of the articles regarding quantitative restrictions, state trading and subsidies. Time has been too short to reach definite conclusions in this respect, but I am confident that further study will prove that it is entirely consistent with the purposes of the draft Charter. The work of the Committee on Employment I think of special importance, so that I may say a word of apprecia- tion on it and express the hope that the Resolution we have agreed upon will soon be forwarded to the Economic and Social Council, in order to enable this Council to undertake the studies which are deemed desirable. The Netherlands Delegation also are in full agreement with the inclusion of a new chapter on Economic Development, which they consider an important addition to the purposes of the ITO. As a concluding remark, Mr. Chaiman, I should also like to draw your attention to the Joint Statement which our French and Belgian friends and ourselves have sub- mitted with regard to the possibility of appeal to an Economic Chamber of the International Court of Justice frorn decisions of the ITO. We feel that such a step is indispensable if the. proposed Organization is to be a success. Thank you, Mr. Chairman. . The CHAIRMAN (Interpretation): I should like to thank Mr: Speekenbrink for his remarks. I now call upon Mr. Johnsen, the Chief Delegate for New Zealand. Mr. JOHNSEN (New Zealand): Mr. Chairman, on behalf of the New Zealand Delegation, may I say how pleased we have been to participate in this Conference? We share with others the view that nothing but good can come from a meeting such as this, attended by re- presentatives of so many nations having so wide an interest in world trade and attendant problems. It is only through the exchange. of ideas and informa- tion. legarding the problems affecting, our particular countries, such as we have had at this Conference that it is possible to see how far it is practicable to determine a common set of rules which might form the basis on which world trade policy might be conducted. The dis- cussions which we have had should assuredly go far to- wards reaching that objective. It is clear that there is common recognition of the necessity for development of economic resources as a means of providing employment and of raising standards of living, thereby Icading to an expansion of international trade. The reports of this Concerence will provide a useful basis for further study of this very important and interest- ing subject, not only by the countries which have been represented at the Conference, but by all countries having an interest in world trade. We hope that the good work which we have commenced at this preliminary meeting will he carried further at the next session of the Committee, May I say in conclusion how couch personal pleasure the New Zealand Delegation have derived in being associated with the representatives of other countries in this task to which our respective countries have attached themselves in the interests of the world as a whole? We have been impressed most deeply by the spirit of goodwill which has existed right throughout the Conference and we are certain that the friendships made will endure for a long time. diverses clauses de chapitres qui ne traitent pas des accords sur les produits de base. It pourrait étre fort utile en consequence que le Comité de Redaction envisage la possi- bilité d'élaborer un nouveau projet de texte sur les pro- duits de base essentiels, dans sequel les questions rela- tives a la politique des produits de base constitueraieut avec les accords sur les produits de base un chapitre unique. A cet égard. je ne puis m'empdcher de songer a la Conference de Washington de l'Organisation pour I'Alimentation et l'Agriculture, car ma suggestion pour- rait faciliter, entre l'O.I.C., l'Organisation pour l'Alimen- tation et l'Agriculture et peut-ètre d'autres institutions spécialisées, la coordination relative a des aspects si im- portants de la politique des produits de base. 11 y a de meme la question du systeme de stabilisa- tion, auquel les Pays Bas ont dû recourir depuis 1930. pour sauvegarder les intérêts vitaux de leur agriculture. J 'ai soumis des details de ce régime à plusieurs délégues qui ont joué un rôle important dans la rédaction des Articles relatifs aux restrictions quantitatives. au com- merce d'Etat et aux subventions. Le temps a fait défaut pour nous permettre d'arriver sur ce point a des conclu- sions definitives, mais je suis convaincu qu'une étude plus approfondie montrera que système est parfaitemnent conciliable avec les buts que se propose le project de Charte. Les travaux de la Commission de l'Emploi sont. je pense, d'une importance spéciale. Je tiens donc à dire combien. j'en apprécie ses travaux, et i. exprimer l'espoir que la resolution que nous avons adopted. sera transmise à bref delai au Conseil economique et social, afin de lui permettre d'entreprendre les études jugées opportunes. La Déléga- tion des Pays Bas est en outre complètement d'accord sur l'insertion d'un nouveau chapitre traitant du dEvelop- pement économique et consider cette addition comme une contribution importante aux buts poursuivis par l'O.I.C. Je voudrais enfin, M. le President. attirer votre atten- tion sur la declaration commune que nos amis français. belges et luxembourgeois, ainsi que nous-meêmes, avons soumise, sur la possibilité d'appeler des décisions de l'O.l C. à une Chambre Economique de la Cour de justice Internationale. Nous considérons ce recours comme in- dispensable si l'on veut que la future Organisation reussise dans l'accomplissement de sa tache. Je vous remercie de m'avoir accorded votre attention. Le PRESIDENT: Je remercie M. Speekenbrink pour son exposé. Je done la parole a Mi. Johnsen. Premier Délégué de la Nouvelle Zélande. .M. JOHNSEN (Nouvelle Zélande) (Traduction): Monsieur le PRESIDENT, Je voudrais dire au nom de la délégation de la Nouvelle Zélande combien nous avons été heureux de participer à cette conférence. Nous sommes convaincus qu'une réunion de ce genre, à laquelle parti- cipent des representants de tant de nations intéressées au plus haut point au commerce mondial et aux problèmes qui s'y rapportent, ne neut aboutir qu'à des résultats heureux. Seuls des échanges de vues et d'informations tels que nous les avons eus au cours de conférence au sujett des probèmes squi affectent nos pay,. permettent de viwr dans quelle measure il est possible déetablir uneserrie de èfgles communes susceptibles de constituer la base d'une politique commerciale mondiale. Les discussions que nous avons enes nous permettront df airee de grands progèfs dansce sen On s'acsccde - Aeconnannaftre la nécessité divéloppement des ressources Ecénomiques pour assurer l'emploi et pour dlévxrere niveau de vie. ce qui entrainerait expansion du commerce international. Les rapports de cette conference constitueront une documentatiruontile pour les tèétud ultiréeqres de cc erpblemètrisèimportant et interéssant. non scueument pour les pays qui ont eécéreprEsénte és cette confErénce, mais pour tous les pays qui sont introéresséa commerce mondial. Nous espdréns que l'oeuvre utile que nous avons com- menceeéau cours de - cette reunion priméliminaire s poursuivie par la Commission dans sa prochaine session. Pour conclure, j'aimerais dire conbimn en dalgétégat no-zéo-aédaise a eteétéureuse de colcollaborer avec les repr sentants d'dutres pays A00 cee tiàhe, a laquelle se sont vouesénoS says respectifs, dans l'interétédu monde eaener. Nous avons &té érofonddmént impressioannsépar la borwnu volontE0 qu s'est manifest~0pendant toute la durné de la conf~éeane et sommesscertains que les amiti6é nouis dureront. The CHAIRMAN (Interpretation): I should like to thank Mr. Johnsen. Now I call upon Mr. Colban. the Delegate for Norway. Mr. COLBAN (Norway): Mr. Chairman, I believe-as those who have spoken before me-that we may congratu- late ourselves upon the results to which we have provision- ally arrived during our six weeks of strenuous work. The excellent spirit and cordial atmosphere which have existed between the delegations have certainly greatly contributed towards this. We realise that such results as we have been able to reach are not final and as yet not binding upon our govern- ments. The No wegian Delegation has made certain reservations and has expressed doubts as to whether Sertain texts are really the proper means of realising our common purpose. But, in spite of our reservations and doubts. we consider that what has been achieved here in London constitutes a valuable step forward. The idea which we have come together to try to bring nearer to its realization has in fact taken more concrete form in our minds and the texts which we have worked out represent a marked advance on anything we have had up to now. I trust we shall succeed. Because we have the will to succeed. The difficulties still not yet overcome must be studied further in the spirit of the most determined desire to solve them through mutual concessions-con- cessions which should result in bringing about a state of affairs such that every one of us may find that. after all what now are looked upon as concessions do not really imply a sacrifice but rather a contribution to the vast construction of satisfactory world trade and satisfactory employment conditions. I for one believe in full confidence that we all will be better off after the successful termination of our labours -next summer and autumn. I need not emphasize the importance of economic stability and wellbeing for the political stability and wellbeing of all countries. We are all of us decided to go ahead with determination. We are all of us decided to be frank and sincere in the defence of the particular interests of our own countries. I think we may promise to examine all outstanding problems with the calrr and inexcitable mind of wise men. We are in for something that is the immediate concern not of governments only but of all mankind. We need support of public opinion in all countries. I nave had pleasure in noting the keen interest which not only other public international bodies but also the International Chamber of Commerce and the World Federation of Trade Unions have shown in our work. It will be a great h-p in the furtherance of our task that these and other inter- national organisations are willing to assist us through direct contact and also, and mainly, through the influence that they. each in their separate fields. may be able to exercise on public opinion and in the counsels of governments. The CHAIRMAN (Interpretation): I would like to thank the Delegate of Norway and I now call upon Mr. van der Post. Delegate for the Union of South Africa. Mr. VAN DER Fi ST (South Africa): Mr. Chairman, on behalf of the Delegation of the Union of South Africa. I wish to express our pleasure at having been associated with colleagues from seventeen other countries and with the Members of the Secretariat in the interesting and very useful discussions of the past six weeks. Unfortunately our ship has had to change Captain several times. but as Third Pilot in charge I am pleased that we have been one of the convoy now approaching port. The convoy has enjoyed sunshine and good weather. but. as is to be expected by those who brave the seas, it has also had to traverse troubled waters and at times has sailed under cloudy skies, That there should have been collinons and that all of us perhaps have some sc is not surprising; but, despite all difficulties, we are pleased that the convoy has weathered such stormy seas as it may have experienced and is now ready to drop anchor at its first port of call. If we exclude the Economic Conference of 1933, this Conference represents-certainly in this post-war era-the first great attempt on the part of a comparatively large 536Co 34) Le PRESIDENT: Je reniercie M. Johnsen pour son exposé. Je donne in parole á M. Colban, Délégué de la Norvège. M. COLBAN (Norvège) (Traduction): M. le PRESI- DENT. De même que ceux qui ont pris la parole avant moi, je crois que nous avons lieu de nous féliciter des résultats auxquels nous sommes provisoirement arrives pendant nos six semaines de travail ardu. L'excellent esprit et l'atmosphère de cordialité qui out régaé parmi les délégations y ont certainement contributé pour beaucoup. Nous nous rendons compte que les résultats auxquels nous avons pu atteindre ne soat pas définitifs et ne lient pas pour 'instant nos gouvernements. La Délégation de la Norvège a formulé certaines réserves et émis des doutes sur la question de savoir si certain textes nous fournissent vraiment le moyen voulu de réaliser notre commun dessein. Pourtant. en dépit de nos réserves et de nos doutes, nous estimons que ce qui a été fait ici. à Londres, constitue un progrès appréciable. L'idée que ncus avions pour but, en nous réunissant. de porter sur le plan des réalisations a pris dans notre esprit une former plus concrèt,. et les textes que nous avons élaborés représentent us rogrès marqué sur tout ce qui s'est fait jusqu'ici. Je compte que nous réussirons. Nous réussirons parce que nous avons lt volonté de réussir. II u.-'3 faudra. étudier les difficultés qu'il nous reste encore à aplanir dans un esprit dominé par la désir irréductibe de les résoudre au moyen de concessions mutuelles, concessions qui devraient aboutir à un état de chases tel que chana de nous puisse constater qu'après tout. ce que nous con- cidérons aujourd'hui comme des concessions n'implique pas réellement un sacrifice. mais plutôt un apport au vaste édifice d'un commerce mondial satisfaisant et de con- ditions satisfaisantes d'emploi. Pour ma part. je crois en toute confiance que nous nous trouverons tous en meilleure situation horsque. l'été ou l'automne prochain. nous aurons mené nos travaux à bonne fin. Je n'ai pas besoin d'insister sur l'importance de la stabilité et de la santé économiques pour assure la stability et la santé politiques de tons. Tous nous sommes décidés à aller de l'avant. Tons nous sommes déterminés à faire preuve de sincénite et de franchaise en défendant les intérêts particuliers de nos propres pays. Nous pouvons. je crois, promettre d'examiner tous les problémes importants avec le calme et la sérénité d'hommes sages. Nous nous attaquous à quelque chose qui eat l'affaire immédiate, nonseulement des gouvernements, mais de l'humanité tout entière. Nous avons besoin de l'appui de l'opinion publique de tous les pays. J'ai eu la satis- faction de constater le vif intérèt qu'ont témoigné à notre oeuvre non seulement d'autres organismes internationaux de caractère- public. mais aussi des groupements comme la Chambre de Commerce Internationale et la Fédération Mondiale des Syndicats. Nous pourrons d'autant mieux nous acquitter de notre tache que ces organismes inter- nationaux et d'autres du méme genre sont disposés à nous seconder grâce à des contacts directs et aussi. et surtout, gràce à l'influence qu'ils sont en mesure d'exercer. chacun dans leur sphère d'action respective. sur l'opinion publique et dans les conseils des gouvernements. Le PRESIDENT: Je remercie M. Colban pour son exposé. Je donne la parole à M. Van der Post. Délégué de l'Union Sud Africaine. M. VAN DER POST (Union Sud Africaine): (Traduc- tion) Monsieur le Président, an nom de la délégation de l'Union Sud-Africaine. je tiens à vuos dire combien nous avons été heureux de participer. avec nos collègues de dix- sept autres pays et les membres du Secrétariat, aux in- téressantes discussions de ces six dernières semaines. Malheureusement notre vaissean a changé de captaine à. plusieurs reprises. Mais en ma qualité de troisième commandant de notre navire, je n'en suis pas moins heureux de faire partie d'un convoi qui est en vue du port. Le convoi a navigué parfois sur une mer agitée et sous un ciel nuageux. II n'est done pas surprenant qu'il ait pu y avoir des collisions et que nous portions, peut- être touns. quelques cicatrices. Mais malgré toutes les difficultés, je crois que nous pouvons etre heureux que le convoi ait affronté une mer aussi agitée et qu'il soit prét maintenant à jeter l'ancre à sa première escale. Si nons exceptons la Conférence Economique de 1933. cette conférence constitue-tout au moins dans cette période d'aprés-guerre-la premiere grande tentative d'un E 179 number of countries, representative of both hemispheres and all latitudes to meet round a table and examine the problems of freer trade. Difference of opinion there were bound to be. but the mere fact that so many persons representative of eighteen nations and, therefore, of widely differing interests could meet and devote six weeks of close scrutiny and study to a desirable and common objective is. to say the least, most encouraging. What is still more encouraging is the degree of unanimity that has been reached between us as delegates on a number of important points. We realize of course that nothing. that we have done here, commits our individual governments, but nevertheless, the cordiality and degree of understanding which have characterized our discussions even as discussions of officials and the degree of unanimity reached by us on points of agreement as well as of differ- ence augur well for the future. We certainly should not be complacent, but more certainly need not be pessimistic or even sceptical about what our association of the past few weeks has attained. Our convoy is about to disperse. only, however, to con- verge again within another few months and steer upon our second goal. We wish the smaller convoy which we are dispatching to New York success in its course and look forward to our converging at Geneva in April with well- warranted courage to undertake the greater task which will await us there. In conclusion. Mr. Chairman. I wish on behalf of our delegation to thank you and the various Chairmen of committees and sub-committees for your aud their leader- ship and the Secretary and his staff, including the trans- lators, for their very efficient services. The CHAIRMAN (Interpretation): I would like to thank Mr. van der Post and I now call upon Mr. Marquand. Chief Delegate for the United Kingdom. Mr. MARQUAND (United Kingdom): Mr. Chairman. We met six weeks ago to tackle a highly technical task. This task, the United Kingdom Government believes. is of critical importance not merely for my own country. but for the future of the world. Somehow, we must find the way of making it clear to the peoples of the world how much it means to them. At the moment. we are in the early stages and while the tasle is yet incomplete it might be the resolve of us all to secure greater under- standing of what we are doing. As I said. we are engaged on a task of great technical difficulty. What was it? We had to prepare an annotated agenda for a further Conference. That Conference, we hoped. would lay the foundations of an International Trade Organisation. At the same time it would begin the job- the necessary job-of removing some of the obstructions to the flow of world trade and plan measures for increasing that flow. Our task was complicated. but our objective was modestly and realistically stated. We were not to solve the major problems. We were to explore them, to examine them, to state them, perhaps to outline the means by which they could be attacked. But we were to leave the major task to the further Conference. Setting out thus modestly, we have exceeded our expectations. We have surprised ourselves. We have found almost complete agreement in stating the problems which must be solved. Perhaps that may seem easy; but we have also been able to agree in the main on the degree of importance of the various problems and the order in which they should be tackled. More than that. we have found a remarkable measure of agreement as to what the ultimate solution of every one of our problems must be and as to the means we can use to ensure those solutions. This we have been able to do because we have tried to be constructive. to go forward to something new, not merely to rectify the mistakes or correct the errors of the past. We have agreed not merely that we must free world trade from obstruction, but that we must nombre relativement important de pays représentant les deux hémisphères et toutes Ies latitudes, de se réunir autour d'une table et d'examiner Ies problémes que pose Ia libération du commerce. Des divergences d'opinions devaient nécessairement se manifester, mais le seul fait qu etant de personnes représentant dix-huit nations et, par conséquent. des intértéts trés différents. aient .pu se rencoutrer et consarrer six semaines d'examens détaillés et d'études à un objectif commun et souhaitable est pour le moins très encourageant., Ce qui est encore plus er- courageant. c'est le degré d'unanimité que nous avons atteint en tant que délégués sur uan nombre important de questions. Nous nous rendons parfaitement compte que rien de ce que nous avons fait ici n'engage nos gouverne- ments respectifs. mais néanmois la cordialité et le degré de comprehension qui ont caractérisé nos discussions, méme si ce n'étaient que des discussions entre fonc- tiomnaires. et le degré d'unanimité atteint aussi bien sur les points comanuns que sur les points divergents. sont de Lon augure pour l'avenir. Il est évident que nous ne pouvons pas nous contenter de ce que notre collaboration nous a permis d'atteindre au cours de ces quelques sesnaines. mais il est certain que nous pouvons ne pas etre pessimistes ni méme sceptiques. Notre convoiva se disperser; il est vrai qu'on le réunira à nouveau d'ici quelques mois pour le départ vers notre seconde escale. Nous sonhaitons au convoi plus réduit que mous envovous à New-York de faire bon voyage et nous envisageons avec plaisir note réuniou à Genève en avril pour entreprendre la tclche important qui nous y attendra. Pour conclure, Monsieur le Président, je désire. au nom de notre délégation, Vous remercoir en menme temps que les presidents des dilffrentes commissions et des comnites. Nos remerciements vont aussi au Secntaire et i ses colla- borateurs, y compris les traducteurs, pour les grands services qu'iis no-us oat rendus. Le PRESIDENT: Je remnercie M. Van der Post pour son expose. Je done la parole a bl. Marquand, Premier Ddltgu6 du Royaunme Uni. M. MARQUAND (Royaume Uni): (Traductioae) Mon- sieur le PRESIDENT. voiha six semaines que nous nous sommes rdunis pour nou t attaquer & une tiche extrtnement technique. Cette thne,- c'est la ferme conviction du Gouvernement du Royaume-Uni-est d'une importance essentielle. non seulement pour moa propre pays. mais pour l'aveir due monde. II nous faut trouver quelque moyen de faire comprendre aux peuples du maonde l'importance qu'elle prdsente pour eux. Nous 'en sommes. en ce moment. -quaau debut, et tant que la tcche est inachevde encore, il se peut que tous nous tenions a parvenir & une corn- prdhension plus grande de ce que nous entreprenons. Comme ie l'ai dit, nous avonss entrepris une tache d'une grande difcultei technique. En quoi consistait-elle? Nous devions preparer un ordre du jour comment* a l'intention d'une Conference- C'est a cette Confrerece. nous en avons I'espoir. qu'il appartiendrait de poser les foundations d'une Organisation Internationale du Commerce. En meme temps. c'est & elle d'entrependre la tiche-tSche nicessaire -de supprimer quelques-uns des obstacles qui barrent la route au courant du corrmmerce mondial, et d'eavisager des measures coherentes en vue d'en accroltre le debit. Notre tache a nous etait compliquee. mais notre but dtait dfini avec moderation et realisme. Nous n'avions pas & resoudre les problhanes essentials, iai simnplement a les fouiller, I les examiner. a les exprimer, et peut-atre a esquisser les moyeas par lesquelsi on pourrait les border. Mais l'essen- tiel de la tache, nous devious le hisser i la Conf6rence. Apres nous etre ainsi mis eni route, avec modestie. les risultats oat depasse notre attente. Nous avons eu une surprise: celle d'arriver i usa accord Presque unanime sur :a mani.-e de poser les problEmes i rdsoudre. Peut-etre cela semable-t-il aise; amais nous avons pu aussi nous mettre d'accord en general sur le degree d'importance a attacker aux divers problemes, et sur lVordre dans lequel il y aurait lieu de les aborder. Bien plus, dans une remarquable mesure. nous sommes arrives & nous entendre sur ce que doit etre en fin de compte la solution de chacun de ces probldbnes, et sur leas moyens que nous pouvons utiliser pour arriver a ces solutions. Si nous avons prn le faire. c'est parce que nousavons essays d'etre constructifs. d'aller de I'avant vers quelque chose de neuf, et que nous ne nous sommes pas contents de corriger et de redresser les erreurs du passe. Nous avons convenu, non seulemnent qu'il faut libdrer le commerce i80 expand it. We have accepted the objective of a high and stable level of employment: we have set down, in outline at least, means by which we think it can be attained. We have agreed on methods of international action which can be taken when the supply of primary commodities threatens seriously to exceed demand. There is no difference between us as to the need for an Inter- national Trade Organisation and lIttle difference as to its constitution. There are some differences among us as to the quickest means of diversifying the economies and in- creasing the wealth of under-developed regions, but there is no difference as to the need to do so. There may be some difference of emphasis about the restoration of the economic life of Central Europe. but there is no difference of principle. I am particularly glad that it should have been in the oldest capital City of the British Commonwealth that this agreement has been found. You may well think after your experiences here that it would be an advantage if our standard of living could be raised. You may even think that our climate could be improved. But I can see that you have all derived benefit from breathing the air of compromise which prevails in London. May I. like . others, pay tribute Mr. Chairman to the sagacity and tact with which you have guided us to these happy con- clusions and to the smoothness and efficiency with which the Secretariat has provided our technical services. When the President of the Board of Trade welcomed this Conference at its firstSessionhesaidthatindiscussions such as these every nation must be prepared to give as well as to take. The United Kingdom Delegation at this Conference has followed that advice. So. I whole- heartedly recognize. have aU other Delegations. But when we separate let us not imagine that the need for agreement and understanding has diminished. The prize that we seek to win is so great that we may all of us ju3tly incur risks in order to gain it. Our need is urgent and time presses. You will return now to report to your Governments. The Government of the United Kingdom hopes that every Government will look with a favourable eye upon these reports. I hope that they will be able to send their Delegates to breathe the air of inspiration in Geneva in the spring-an inspiration to resolve every difference and to carry through there with speed the bigger task of establish- ing world trade upon firmer and more lasting foundations than in the past. The CAIRMAN (Ixterprwtation): I thank you Mr. Narquand and I now call upon Mr. Wilcox. the Chief of the United States Delegation. Mr. WILCOX (United States): Mr. Chairman, To-day we come to the end, not of one meeting, but of six. We have completed a series of conferences on international economic policy, dealing, respectively, with employment, industrial development, commercial relations, restrictive business practices, commodity arrangements, and the establishment of a new organization for world trade. We have dealt with a subject matter that presents, in its combination of diversity, complexity, and political sensitivity, a problem so difficult that it -might well have defied the negotiators' art Yet on every major issue that has been before us, in every one of these conferences, ,we have come, almost all of us, to an identity of views. We have worked steadily and quietly, in an atmosphere of cordial co-operation. where each has sought to find hs own interest in a purpose that is common to us all. And we have completed our task within the time that we allotted to it when we met. We have arrived at wide agreement, speaking as experts without committing our governments, on nine-tenths or more of the text of a new charter for world trade, em- ployment, and economic development I am happy that the preparatory work that was done within my own government has contributed to this result. But I am 53680 (34) moudial de ses entraves. mais qu'il faut le developper. Le but que nous avons accepted, c'est d'assurer un volume ample et stable de l'emploi; nous avons d6termia6, dansleurs grandes lignes du moins, les moyens par lesqucls nous pen- sons que ce but peut etre atteint. Nous nous sommes nis d'accord sur des m6thodes d'action international, aux- quelles recourir lorsque l'offre des produits essentials menace d'excder sdrieusement la dernande. Il n'y a pas de disaccord entre nous quant a la n6cessitd d'une Organ- isation Internationale du Commerce. et il n'y a que de trbs Idgers desaccords quant & sa constitution. I1 y a quelques divergences de vues parmi nous quant aux moyens les plus rapides de diversifier les economies et d'accroltre la prospdrith des regions insuffsmment developp6es. mais nous sommes parfaitement d'accord sur la nacessitd de le fire. Peut-etre a-t-on insisted. a des degrds diffirents. sur l'importance de la reconstruction de la vie 6conomique dn Europe centrale, mais il nay a aucun dfsaccord sur le principle. Je suis particulierement heureux que ce soit dans la plus vieille capitale du Commonwealth britannique que cet accord ait itt rdalis6. II est possible. qu'apres vote se6jour, ici. vous vous disiez que les conditions de vie pourraient y etre plus satisfaisantes. ou mAine que notre climat pourrait 6tre meilleur. Mais je puis constater, en tout cas, que vous avez tous tir6 profit de l'atmosphere de compromis qui regae a Londres. Puis-je, apras les autres, Monsieur le Pr6sident, payer moa tribut a la sagacity et au tact avec lesquels vous nous avez guides vers ces heureuses conclusions, et aux qualites don't le Secrttariat a fait preuve pour assurer sans heurt et avec efficacity le fonc- tionnement de nos services techniques. Lorsque le President du Board of Trade a souhaite la bienvenue a cette Confdrence. lors de sa premiere seance. il a d~clarE que, dans des discussions comme celles-ci. chaque nation devait etre prete a doaner autant qu'i prendre. La DdlWgation du Royaume-Uni, a cette Con- fdrence, a suivi ce conseil et. je le reconnais volontiers. toutes les autres Dl1gations en ont fait autant. Mais. lorsque nous nous separerons, ne nous laissons pas aller A croire que la besoin d'entente et de comprEhension a diminue. Le prix que nous essayons de reporter a tant de valeur, quo nous pouvons bien tous courir avec raison quelques risques aia de l'obtenir. La ndcessite nous presse. et le temps est limited. Vous allez, 1 present. rentrer chez vous et rendre compte X vos Gouvernements. Le Gouvernement du Royaume-Uini espEre que tous les Gouvernemnents considdreront ces rap- ports d'un ceil favorable. J'esp~re qu'ils pourront tous envoyer leurs D#lEguds puiser. au printemps, dans lair de Geneve, l'inspiration qui leur permettra de fire dis- paraitre tons les ddsaccords et de mener promptement IL bien la ththe. qui leur incombe, d'etablir le commerce mondial sur des bases plus solides et plus durables que dans le passE. Le PRESID1ENT: Je remercie M. Marquand pour son expos. Je donna la, parole a M. Wilcox, Chef de la D6l6gation des Stats-Unis. M. WILCOX (Etats-Unis): (Traduction) Monsieur le PRESIDENT, Nous arrivons aujourd'hui a la fin, non pas d'une seule mais de six sessions diffErentes. Nous avons en une srie de confErences en matiere de poli- tique economique international. qui concernaient l'em- ploi. le dEveloppement industrial, les relations commer- ciales. les pratiques commercials restrictives. les accords sur les produits de base et la crEation d'une nouvelle organisation du commerce international. Ce sont 1& des sujets qui prdsentent un tel caractere de diversity. de complexity et qui sont si d6licats sur le plan politique que le problnme qu'ils creent aurait fort bien pu mettre au defi l'habilete des ndgociateurs. Malgre cela et pour chacun des probldmes principaux que nous avons studies dans chacune de ces conferences, nous sommes arrives presque sans exception a des vues identiques. Nous nous sommes livris a un travail constant et came, dans une atmosphere de coopEration cordiale oh chacun cherchait 8 trouver son propre interet dans la poursuite d'un but qui nous est commun. Et noUs avons achevE nos travaux dans le3 limites de temps que noUs nous etions imparties lorsque nous nous sommes reunis. Nous sommes arrives a un accord gEnral, agissat en tant qu'experts sans engager nos gouvernements, sur plus des gJroemes du texte d'une nouvelle charter du com- merce mondial. de l'emploi et du developpement econo- mique. Je suis heureux que le travail preparatoire effectue par mon propre government ait pu contribuer A ce F z81 equally happy that the draft that is now taking form has a better balance, a greater realism, and a finer pre- cision than the one with which we began. The document that is emerging will give expression, not to the lowest common denominator, but to the highest common denominator of our views. The principles on which we have built are sound. Our work has been well ddne. We have gone farther and faster, I am sure, than any one of.us had dared to hope was possible six weeks ago. We have made a good beginning. but it is only a beginning. The instrument that we have forged in London must be polished this winter in New York, hardened with the alloy of trade negotiations next spring in Geneva. tested in the conference of many nations that win follow. accepted by world opinion, and put, into operation by governments. The way ahead of us is long and may be difficult. But we are facing in the right direction and we have taken the first sure steps toward our common goal. And in this there is great promise for a worried and a weary world. As we have struggled here with the technicalities ot unconditional most-favoured-nation treatment. disequili- brium in the balance of payments, non-discrimination in the administration of quantitative restrictions. and pro- cedures to be followed in multilateral selective negotiations on tariffs and preferences, we have not lost sight, I trust. of the deeper problems that underlie these mysteries. For the questions that we have really been discussing are whether there is to be economic peace or economic war, whether nations are to be drawn together or torn apart, whether anre to ihave work or be ide, whether their families are to eat or go hunvgy. whether their children are to face the future with conmdence or with fear. Our answer to anl of these questions is written in thie Charter for the world the enad. In conclusion, Mr. Chairman I should like to express, for my colleagues and myself, our gratitude for the many courtesies that have been shown us during these meetings, our admiration for the men with whom we have worked both day and night over the past six weeks, our affection for those whom we have core to kow as personal friends, our deep appreciation of the spirit of good-will that has animated all of the deliberations of his Com- mittee, from the beginning to the end. We are pleased and we are proud to have been associated with sacb a group in such an enterprise. The CsAI ng {Intsvpretafioa): I would like to than Mr. Wilcox for his statement.- Gentlemen, I have listened with the greatest of attention to the speeches made by the vmrous delegations. and I am very pleased to remarks that the impression that each one of them haas drawn rom thy tbik of teis Confereacve iste ine as my own impression, which I allowed myself to expre this morning f my osee. I thnk we are in the right way and that we need only go ahead. Before separating I would like to say to you, nst of all, how much I was moved by the gracious words which most of you have expressed concerning myself. We have worked in an atmosphere po thought. ro an atmosphere which sometimes was even oraer dynamic, but above all we have worked in a good hour. We have some- tines even had the courage to mke fun of ourselves so we have had some sense of humour. We will laugh for many years yet about the famous Ruitaniian amend- ment which was circulanised amongst all toh delegations, and also the apocryphal report of the Procedures Com- mitee. If we had this courage it was because we saw what rocks we wished to avoid, and thus we found quickly and very easily the right path. I would now like to speak to the representatives of the Goenment of the United Kingdom, in order to express to them in my own name and on behalf ef all of you, our thanks and gratitude for the hospitality which we have enjoyed in London during this last few weeks. It does not seem to me an exaggerton to say that the cordiality with which we were greeted here, dhe atmshere of seriousness, of work and organization with which old England is so full today, heave helped in the excellent reslts which we have reached. r~lsultat. Je suis heureus aussi de constater que le projet qui prend forie maintenant presente un meilleur Equilibre, deonote plus de rfulisme et fait preuve de plus de precision, que celo avec lequel nous avons commence nos travaux. Le document qui sortira de nos travaux sera l'expres- sion non pas du plus petit, mais du plus grand common dfnominateur de nos opinions. Les principes sur lesquels nous avons fonde nos travaux sont bons. Notre travail a dtet bien fait. Nous somnmes allies plus loin et plus vite, j'en suis certain, qu'aucun d'entre nous n'edt os6 I'esperer i y a Six semaies. Nous avons bien commence notre travail, mnais c'est seulement un commencement. L'instrument que nous avons forge a Londres doit etre poll cet hiver a New- York, trempe avec l'alliage que constituerent les ndgocia- tions du printemps prochain a Genave. mis a l'epreuve au cours de la conference international qui suivra, accept par l'opinion mondiale et mis en service par les gouvernements. Le chemin qui reste a parcourir. est long et peut etre difficile. Mais nous marchons dans li bone direction et nous avons fait lea premiers pas vers notre but commun. Notre travail est riche de promesses pour le monde tourmente et affaibli. Nous nous sommes dedbattus ici avec les problems techniques du traitement inconditionnel de la nation la plus favorite, du ddsdquilibre de la balance des paieaients. de la non-discrimination dans application des restrictions quantitatives et des procedures a suivre dans lea ndgo- ciatiops s6lectives multilatdrales sur les tarifs et les prdf6r- ences, mais nous naavons pas pour autant perdu de vue les problemes plus profonds que recouvrent ces mystbres. Car ce que nous avons discute en fait c-est la question de savoir s'il doit y avoir pais ou guerre econornique. si les nations doivent etre unies ou divides, si les homes doivent avoir du travail ou chomer, si leurs families doivent pouvoir se nourrir 0u sou-ffri de la faim, si leurs enfants doivent pouvoir envisager l'aveuir avec confiance 0u avec crainte. Notre r6panse a toutes ces questions est inscrite dans la Charte que le monde lira. Pour conclure. Monsieur le Prisident, 'faimerais ex- primer, au nom de mes collogues et au mien, notre re- connaissance pour la parfaite courtoisie qui nous a 6th t6moignie au course de ces reuniors, notre admiration pour les homes avec qui nous avons travailld jour et nuit au course de six semaines, notre affection pour ceux avec qui nous pu avoir des relations amicales, notre pro- fonde admiration pour l'esprit qui a animus toutes les ddli- berations de cette commission d&s le d6but. Nous sommes heureux et fibers d'avoir dtd assocics, dans cette ttche. a une compagnie de cette quality. LE PRESIDENT: Je remercie M. Wilcox. Messieurs, j.ai gcontE avec ia plus grande attention les exposes des difcrentes delsations et je suis tres heureux de constater que l'impression que chacune d'elles retire des travaux de Ia Conference rejoin celic que j'ai moi- mame et que je me suis permis d'exp mer ce matin dans mon propre exposed. Je crois que nous sommes dans une bonne voie, & nous de continuer. Avant de nous sdparer, je voudrais vous dire tout d'abord combien j'ai ete touch par les paroles gracienses que la plupart d'entre vous ont pronounces - mon dgard. Nous avons travail6 dans une atmosphere de recucillement. dans une atmosphere qui, parfois meme, etait assez dynamique, mais surtout dans la bonne humeur. Parfois meme nous avons cu le courage de nous moquer de nous- memes. Nous avons eu beaucoup de sens de l'humour nous rirons longtemns encore du fameux amendement de la Rurdtaine qui a circuld dans toutes les ddlOgations et du procds-verbal apocryphe de la stance du Comite d. Procedure. Messieurs, si nous avons eu cc courage, cest que nous avons vii nous-mnmes quels etaient les ecueils que nous devions 6viter et nous avons ainsi. tres naturellement et tris facilement. trouv6 la bonne voice. Je voudrais maintenant m'adresser aux reprdsentants du gouvernerneat du Royaume Uni pour leur exprimer, en mon nom personnel. et aprbs vous tons, notre recon- naissance et nos remerciements pour l'hospitalitd dont nous avons joui & Londres au cours de ces dernieres semaines. II ne me parait pas exagdrd de dire que ;a cordiality avec laquelle nous avons it6 recus, que l'atnosphere de sdrieux, de travail et d organisation, dont la vie en Angleterre est auourd'hui empreinte, ont marqud le ton de nos debats et les rfsltats excellents ausquels nous avons about. 182 I would like to thank the Directors of Church House, this fine building of which we now know all the many passages: To those managers I would like to say how much I have appreciated their effective and discreet organization. Gentlemen, here in Church House you have found ex- cellent co-operation and such goodwill in your work that you were able to finish your task in a relatively short while. It is none the less sure that this result is to a great extent due to the valuable work of the Chairmen off the different Committees, and snow I would like to pause in order to greet them all: Mr. Wunsz King, the representative of China; Mr. Coombs. who had such a heavy task and to whom we all owe so much. Mr. Helmore. whose Committee worked so valiantly that it was all the more worthy of our homage to-day. We are sorry not to have amongst us to-day Mr. Edminster. Mr. Malik and Mr. Dieterlin. but let their absence not make us forget all that we owe to them. Every one was worthy of his task and I associate you all together in my thoughts. All delegations worked effectively. I cannot name them all, nor all their qualities. but I do not wish by this silence to seem to forget the excellent work done by my friend Mr. Speekenbrink and the Procedures Committee. I would also like to turn towards the Interpreters and tell them how much I admire their work and how they have accomplished their difficult task, often in very diffi- cult circumstances. Finally. I would like to give a very special place in this tribute to the Executive Secretariat of this Confer- ence, thanks to which we have been able to accomplish our task. Mr. Wyndham-White, Mr. Lacarte and their brilliant group of co-workers have been model agents and we must admit it-the real workers of this Conference. I cannot do better than to thank them in your name and in my own name. Now. gentlemen, I must say farewell to you and wish you a speedy return to your homes, a Happy Christmas. and let us meet again in the future. (End of Interpreta- tion.) Gentlemen, I feel it is my duty now to say a few words in English to my English-speaking friends who form the majority of this Conference. Most of the time what I have had to say has had to be conveyed to you through Interpreters. I should like to thank them for ex- pressing my thoughts so admirably, and without their help my task would have been most difficult. However, on this occasion I feel that I must speak to you directly and give you a few words of farewell in your own language. I wish first of all to speak to our host, the British Government, who have helped us so generously and whom I thank most sincerely for their very cordial hospitality. Long will be remembered the Church of England, whose premises have formed the setting for our meetings. Long will be remembered the Hoare Memorial Hall. the consul- tation room from which we were regularly driven by the noise of the work! And the corridors where several delegates regularly lost their way1 My five weeks in London have been both very hard and very pleasant; very hard because we have all had to tackle a lot of work, but also very pleasant because of the excellent relations established between us and the feeling of mutual goodwill and the desire to collaborate in the common task. I should like to add a word of thanks to the members of its Secretariat, whose zeal, efficiency and kindness have been more than useful to me and us all. I shall always retain grateful memories of my stay here, and I sincerely hope we shall all meet again next spring at Geneva. I now call on Mr. Speekenbrink. Mr. SPEEKENBRINK (Netherlands): Gentlemen, I have been allowed the privilege of saying a last word to you, and I do that with the more pleasure owing to the dose relationship between our two countries and also between us as colleagues, and when we get a wider Customs Union, well, we may be twins1 Ma pensée se porte ensuite vers les dirigeants de Church House. vers cette aimable maison dont nous sommes fiers de connaître maintenant lea détours les plus sinueux-et Dieu sait si cette maisan est riche en sinuosités-vers les dirigeants auxquels je voudrais dire combien j'ai apprécé leur efficace et discrète organisation. Messieurs, parce que vous avez trouvé à Church House une si excellente coopération et tant d'esprit au travail. vous avez pu mener vos travaux dana un temps relative- ment court il est néanmoins certain que ce résultat est dû pour une très grande part à la valeur des présidents des différentes commissions. Ici, je voudrais m'arrêter une seconde pour les saluer tous M. Wunsz King. M. Wilcox. M. Coombs, à qui incombée une si lourde tache et à qui nous devons tant, M. Helmore dont la Commis- sion a travaillé si silencieusement qu'il n'est que juste de lui rendre aujourd'hui un hommage éclatant. Nous avons le regret. Messieurs. de n'avoir pas parmi nous aujourd'hui MM. Edminster, Malik et Dieterlin: que leur absence ne nous fasse pas oublier tout ce que nous lour devons. Messieurs, tout le monde a été à la hauteur de sa tâche et je vous associe tons dana ma pensée. Toutes les délégations on travaillé efficacement; je ne puis mal- heureusement énumérer les noms et les qualités de tous. Je ne veus point passer sons silence l'excellent travail fait au Comité de procédure par mon ami .M. Speekenbrink. Je voudrais me tourner vers les interprêtes et leur dire ma profonde admiration pour la manière dont ils se sont acquittés de leur tâche ingrate, dans des conditions souvent très difficiles. Enfin, je tiens à donner une place particulière dans ce tribut d'hommages au Secrétariat exécutif de cette Con- férence car c'est gráce à lui que nous avons pu accomplir notre tâche. MM. Wyndham-White et lacarte et leur brillante phalange de collaborateurs ont été des agents modéles et-avouens-nous. les véritables chevilles ouvrières de cette Conférence. Je ne peux mieux faire qu'en leur adressant, en votre nom à tous et au mien per- sonnel, un très grand merci. Il me reste maintenant, Messieurs. à vous faire mes adieux en vous souhaitant bon retour dans vos foyers. Bon Noël et à bientôt à Genève, au printemps prochain. (Interprdéation): J'estime qu'il est de mon devoir de dire quelques mos en anglais à mes amis de langue anglaise qui constituent la majorité de cette conférence. Le plus souvent, ce que j'avais à vous dire a été transmis par l'intermédiaire des interprètes. Je remercie les interpretes qui ent exprimé nos opinions d'une manière si éloquente et sans l'aide desquels notre tâche aurait été si difficile. Cependant. j'estime que je dais vous parler directement et vous adresser quelques mots d'adieu dans votre propre langue. Je desire tout d'abord m'adresser à nos hòtes, au Gouvernement Britannque, que je voudrais remercier très sincérement de leur cordial hospitalité. Nous nous rapel- lerons toujours l'Angleterre et le Hoare Memorial Hall et le Convocation Hall d'où l'on nous chassait si souvent, et les couleirs où si souvent les délégués se perdaient. Les cinq semaines que j'ai passées à Londres ont été à fois très dures et très agréables; très dures parce que nous avions tous unequantité de travaux à effectuer, mais très agréables aussi en raison des excellentes relations que nous avons pu établir entre nous et grace à ce sentiment de bonne volonté générale pour note tiche. J'aimerais adresser un mot de remerciement aux membres du Secrétariat dont les services ont été plus qu'utiles. Je me souviendrai toujours de mon séjour à Londres et je souhaite sincérement que nous nous rencon- trions tons au printemps prochain à Genève. Je donne la parole à M. Speenkenbrink. M. SPEEKENBRINK (Pays-Bas) (Interprétation): Monsieur le Prédsident, on m'a permis de vous adresser un dernier mot et je le fais avec un très grand plaisir, tant à cause des relations étroites existant entre nos deux pays qu'en raison de celles qui nons unissent personellement en tant que collegues. Après l'Union Douanière, je me demande ce que nous deviendrans. Peut-être des jumeaux. 183 Mr. Chairman. I am not a man of many words. so I will only say to you this, that it is my privilege to express to you the appreciation of the whole Conference for the impartial and wise guidance which you have offered to us. We have indeed been fortunate to have you as our Chair- man-a man who combines such high qualities of tact, experience and personality. Thank you. The CHAIRMAN (Interpretation): I thank Mr. Speeken- brink-my friend Speekelbrink-with all my heart for his kindness and his very good words. Gentleman, I believe that we have come to the end of our work. We had hoped to finish this evening, but we have had the pleasant surprise of finishing at tea-time. Therefore, I declare the meeting closed. - The Meeting rose at 4.30 p.m. II. DOCUMENTS DISTRIBUTED Tuesday 26 November 1946 Symbol No. Title E/PC/T/23 ... English text distributed on 25.11.46. E/PC/T/30 Corr. I Corrigendum to- Report of Com- mittee II. E/PC/T/CII/66 ... Committee II: Summary Record of the Thirteenth Meeting. E/PC/T/Cl & 11/22 English text distributed on 25.11.46. E/PC/T/CI & 11/23 Joint Committee-Drafting Sub-com- mittee: Summary Record of the Fifth Meeting. E/PC/T/CI & 11/24 joint Committee-Drafting Sub-com- mittee: Summary Record of the Sixth Meeting. E/PC/T/CIV/19 ... English text distributed on 25.11.46. E/PC/T/CV/33 Revised Instructions to the Drafting Rev. 1 Committee from Committee V. CoMMUNICATONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. Permettez-moi de vous dire simplement ceci: j'ai le- privilège de vous exprimer la reconnaissance de toute la Commission pour la direction impartiale et sage qua nous vous devons, Nous avons été veritablement très heureux d'avoir un Président réunissant à la fois les qualités de tact. d'expérience et de personnalité. Le PRESIDENT: Je remercie du fond du coeur mon ami Speekenbrink pour son hommage et sa gentillesse. Messieurs, nous voici doac arrivés à la min de nos travaux. Nous espérions finir ce soir et nous avons même l'agréable surprise de pouvoir terminer à l'heure du thé. Je lève la séance. La séance est levde à 16 h. 30. II. DOCUMENTS DISTRIBUES Mardi 26. Novembre 1946 Cote Titre E/PC/T/16 ... Rapport de la Première Commission. E/PC/T/23 ... Rapport de la Commission mixte du Développement Industriel. E/PC/T/30 Corr. 1 Document non encore distribué en français. E/PC/T/CII/66 ... Document non encore distribué en français. E/PC/T/CI & II/22 Commission mixte-Comité de Réd- action: Procès-verbal de la sep- time séance. E/PC/T/CI & II/23 Document non encore distribué en français. E/PC/T/CI & II/4 Document non encore distribué en français. E/PC/T/CIV/19 ... Quatrième Commission: Procès-verbal de la huitième séance. E/PC/T/CV/33 Document non encore distribué en Rev. 1 français. COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent être adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français (téléphone: posters 255 et 29). (53680) (341) - 1200 11/46 D.L G. 344

GATT Library

sy146nr6757

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/sy146nr6757

sy146nr6757_90240054.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL. OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 37 No. 37 London: Tuesday 26 November 1946 Londres: Mardi 26 Novembre 1946 I. PROGRAMME OF MEETINGS Tuesday 26 November 1946 Plenary Meetings Time Room 10.30 a.m. Fifth Plenary Session Hoare Memorial Hall 3.00 p.m.. Sixth Plenary Session Hoare Memorial Hall II. AGENDA Tuesday 26 November 1946 Plenary Meetings Fifth and Sixth Session 1. Report by Chairman on Credentials. (E/PC/T/8) 2. Resolution convening a meeting to negotiate a Multi- lateral Trade Agreement Embodying Tariff Con- cessions, submitted by the United States Delegation (E/PC/T/27) 3. Resolutions concerning: (a) The Report of the First Session of the Pre- paratory Committee; (E/PC/T/28) (b) The appointment of a Drafting Committee ; (E/PC/T/29) (c) A Second Session of the Preparatory Com mittee. -(E/PC/T/25) 4. Presentation and adoption of Committee Reports and Resolutions. (E/PC/T/16, 30, 23, 15, 17, 18, 26, 24) 5. Final statements on the work of the First Session of the Preparatory Committee. 6. Any other business. 1. PROGRAMME DES SEANCES Mardi 26 Novembre 1946 Heure 10 h. 30 15 heures Séances Piènières Salle Cinquième Séance Plénière ... Hoare Memorial Hall Sixième Séances Plénière ... Hoare Memorial Hall II. ORDRE DU JOUR Mardi 26 Novembre 1946 Séances Plénières Cinquième et Sixième Séances 1. Rapport du Président sur les Pouvoirs des Délégués. (E/PC/T/8) 2. Résolution soumise par la Délégation des Etats-Unis tendant à la convocation d'une réunion charge de . négocier un accord commercial multilatéral portant notamment sur les concessions tarifaires. (E/PC/T/27) 3. Résolutions relatives: (a) au Rapport de la première Session de la Commission Préparatoire. (E/PC/T/28) (b) à la constitution d'une Comité de Rédaction. (E/PC/T/29) (c) à une seconde Session de la Commission Préparatoire. (E/PC/T/25) 4. Présentation et adoption des Rapports et des Résolu- tions des Commissions. (E/PC/T/16, 30, 23, 15; I7, I8, 26, 24) 5. Déclarations finales concernant les travaux de la première Session de'la Commission Préparatoire. 6. Questions diverses. 144 145 III. DOCUMENTS DISTRIBUTED Monday 25 November 1946 Title ... Report of Joint Committee Industrial Development. on ... Resolution relating to Inter-Govern- mental Consultation and Action on Commodity Problems prior to establishment of the ITO. (Note by Secretariat.) E/PC/T/25 ... Resolution concerning the Seconp Session of the Preparatory Com- mittee. E/PC/T/26 ... Resolution regarding Industrial De- velopment, to be proposed by the Chairman of the Joint Committee. E/PC/T/27 ... Resolution regarding the negotiation of a Multilateral Trade Agreement embodying Tariff Concessions. E/PC/T/28 ... Instructions to the Executive Secre- tary regarding the report of the First Session of the Preparatory Committee. E/PC/T/29 ... Resolution regarding the Appoint- ment of a Drafting Committee. E/PC/T/30 ... Report of Committee II. E/PC/T/C-II/59 Suggested addition to report of the Add. 1 Sub-Committee on Quantitative Restrictions and Exchange Control, of Committee II. E/PC/T/C.II/65 ... English text distributed on 23.11.46. E/PC/T/C.II/65 Committee II: Summary Record of Add. 1 the Twelfth Meeting (continued). E/PC/T/C.I & II/21 Corr. 1 E/PC/T/C.I & II/22 E/PC/T/C.IV/19 ... E/PC/T/C.IV/20 ... E/PC/T/C.V/30 Corr. 1 Corrigendum to Summary Record of the Fourth Meeting of Drafting Sub-Committee of the Joint Com- mittee. Joint Committee: Drafting Sub- Committee: Summary Record of the Seventh Meeting. Committee IV: Summary Record of the Eighth Meeting. Committee IV: Summary Record of the Ninth Meeting-. Corrigendum to Summary Record of the Twelfth Meeting of Committee V. IV. MISCELLANEOUS A. Press Conference In connection with the final Plenary Sessions, Sir Stafford Cripps, President of the Board of Trade, will hold a Press Conference at Church House today. Tuesday 26 November 1946, at 6.30 p.m. (Committee Room V-Convocation Hall). B. Lost Fountain pen and propelling pencil (reward offered). C. Found One scarf. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. (53680) (33) -- 1200 11/46 D.L G.344 III. DOCUMENTS DISTRIBUES Lundi 25 Novembre 1946 Cote E/PC/T/23 E/PC/T/24 E/PC/T/25 E/PC/T/26 E/PC/T/27 E/PC/T/28 E/PC/T/29 E/PC/T/30 E/PC/T/C.II/59 Add. 1 E/PC/T/C.II/65 Add. 1 E/PC/T/C.I & II/21 Corr. 1 E/PC/T/C.I & II/22 E/PC/T/C.IV/19 E/PC/T/C.IV/20 E/PC/T/C.V/30 Corr. 1 Titre Document non encore distribué en français. ... Résolution sur les consultations et l'action inter-gouvernementales concernant les problèmes relatifs aux produits de base avant l'étab- lissement de l'O.I.C. (Note du Secrétariat). ... Résolution concernant la deuxième Session de la Commission Prepara- toire. ... Resolution relative au Développe- ment Industriel. qui doit être proposée par le Président de la Commission mixte. ... Résolution relative à la négociation d'un accord multilateral de com- merce portant notamment sur les concessions tarifaires. ... Instructions au Secrétaire Executif concernant le rapport de la pre- mière Session de la Commission Préparatoire. ... Résolution concernant la constitution d'un Comité de Rédaction. ... Document non encore distribud en français. Proposition d'additif au rapport du I Cémit6 des Restrictions quantita- tives et du Côntr6le des changes de la Dèuxieme Commission. Dèuxibme Commission: èroces- verbal de la dèuzibée stance, (iere partie). Dèuxieme Commission: èrocbs- I verbal de lè doézieme seance, (2eme partie). Corrigendumèau Proces-verbal de la Iè quétrieme seanceédu Comit6 de Redaction de la Commission mixte. Document non encore édistribud en franfais. ... Document non encore édistribui en francais. .è. Quatribme Commission: è Proc&s- verbal deèla néuvibme seance. Corrigenduè au Proces-verbal de la I édouzibme seance dè la Cinquixme Commission. IV. DIVERS A. Confbrence de Presse A l'occasioè des éernieres stances de la Commission Prdparatoire, Sir StaffordéCripps, Prdsident du Board of Trade, tiendra, anjourd'hui mardi 26àNovembre, a 28 heures 3é, une conferencà de press a Church House (Salle de Commission No. V-Convocation Hall). B. Objets perdus Une stylo et un séylomine (recompense offerte). C. Oéjets trouves Une 6charpe. CNSMUNICATIOus A LA REDACTION Les commànicatéons a la Redaction doê,'-nt btre adresstes au Bureau 414 pour le isexte anglaN et au Bureau 413 pour leçtexte éréngais (t6l6phone: posted 255 et 29). Symbol No. E/PC/T/23 E/PCIT/24

GATT Library

tq270jz2365

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/tq270jz2365

tq270jz2365_90240042.xml

GATT_157

UNITED. NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE Tt,- ET SOCIAL " n! OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE-LA COMMISSION PREPARATOIREi DE !A ;;' CONFERENCE INTERNATIONAL` DU COMMERCE ET DE L'EMPtOI No. 25 No. 25 London: Tuesday 12 November 1946 Londres: Mardi 12 Novembre 1946 " I. PROGRAMME OF MEETINGS Tuesday 12 November 1946 Time 10.30 a-m. 3.00 p.m. A. Committee Meeting Committee V: Twelfth Meeting Committee V: Twelfth Meeting (continued) B. Sub-committee Meeti 10.30 a.m. Committee II-Procedures Sub-committee: Tenth Meeting 3.00 p.m Committee II-Sub-com- mittee on Quantitative Restrictions and Ex- change Control: Second Meeting Room Heure Hoare Memorial I0 h. 30 Hall 1. PROGRAMME DES SEANCES Mardi 12 Novembre 1946 A. S6ances de Co-missions oareuieme Commission: Hc Douziere S6ance Hoare Memoèial 15heures Cinquieme Commission: Hall è é Douzieme Seance (suite) Room 243 Room 243 4.45 p m. Heads of Delegations- Committee Room Drafting Sub-committee: V-(Convoca- First Meeting tion Hall) Future Programme of Meetings This programme replaces the one published in Journal No. 24. Wednesday 13 November 1946 Committee II-T1chnica.l Sub-committee: X0.30 am. Ninth Meeting Joint Committee o Industrial Development- I0.30 a.m. Drafting Sub-committee: Fourth Meeting Committees II and n-Joint Drafting Sub- committee on Subsidies on Primary Pro- ducts: First Meeting ' 10.30 alm. on Quantita- 3.00 -0-Ste' on Q0a tits ''op.m. tive Restrictiosand Exchange Control: -,_ux 4 e~eti Hc Salk are Memorial Hall are Memorial Hall B. S6ances de Comit6s Io h. .30 Deuxi~me Commission. - Salle 243 Comitt de Proc6dure: Dixieme Seance I5 heures Deuxinme Commission - Sale 243 Comit6 des Restrictions quôntitatives et du Contr6le des changes: Deuxieme S6ance I6 h. 45 Comite de Redaction des Salle de Com- Chefs de D6l6gations: mission No. V Premiere Seance (Convocation Hall) Proéramme des prochsines saances Ce programmé éemplacé celui qui a ete public dans le No. 24 du Journal Mercredi 13 Novembre 1946 Deuxéeme Commissio0 - Co0ite Technique: 1o h. 3o NeuvimemSeance Commission mixtedu li1elhppment industries I0 z 30 - Comiteède R6daction: Quatrinme Seance . . Deuxiame'et Quatr10mh. Commissions - IO i 30 Comit6 mixte de R6daction sur les subven- tions aux prèoduits essentials: Premire seance Degéisne Coesission15 heures des R. u trictqsp 4uantitativô e,et du Contr6lc des ; banées ,Troisihme S6ance ' 14 . . ; . . "-- 115 Thursday 14 November 1946 Committee I: Fourth Meeting . 10.30 a.m. Committee II-Procedures Sub-committee: 10.30 a.m. Eleventh Meeting Committee .I-Technical Sub-committee: 10.30 a.m. Tenth Meeting Committee II-Sub-committee on Quantita- 3.00 p.m. tive Restrictions and Exchange Control: Fourth Meeting Joint Committee on Industrial Development- 3.00 p.m. Drafting Sub-committee: Fifth Meeting Committee II-Joint Sub-committee of Technical and Procedures Sub-committee: First Meeting Friday 15 November 1946 Heads of Delegations: Fifth Meeting... Committee II-Technical Sub-committee: Eleventh Meeting Joint Committee on Industrial Development: Fourth Meeting Joint Committee on Industrial Development: Fourth Meeting (continued) Saturday 16 Novermber 1946 Joint Committee on Industrial Development: Fifth Meeting 5.00 p.m. 10.30 a m. 10.30 a.m. 3.00 p.m. 8.00 p.m. 10.30 a.m. II. AGENDA Tuesday 12 November 1946 Committee V: Twelfth Meeting I. Report of ad hoc Drafting Sub-committee on Article 76. (Interpretation and Settlement of Legal Questions); 78 (3) and (4). (Entry into Force); and Article 2 (Membership of the Organization). 2. Discussion of Articles 50, (Functions of the Organiza- tion); 5I, (Structure of the Organization), and 61 (Establishment of Commissions). Committee V: Twelfth Meeting (continued) Further discussion of Voting, including Articles 57 and 58 (Membership and Voting of the Executive Board). .. III. SUMMARY RECORD OF MEETINGS Committee III: Restrictive Business Practices Eighth Meeting HeHd onnMa d11 ovemNe ber I946 at 4.00 p.m. Chairman: Mr. P. DIETERLIN (France) in Committdebae15tehd te" Rapporteur'r Dkafr of: the Final Report of Committee III to the Preparatory Committee of the International Conference on Trade and: (4mplonme" t -(Document E/PC/T/CIII/W/4) and generally approved the stance sceof t ris~eport,... , ! I thae thw brm of thfaco: the fon . fie ,f `tfndid not conform to the arrangemeninalsualized for fliii reports, inted C mitt~e a C. WILCOXT,Unted-States). ES. (UnL."HOe n )iaed Kiigdom znd'-Mr. E. LECUYER (raancng) ab-c ma tteD, ifti Su-omie with the instruction to submit to the Committee the re-arrangement of its final report. N Jeudl 14 Novembre 1946 Premiere Coxiission. _Quatribme S6ance..... Deuxieme Commission-Comite de Procedure: Onzieme S6ance Deuxieme Commission - Comit6 Technique: Dixieme Seance Deuxieme Commission - Comit6 des Restric- tions quantitatives et dni Controle des changes: Quatrieme Seance Commission mixte du developpement indus- triel - Comite de R6daction: Cinquieme Seance Deuxieme Commission - Comite mixte des Comites Technique et de Procedure: Premiere Seance Vendredi 13 Novembre 1946 Cinquieme Reunion des Chefs de Del6gations Deuxieme Commission - Comit6 Technique: Onzieme Seance Commission mixte du developpement indus- triel: Quatrieme Seance Commission mixte du developpement indus- triel: Quatri~me Seance (suite) Samedi 16 Novembre 1946 Commission mixte du dIveloppemcnt indus- triel: Cinquiere Seance io h. 30 io h. 30 I0 h. 30 15 heures I5 heures I7 heures Io h. 30 1o h. 30 15 heures 20 heures Io h. 30 II. ORDRE DU JOUR Mardi 12 Novembre 1946 Cinquieme Commission: Douncixme Skance I. Rapport du Comite special de Redaction sur l'article 76 (Interpretation et r*glement des questions juridiques), lés paragraphes 3 et 4 de I'article 78 (Entree en vigueur) et l'article 2 (Membres de l'Organisation). 2l Discussion de 1'article 50 (Fonctions de 1'Organisation), de- l'article 51 (Organes de l'Organisation) et de Particle 6i (Constitution des Commissions). Cinqui6re Commission: Douwieme Sesnce (suite) Nouvel examen de la. question du vote, portant sur les articles 57 et 58 (Comite excutif-Qualit6 de membre et Vote). III. PROCES-VERBAUX DES SEANCES lTrolsieme Commission; Pratiques Commerciales Restrictives Huitime Seince tenue le lundi II Novembre I946 a I6. Jeures Prsidnt M. P. DIATERLIN_ (France) La Commission discute le Projet de Rapport final adresse par la Troisieme Commission & la Commission Preparatoire de la Confernce Internationale du Com- merce et de l'Emploi (document E/PC/T/CIII/W/4), et -donne son accord final sur le: fond de ce rapport. En raison du f'ait qie la disposition de ce rapport nest pas conform a celle qui est envisag6e pour les rapports finaux, ,la Commission dsigne MM. C. WILCOX (Etats- Unis), 'S. L. HOLMSF RyaumneUni); et E. LECUYER (France). et las; céarge- de se constituer en Comite de R6dastion et de soumettre a la Comminsion la nouvelle presentation de son rapport final. IV. DOCUMENTS DISTRIBUTED Monday 11 November 1946 Symbol No. E/PC/T/CI/13 E/PC/T/CI/14 E/PC/T/CI/15 E/PC/T/CII/47 E/PC/T/CV/21 E/PC/T/CV/22 E/PC/T/CV/23 E/PC/T/CV/24 Title Committee I: Remarks and Sugges- tions on the British Memorandum, submitted by the Netherlands Dele- gation. Committee I: Draft Report. Committee I: Summary Record of the Third Meeting. Committee II: Sub-committee on State Trading: Summary Record of the early part of the First Meeting Committee V: Memorandum on the question of Voting in the Inter- national Trade Organization, sub- mitted by the Netherlands and Belgo-Luxembourg Delegations. Committee V: Revised Draft of Article 65, submitted by United Kingdom Delegation. Committee V: Common Services for the United Nations and the Specia- lized Agencies. etc. (Note by Secretariat). Committee V: Amended Redraft of Article 78 (4) and 79 (I), submitted by United Kingdom Delegation. EPC/T/CV/25 ... Committee V: Summary Record of the Ninth Meeting. Erratum: Title of Document E/PC/T/CI & II/12 (See Journal No. 24, p. 113 E); read: Joint Committee: Brazilian Note on Qualitative Control V. MISCELLANEOUS A. Corrigendum to Document E/PC/T/CII/PV/6 Page 38, second paragraph, line 2: for " Article 26 " read " Article 25 " Page 38, second paragraph, line 4: for " is " read " should be " B. Press Conference The Press Conference which was to be held on Tuesday 12 November 1946 by H.E. Dr. WUNSZ KING, Head of Chinese Delegation and Chairman of Committee I, has been postponed owing to illness. C. Accommodation at Church House (Reference Journal No. 19, p. 99) The English Verbatim Reporters have now returned to Rooms 331 A-C, telephone extensions 61, 154 and 115. D. Found Book entitled Nova Tarúa das Alfandegas." COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text); telephone extensions: 255 and 29. IV. DOCUMENTS DISTRIBUES Lundi 11 Novembre 1946 Cote E/PC/T/CI/13 ... E/PC/T/CI/14 ... E/PC/T/CI/15 ... E/PC/T/CII/47 ... E/PC/T/CV/21 ... E/PC/T/CV/22 ... E/PC/T/CV/23 ... E/PC/T/CV/24 Titre Première Commission :-- Observations et suggestions concernant le Mémorandum Britannique, soumises par la Délégation des Pays-Bas. Projet de rapport de la Première Commission. Première Commission: Procès-verbal de la troisième séance. Deuxième Commission: Procès-verbal de la troisième séance (premiere partie) du. Comité des Monopoles d'Etat. Cinquième Commission: Mémorandum présenté par les Déeéegations des Pays-Bas et de l'Union Economique belgo-luxembourgeoise, sur la question du voteàa l'Organisation Internationale du Commerce. Cinquèeme Commission: Nouvelle éedaction del'Particle 65. péesenéhe par la éeéegation du Royaume-Uni. Cinquèeme Commission: Services communs aux Nations Unies et aux Institutions séecialiéees, etc. (Note du Secéetariat). Cinquèeme Commission: Projet amenèèd deérevision des articles 78 (4) et 791(I), éreseéte par laéDélegation du Royaume-Uni. E/PC/T/CV/25 ... Cinqèieme Commission: Prèces- verbal de la neuèiemcéstance. V. DIVERS A. Corrigendum au document Page 46/50, ligne 2: au lieu de : article 26 lire : article 25 E/PC/T/CII/PV/6 ligne 5: au lieu de: qu'il y a une exception lire: qu'il devrait y avoir une exceptio'' B. Conéerence de Presse En raison de sonédtat de sanée, M. WUNSZ KING. chef de la éeé6gation de la Chine et péesident de la Premèere Commission, se voit dans l'obligation d'ajourner la con- éerence de presse qu'il devait tenir le mardi 12 novembre. C. Attribution de locauxài Church House (cf. Journal No.1I9, page 99) Le service des sédnographes de seances anglais s'est éeinstalé6 dans les Bureaux 31X-A-C (éeéephone: postes 1i,1I54 et 115. D. Objets trouvès Un livre intitulé: " Nova Tarifa das Alfandegas." COMMUNICATIONs A LA REDACTION Les communications à la Rédaction doivent. étre adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français (telephone: posted 255 et 29). (13630) (x9) - 1300 xx/46 D.L G. 335 116

GATT Library

mq465xc4770

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/mq465xc4770

mq465xc4770_90240051.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL OF TH PREPARATORY OF TH INTERNATIONAL ON TRADE AND NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL. JOURNAL E: DE LA COMMITTEE COMMISSION PREPARATOIRE E DE LA CONFERENCE CONFERENCE INTERNATIONALE EMPLOYMENT DU COMMERCE ET DE L'EMPLOI No. 34 London: Friday 22 November 1946 I. PROGRAMME OF MEETINGS Friday 22 November 1946 Committee Meetings Committee II: Twelfth Hoare Meeting H Committee II: Twelfth Hoare Meeting (continued) H Committee II: Twelfth Hoare Meeting (continued) H om emorial all hmorial all Memorial all II. AGENDA Friday 22 November 1946 Committee II: Twelfth Meeting 1. Discussion of the report of the Procedures Sub- committee 2. Discussion of the report of the Sub-committee on Quantitative Restrictions and Exchange Control 3. Discussion of the reports of the Sub-committees on Subsidies 4. Discussion of the report of the Sub-committee on State Trading 5. Discussion of the report on Relations with Non- Members, submitted by the Delegate for the United Kingdom I No. 34 Londres: Vendredi 22 Novembre 1946 Heure 10 h. 30 15 heures 20 h. 30 I. PROGRAMME DES SEANCES Vendredi 22 Novembre 1946 Sances de Commissions Salle Deuxième Commission: Hoare Memorial Douzième Séance Hall Deuxièeme Commission: Hoare Memorial Douzèeme é6ance (suite) Hall Deuxèeme Commission: Hoare Memorial Douzèeme é6ance (suite) Hall 11. ORDRE DU JOUR Vendreil 22 Novembre 1946 Deuiè6me Commission: Douiènime é6ance I. Discussion du Rapport du Comiée de Procedure. 2. Discussion du Rapport du Comié6 des Restrictions quantitatives et du Contóule des changes. 3. Discussion des Rapports des Comiéds des Subventions. 4. Discussion du Rapport du Cmniée, du Commerce d'Etat. 5. Discussion du Rapport du élé6géd du Royaume-Uni sur les relations avec les Etats non membres. 39 Time i0.30 .m 3.00 p.m 8.30 p.m 140 III. DOCUMENTS DISTRIBUTED Thursday 21 November 1946 Symbol No. Title E/PC/T/I7 ... Report of Committee IV. E/PC/T/CII/55 ... English text distributed on 20.11.46. E/PC/T/CII/56 ... Committee II: Summary Record of the Eleventh Meeting. E/PC/T/CII/57 ... E/PC/T/CII/57 Add. I E/PC/T/CII/57. . Corr. I E/PC/T/CII/58 ... E/PC/T/CI &CII/I9 E/PC/T/CIV/I8 ... E/PC/T/CV/33 ... Committee II-Procedures Sub-com- mittee: Draft Report of the Rapporteur. Addition to the Draft Report of the Procedures Sub-committee of Com- mittee II. Corrigendum to the Draft Report of the Procedures Sub-committee of Committee II. Committee II-Procedures Sub-com- mittee: Memorandum on Multi- lateral Trade-Agreement Negotia- tions. Joint Committee: Draft Report of the Committee. Committee IV: Draft Resolution to Preparatory Committee, relating to Intergovernmental consultation and action on Commodity Problems prior to establishment of the ITO. Committee V: Note from Secretary regarding Instructions to the Interim Drafting Committee. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text): telephone extensions: 255 and 29. 363o) (30) - 3100 II/46 DL G.344 111. DOCUMENTS DISTRIBUES Jeudl 21 Novembre 1946 Cote Titre E/PC/T/17 ... Document non encore distribué en français. E/PC/T/CII/55 ... Deuxième Commission: Procès-verbal de la dixième séance. E/PC/T/CII/56 ... Deuxième Commission: Procès-verbal de la onzième seance. E/PC/T/CII/57 ... Deuxième Commission-Comité de Procedure: Projet de Rapport présenté par le Rapporteur. E/PC/T/CII/57 Addendum au projet de Rapport du Add. I Comité de Procédure de la Deuxième Commission. E/PC/T/CII/57 Document non encore distribute en Corr. I français. E/PC/T/CII/58 ... E/PC/T/CI & II/19 E/PC/T/CIV/18 ... Document non encore distribué en français. Projet de Rapport de la Commission mixte du développement industriel. Quatrième Commission: Projet de resolution adressé à la Commission Préparatoire. au sujet des con- sultations et des mesures inter- gouvernementales ayant trait aux problèmes concernant les produits avant l'établissement de l'O.I.C. E/PC/T/CV/33 ... Document non encore distribué en français COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent être adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français(téléphone: posted 255 et 29).

GATT Library

cq055gp6471

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/cq055gp6471

cq055gp6471_90240041.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 24 London: Monday 11 November 1946 I. PROGRAMME OF MEETINGS Monday 11 November 1946 See attached lI. AGENDA Monday 11 November 1946 See attached 111. SUMMARY RECORD OF MEETINGS Committee V: Administration and Organization Eleventh Meeting Held on Saturday 9 November I946 at 10.30 a.m. See attached IV. DOCUMENTS DISTRIBUTED Saturday 9 November 1946 See attached COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 4I4 (English text) and Room 4I3 (French text); telephone extensions: 255 and 29. No. 24 Londres: Lundi 11 Novembre 1946 I. PROGRAMME DES SEANCES Lundi 11 Novembre 1946 Voir feuile jointe II. ORDRE DU JOUR Lund 11 Novembre 1946 Voir feuille joint III. PROCES-VERBAUX DES SEANCES Clnquième Commission: Administration et Organisation Onzième Séance Tenue le Samedi 9 Novembre I946 à ro h. 30 Voir feuille jointe IV. DOCUMENTS DISTRIPUES Samedi 9 Novembre 1946 Voir feuille jointe COMMUNICATIONS A LA REDACTION Les communications à la Rédaction doivent étre adressées au Bureau 414 pour le texte anglais et au Bureau 4I3 pour me texte français (téléphone: postes 255 et 29). II3 (53680) (18) _ 7200 11/46 D.L- G. 335 J O U R N A L NO. 2 4 - 113 A - I. PROGRAMME OF MEETINGS Monday 11 November 1946 Time Room 4.00 p.m. Committee III Eighth Meeting Hoare Memorial Hall B. Sub-committee Meetings 10. 30 a. m. Committee II -Technical Sub-committee: .Eighth Meeting Hoare Memorial Hall 10.30 a.m. Committee II -Sub-comrmittee on State Trading: Third Meeting Room 243 3.00 p.m. Committee II- Sub-committee on Quantitative Restrictions and. Exchange Control: First Meeting Room 243 3.00 p.m. Committee V - Ad. hoc Drafting Sub-committee: First Meeting Room 230 5.00 p.m. Committee: IV - Drafting Sub-committee: Please consult Ninth Meeting Notice Boards Future Programme of Meetings Tuesday 12 November 1946 Committee V : Twelfth Meeting 10 .30 a.m Committee II -Procedures Sub-committee: Tenth Meeting 10.-30 a.m.. Joint Committee on Industrial Development- Drafting Sub-committee: Fourth Meeting 10 .30 a.m. Committee V :Tweflth Meeting (continue)d 3.00p.m.. Committee II -Sub-cmrmittee on Quantitative Restrictions and Exchange Control: Second Meeting 3.00pP.m. Joint Committee on Industrial Development- Drafting Sub-committee: Fourth Meeting (continued) 3.00 .-m. Wednesday 13 November 1946 Headso f Delegations - Drafting Subc-momittee: First Meeting 10. 30 a.M. Committee II - Technical Sub-committee: Ninth Meeting 10.30 a.m. Committee I : Fourth eMeting 3.00 .pm. Committee II - Sub-cmzmittee on Quantitative Restrictions and Exchange Control: Third Meetign 3.00 p.m. - 113 B - I . PROGRAMME DES SEANCES Lundi 11 Novembre 1946 Heure A. Séances de Commissions Salle 16 heures Troisième Commission Huitième Séence Heare Memorial Hall B. Séances de Comités 10 h. 30 Deuxième Commission Comité technique Hoare Memorial Hall 10 h; 30 Deuxième Commission - Comité du Commerce Salle 243 d'Etat: Troisième Séance 15 heures Deuxième Commission - Comité des Restric- Salle 243 tions quantitatives at du Contrôle des changes: Première Séance 15 hèure's Cinquième Commission - Comité- spécial Salle 230 de Rédaction :Première Séance 17 heures Quatrième Commission - Comité de Prière de consulter Rédaction: Neuvième Séance le tableau d' affi- chage. Programme des prochaines séances Mardi 12 Novembre 1946 Cinquième Commission Douzième Séance 10 h. 30 Deuxième Commission - Comité de Procédure-: 10 h.; 30 Dixième Séance Commission mixte du développement indus- 10 h. 30 triel - Comite de Rédaction Quatrième Séance Cinquième Commission Dousième Séance 15 heures Deuxième Commission - Comité des Restric- 15 heures tions quantitatives et du Contrôle des changes : Deuxième Séance Commission mixte du développement indus- 15 heures triel - Comité de Rédaction : Quatrième Séance (suite) Mercredi 13 Novembre 1946 Comité de Rédaction des Chefs de Déléga- tions: Première Séance 10 h. 30 Deuxième Commission - Comité technique 10 h. 30 Neuvième Séance Première Commission : Quatrième Séance 15 heures Deuxième Commission - Comité des Restric- 15 heures tions quantitatives et du Contrôle des changes : Troisième Séance - 113 C - Thursday 14 November 1946 Committee II - Procedures Sub-committee: Tenth Meeting 10.30 a.m. Joint Committee on Industrial.Development: Fourth Meeting 3.00 p.m. Committee II - Sub-committee on Quantitative Restrictions and Exchange Control: Fourth Meeting 3.00 p.m. Friday 15 November 1946 Committee II - Technical Sub-committee: Ninth Meeting . 10.30 a.m. Heads of Delegations: Fifth Meeting 3.00 p.m. -Note: It is hoped that the work of Committees will be completed during the course of this week, although the morning of Monday 18 November is being reserved for a final meeting of Committee II, should this be necessary. It should then be possible for the Preparatory Committee to begin the final Plenary Sessions on the afternoons of Monday 18 November and to conclude the First Session by midday on Wednesday 20 November. This schedule depends, however, on the speedy dispatch of the work of the Committee and Sub-committees so that the Secretariat may have time to prepare the Report for submission to the Preparatory Committee. II. AGENDA Monday 11 November 1946 Committee III: Eighth Meeting. 1. Report of Chairman on views of the International Chamber of Commerce regarding Restrictive Business Practices 2. Debate and Resolution regarding the Rapporteur's draft of final report of Committee III to the Preparatory Committee of the International Conference on Trade and Employment. - 113D - Jeudi 14 Novembre 1946 Deuxime Commission - Comité de Procédure: 10 h. 30 Onzième Séance Commission mixte du développement industrial: 15 heures Quatrième Séance Deuxième Commission -- Comité des Restrictions 15 heures quantitatives et du Contrôle des Changes: Quatrième Séance Vendredi 15 Novembre 1946 Deuximbe Commission - Comité technique: 10 h. 30 Dixième Séance Cinquinme Réunion des Chefs des Délégations 15 heures Note: On e spère que les travaux des Commissions seront terminés au cours de cette semaine; la matinée du lundi 18 novembre est toutafois réservée à une dernière séance de la Deuxième Commission, si le besoin s'en faisait sentir. Les derrnières séances plénières de la Commission Préparatoire pourraient done commencer l' après-midi du lundi 18 novembre et la première Session pourrait ètre close le mercredi 20 novembre à mìdi. La réalisation de ce programme dépend cependant de l'achèvement rapide des travaux des Commissions et des Comités. Cette condition est nécessaire pour donner le temps au Secrétariat de préparer le rapport qu'il soumettra à la Commission Préparatoire. II. ORDRE DU JOUR Lundi 11 Novembre 1946 Troisième Commission: Huitième Séance 1. Rapport du Président sur le point de vue de la Chambre de Commerce Internationale au sujet des pratiques commerciales restrictives. 2;. Project de rapport final de la Troisième Commission à la Commission Préparatoire de la Conférence Inter- nationale du Commerce et de 1'Emploi: Discussion et adoption. ~ ~ ~~* - tration aVd Acgalaz'te'nc*'cn ara:~ni iaior; oeemben S~turday 9 lcv.:.m. 1946 at 10. 30 a.:;. Chairan: hi L.R. Red :LU'.e.-<; ER (Unxid Statlc Disc6sof the Unrtedle 7 hjneits. States Draft-Charter concerning letvrement of ufd S;ttl es;.-t cwas c. l Qu-.tions -;'Pcontinued, following which ered certate provisiors .e:a .ng nL - i-.zonzorlatirto Entry intu e rce,ircludilof t:lcCha pplicatien -.he ter to dec endent territ:riu. At .:1co g Sub-committee was .1po tt.ewasxamine eene tgg stioa-etons mendment ofother particuaf selar proviswions ith instruct- to report back to the full Commi:iee, if possible, at its ext:mcettng The Delegate for China and the Delegate for Australia were appointed as . _S >x1>,.>y~s. tk Ll>- to prepare the Report of Committee V for submission to the Plenary Session of the Preparatory Committee. . IV DOCUMENTS DISTRIBUTED Saturday 9 November 1946 Symbol No. Title E/PC/T/9 Letters between the Executive Secretary and the E/PC/T/10 Committee II: General Observations of Czechoslovak Delegation on the Agenda of the Committee (ChangeOe OSymbol No. from :PrC//1ClI/24) 4/PCT/1C1 Charetr of Intena.tionl Trade Organiastion. Sgg?estionspresented by raiizlani Government (Chnge ;of Symbol No. from E/PLC/T//116) /PECT//l. ote NbyAustralian Delegation rergarding Quantitative es:tricton to t; ._.:Us...I-BLalane oOf ayments.l (Chngae of SmybolNo. from E/PC/T/W/112) /3PC/T/3 Cmmiitee II:A.ustralann View io Genneal CCmmor-cial Provszions(Change of SymbSol fromEB/PC/T/CII/5) /PBCT/'IIL4L5 ommiite-e I:; ummary Re cod of the Eighth Meeting /:P/T/CII/,6 Cmm:iteev IT: Summa.ryRecord of the Sixth Meeintg f te Technical Sub-committe'e 2/CQT/CT & II/I2 / Joint Cmmi.tee a: Ir.:ili Ni foNte n lQuantitative Control V. MUSCELLANEOUSL,;U1J' ndum rzwnocament E/PC/T/CV/ L/ /v/15 Co-dittemmary Record ccahe Sixth uii:ctMeeting tdG 6 . rirdapa!agre h lin;117: Aftwo the -.rds eleciar"d th-t' tanzrt .e following<: "t;.etha Cenrtar heen lein non-commital in l o tareem~ttr it head hbs impression en i ...."that III. PROCES-VERRAUK DES SEANCES Cinauiènie Commission: Acministration et Organisation Tenue le Samedi 9 November 1946 b 10 h. 30i. 30 dent: M. L. R. EIMINUTEP (Etats-Unis) ct- mmission poursuit La Siseuion de l'article 76 du project prou can de Charte concernant l'interprétation et le règlement des era questiuridiques; elle examine ensuite certaines dispositionsition ives à la mis an viguour de la Sharte, notamaent dans lerz erritoires placés sous la dépendence des paya En fin ded tance, elle constitue un comité de rédaction chargé d'étudier lesu propositions d'amendments concernant des dispositions et de fairei aooirt a ka Commission si possible lors de sa prochaine séance, qui oit avoir lieu le 12 novembre à 10 heures 30.:3/?. Lmission désigne come Rapporteurs les Délégués de lae la Chine etl'Australie. et les charge les préparer le Rapport de lade l ission à la session pléni&re de la Commission Préparatoire.1pra di eadi ovembre 1946.96 Cote A/T/9f/T/ C/T/10Vi PC/T/12/1 P//T13t3 P/T/3/T PC/T/C/ II/46T/ PC/T/C.I & II/12IY ttres échangées entre la Sr mmission Préparatoire et la ternationals.'- Titre crétaire exécutif de lae Chambre de CommerceW uxième Commission: Observations générales de lade légation au sujet de l'odre du jouru la Commission (nouvelle cote donnée au document um PC/T/CII/24)I_ arte de l'Organisation Internationale du Commerce: :: oject présenté par le Gouvernement du Brésil (nouvelle ( te de la Délzégation de l ustralie sur les restric-ic ons quantitative en de la c sauge-rde de la ba.lcnrgénérale des comptes (nouvelle cote donnéer. document E/PC/T/W/12),/) xième Commission : Expesé des vued de l'Australie Aic: le date dom /T/CII/5) a re: D .cxt~~e ;^s-vctrb l i~ L sixi'sm.e s~suxle _du Coilit'6 c'r'n du contrôlen .ixt_ I4ot) dau Br$sil a:a ,ujet d'a ontL 2-itat4il' _ _ __t _D - Corrigenduzm. !.a Pcumn 1 /J/' /C/1 Cinquibme Coormis.;ion: Prc'esVerbejol de :la sixif.me st Pa-e 8 1Sclarat 9r: d-u Prn'idLrt, det;.stiEt; 1 sez6s ies mots "dI.1 e qUz;". V-1 -.r ls rnot T"bien que la Chharte soit pas -ion pluck prononce,- - a. 1' izinression qcu

GATT Library

tb055nf3219

Journal of the Preparatory Committee of the International Conference on Trade and Employment. 24-38

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

24-38

https://exhibits.stanford.edu/gatt/catalog/tb055nf3219

tb055nf3219_90240044.xml

GATT_157

UNITED NATIONS ECONOMIC AND SOCIAL COUNCIL NATIONS UNIES CONSEIL ECONOMIQUE ET SOCIAL 1O JOURNAL OF THE PREPARATORY COMMITTEE OF THE INTERNATIONAL CONFERENCE ON TRADE AND EMPLOYMENT DE LA COMMISSION PREPARATOIRE DE LA CONFERENCE INTERNATIONALE DU COMMERCE ET DE L'EMPLOI No. 27 No. 27 London: Thursday 14 November 1946 Londres: Jeudi 14 Novembre 1946 I. PROGRAMME OF MEETINGS Thursday 14 November 1946 A. Committee Meetings Time 10.30 am. Committee I: Fourth Meeting Room Hoare Memorial Hall B. Sub-committee Meetings 10.30 am. Committee II- Procedures Sub-committee: Eleventh Meeting 3.00 p.m. Committee II- Procedures Sub-committee: Eleventh Meeting (continued) 3.00 p.m. Joint Committee on Industrial Development-Drafting Sub- committee: Fifth Meeting Committee V-Drafting Sub- committee: First Meeting Future Programme of Meetings Friday 15 November 1946 (C (C I Heads of Delegations: Fifth Meeting... Committee II-Drafting Sub-committee on State Trading: First Meeting Committee III-Liaison Sub-committee: First Meeting Committee II: Ninth Meeting... ... Joint Committee on Industrial Development: Fourth Meeting Committee V: Fourteenth Meeting ... . Committee II-Technical Sub-committee: Tenth Meeting Committees II and IV-Joint Drafting Sub- committee on Subsidies on Primary Pro- ducts: Second Meeting Committee Room V- Convacation Hail) Committee Room V- Convocation Hall) Hoare Memorial Hall Room 230 10.30 a.m. 10.30 a.m. 10.30 a-m. 11.30 am. 3.00 p.m. 3.00 p.m. 3.00 p.m. 3.00 p.m. 1. PROGRAMME DES SEANCES Jeudi 14 Novembre 1946 A. Seances de Commissions Heure Salle ioh. 30 Première Commission: HoareMemorial Quatricmc Séance Hall B. Séances de Comités io h. 30 DeuxiIme Commission- Comite de Procédure: Onziedie Seance 15 heures Deuxirme Commission- Comité de Proédure: Onzième Séance (suite) Salle de Com- mission No. V (Convocation Hall) Salle de Com- mission No. V (Convocation Hall) 15 heures Commission mixte du HoareMe developpement industriel- Hall Comité de Redaction: Cinquiedme Séance I5 heures Cinquiéme Commission- Salle 230 Comit, de Rédaction: Première Séance morial Programme des prochaines séances Vendredi 15 Novembre 1946 Cinquinme Reunion des Chefs de Delegations zo h. 30 Deuwieme Commission-Comit6 de Redaction I0 h. 30 sur le Commerce d'Etat: Premiére Seance Troisiime Commission-Comité de Liaison: zo h. 30 Prerninre Seance Deuxieme Commission: Neuvieme Seance ... 1I h. 30 Commission mixte du développement indus- x5 herres triel: Quatrime Séance Cinquieme Commission: Quatorziime Séance 15 heures Deuxième Commission-Comité Technique: 15 heures Dixième Seance Deaxieme et Quatrieme Commissions-Comité 15 heures mixte de Redaction sur les subventions aux produits essentials: Deuxième Séance 120 3.00 p.m. 121 Joint Committee on Industrial Development: 8.00 p.m. Fourth Meeting (continued) Committee. II-Procedures. Sub-committee: 8.00 p.m. Twelfth Meeting Committee II-Sub-committee on Quantitative 8.30 p.m. Restrictions and Exchange Control: Fourth Meeting Saturday 16 November 1946 Joint Committee on Industrial Development: Fifth Meeting Committee II-Procedures Sub-committee: Thirteenth Meeting 10.30 a.m. 10.30 a.m. II. AGENDA Thursday 14 November 1946 Committee I: Fourth Meeting I. Report of the Rapporteur (Document E/PC/T/CI/14 Rev. I). 2. Consultation with the Representatives of the International Chamber of Commerce (Document E/PC/T/CI/16), and with the Representative of the World Federation of Trade Unions (Document . E/PC/T/W/21). XII. SUMMARY RECORD OF MEETINGS .Commlttee V: Administration and Organization Thirteenth Meeting - Held on Wednesday 13 November 1946 at 3.00 p.m. Chairman: Mr. L. R. EDMINSTER (United States) Consideration was given to the manner in which the Committee could best proceed in dealing with the remaining items on its Agenda, including particularly Articles relating to the Functions of the Commissions on Commercial Policy, Business Practices and Commodities ,respectively. It was decided in view of the short time remaining, that Committee V could not usefully undertake a detailed discussion of the provisions of these three Articles but should convey to the Interim Drafting Com- mittee such comments and suggestions as it might receive from the Committees more substantively concerned, together with any amendments or proposals received from Delegations. Article 56. relating to the Interim Tariff Commission, was then discussed and approved with one minor amendment. It was decidedd that Article 1 on the General Purposes of ti - C .ganization should be referred to the Plenary Sessio of the Preparatory Committee. After appointing a Drafting Sub-committee to consider those Articles which were discussed at the Committee's previous meeting, it was decided that the next full meeting should be held on Friday I5 November 1946 at 3.00 p.m. IV. DOCUMENTS DISTRIBUTED Wednesday 13 November 1946 Symbol No. E/PC/T/CI/14 Rev.I E/PC/T/CII/46 E/PC/T/II/49 E/PC/T/CI &:II/15 E/PC/T/CIII/15 E/PC/T/CV/28 Title Committee I: Revised Draft Report. Rev. I Corrigendum to Summary Record of Corr. r the Sixth Meeting of the Technical Sub-committee of Committee II. Committee II-Technical Sub-com- mittee: Summary Record of the Eighth Meeting. II/35 Joint Committee: Draft Chapter on Economic Development, submitted by United States Delegation. .5 Committee III: Summary Record of the Seventh Meeting. 8 ... Committee V: Suggested Redraft of Article 57, submitted by Brazilian Delegation. Commission mixte -du développement indus- 20 heures triel: Quatrième Séance (suite) Deuxieme Commission-Comité de Procedure: 20 hueres Douzieme Seance Deuxieme Commission-Comite des Restric- 20 h. 30 tions quantitatives et du Controle des changes: Quatrieme Seance 'Samedl 16 Novembre 1946 Commission mixte du développement indus- triel: Cinquieme Sbance Deuxienie Commission-Comite de Procedure: Treizieme Seance 10 h.30 10 h. 30 II. ORDRE DU JOUR Jeudi 14 Novembre 1946 Premiere Commission: Quatrième Séance I. Rapport presented par de Rapporteur (Document E/IPC/TICI/I4 Rev. 1) 2. Echange de vues avec les representants de la Chambre de Commerce international (Dcument E/PC/T/CI/i6). et avec le représentant de la Fédération mondiale des Syndicats (Document E/PC/T/W/21). III. PROCES-VERBAUX DES SEANCES Cinqulème Commission: Adminlstration et Organisation Trelzleme Séance Tenue le Merecredi 13 Novembre I946 , 15 heures President: M. L. R. EDMINSTER (Etats-Unis) La Commission étudie la methode qui lui permettra de rbgler, dans les meilleures conditions, les points restant a l'ordre du jour, notamment les articles relatifs aux fonctions de la Commission de politique commercial, de la Com- mission des pratiques commerciales et de la Commission des produits. Etant done le peu de temps dont elle dispose encore, la Commission decide qu'elle ne peut entreprendre avec profit un examen détaillé des dispositions de ces trois articles mais qu'elle transmettra au Comité provisoire de Redaction les observations et les suggestions qu'elle pourra recevoir des Commissions que ces questions concernent plus particulierement. de mbme que tous les amendements ou les propositions quelle recevra des Delegations. La Commission passe ensuite a Ia discussion de l'article 56 relatif au Comite interinaire du Tarif et l'adopte en y apportant un seul amendement d'importance secondaire. Elle decide que l'article s relatif aux buts g6neraux de l'Organisation sera renvoy6 devant la session pleniere de la Commission Preparatoire. Apres avoir constitute un Comite de Redactioa charge d'examiner Ics articles qu'elle a discutes au cours de sa seance psecedente, la Commission decide de tenir sa pro- chaine seance le Vendredi I5 novembre 1946, & I5 heures. IV. DOCUMENTS DISTRIBUES Mercredi 13 Novembre 1946 Cote E/PC/T/CI/I4 Rev. a E/PC/T/CII/46 Corr. I E/PC/TICII/49 E/PCfT/CI & II/I5 E/PCfT/CIII/f5 ... E/PC/T/CV/z8 ... Tift Premiere Commission: Projet de rapport revise. Corrigendum au proces-verbal de la sixieme seance du Comité Tech- nique de la Deuxieme Commission. Deuxaime Commission--Comité Tech- nique: Proces-verbal de la huitieme s.ance. Commission mixte: Projet de Chapitre sur le développement économique prdsenté par la Délégation des Etats-Unis. Troisieme Commission: Procs-verbal de la septieme stance. Cinquiéme Commission: Nouvelle redaction de I'Article 57 propose par la Delégation du Bresil. 122 V. MISCELLANEOUS A. Corrigendum to Document E/PC/T/CII/48 jComrittee II-Technical Sub-committee: Summary Record of the Seventh Meeting) Page 9. second paragraph, lines 4-5 for " Export duties" read " Export drawbacks" B. Accommodation at Church House (Reference Journal No. I8. P. 96 E) The French Verbatim Reporters have now returned to Room 331 B. telephone extension 72. COMMUNICATIONS TO THE EDITOR Communications to the Editor should be addressed to Room 414 (English text) and Room 413 (French text); telephone extensions: 255 and 29. V. DIVERS A. Corrigendum au Document E/PC/T/CII/48 (Deuxieme Commission-Comité Technique: Procès-verbal de la septième seance) Page II. ligne 5. au lieu de: " contrecarrer les droits à l'exportation" lire: " contrecarrer les detaxes à l'exportation" B. Attribution de locaux à Church House (Cf. Journal No. 18, page 96 F) Le service des stenographes de séances français s'est réinstallé dans le Bureau 331 B (téléphone: poste 72). COMMUNICATIONS A LA REDACTION Les communications à la Redaction doivent étre adressées au Bureau 414 pour le texte anglais et au Bureau 413 pour le texte français telephonee: postes 255 et 29). (53680) (22) - 1200 11/46 D.L. G. 335

GATT Library

gs258gp2673

Journal of the Preparatory Committee of the International Conference on Trade and Employment London, 1946. 1-5

United Nations Economic and Social Council

United Nations. Economic and Social Council

NaT

journal

1-5

https://exhibits.stanford.edu/gatt/catalog/gs258gp2673

gs258gp2673_90240011.xml

GATT_157

United Nations ECONOMIC AND SOCLAL COUNCIL Nations Unies CONSEIL ECONOMIQUE ET SOCIAL J O U RN A L of the PREPARATORY COMMITTEE.RvQY CO LL :J of the ONFERENCE ON TRADE AND EMPLOYMENTt'Rm-T.'I3iN.A= TFRhtLE 21iD 1>-rLOYK!,INiT Ol~D-Ii,;4 NO. 1. TUE-IX5 OCYO:Bi1,- PROGR:-i.;l O,2:L- ± Tuesday 15 October 1'3 Ie Ccmmittee Room 1st Plenarv Hoare Morial Hall 3. 0 p.m. 4238 1. Opening of the Session by the temporary Chairman, Mr. A. D. K. Owen, Asistant secretary GeneraI for Economic Affairs. 2. Remarks by the representative of the host Government. 3. Adoption of the suggested 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. NOTE: An explanation of the interpretation arrangements will be available ap the orfning o' the meeting. DO CU.NSLjSTRIBUTED SyNmbol o. Title E/INPC1/T/F/ e Genral garranements for Delegates. E/1PC/T/ ProvisiAonadl gena. E/PC/T/2 SugdgRelste Ues of Procedure. 4238 CONSEIL ECONOMIQUE ET SOCIAL J O U R N A L de la COMMISSION PREPARATOIREOr FPJRL.iPTOLS de la RNATIONALE DU COMMERCE ET CEeONFEMPeOERENCE DpTUOI00PsRC1E 7 DE L'FrMLQI LONDRES, 1946 NO. 1. .TRDI 15 OcTOBRE 1946 Foir-1W'.ESp.FICES !rdi 15 octobre 1946 Here Com:.sion Salle é15 heuréesè a !,Memorial e s6nce pl~iee Ho e ilorial Hall ORDRE DU JOUR 1. Oeuveprture de L-essM. Ai on narle Presidcntnroisoire, ,. K. Owen, des aSous-secérsaimrc eneal c'- cr;6cnordiqes. é2. Obdservateinement ons du rercentant ' Gouvccrt hote. é3. m .ontéon du nroet de regl;.; int 6rur., 4. Election u Prsdent. 5. Eléeiction du premier Vice-prsdent. 6 . pEélecetion du ee'.ximece-nrsdcn. 7. Lotion de l'ordre du jour provisoire. NOTpréE: Le syst'ae xprteré-6tin éléseéra. e-éolie au d&1eg a d&bt * de los~ace- DOCT71r±S TrIBUS Cote Disposité éons gnralées intressant .é é ls del6gu6s E/PC/T/j pOrdre du jour -ovisoi e. E/F/T/2 é Pmenrointéjet de relet eieur.

GATT Library

xz796nd1790

List of Press Releases issued during the United Nations Conference on Trade and Employment : November 1947 - March 1948. Havana

NaT

press releases

ITO/1-48 and ITO/1-48

https://exhibits.stanford.edu/gatt/catalog/xz796nd1790

xz796nd1790_90200315.xml

GATT_157

List of Press Releases issued during the United Nations Conference on Trade and Employment 1947 November - March 1948 Havana Date ITO No. Short Title Speech by Mr. B. Cohen, Assistant Secretary-General of UN, at opening Speech by M. M Suetens, President of the Preparatory Ctee Speech by Mr. D. Christie Tait, Representative of ILC Speech of President Grau San Martin (missing) President of Cuba welcomes delegates (missing) Biography of Dr. Zdenek Augenthaler, Czechoslovakia . 1947 21.11 1 21.11 2 20.11 3 20.11 4 5 21.11 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 24.11 25.11 2. Date ITO/No. Short Title 25.11 23 24 25.11 25 26 27 28 25 .11 29 30 31 26.11 32 33 34 26.11 35 26.11 36 37 38 26.11 39 27.11 39/Add.1 40 26.11 41 26,11 42 43 27.11 44 45 27.11 46 Take 1-6 27.11 47 27.11 47/Add.1 27.11 48 Biography of the Hon. C.H. Bhabha, India (missing) Address of Mr. F. Coppola J'Anna, Italy (missing) Speech by Mr. A. Bottomley. UK (missing) Address by Lic. Ramon Beteta, President, Mexico (missing) Address by Mr. Stig Sahlin, Sweden Biography of Dr. Walter Stucki. Switzerland (missing) Speech of Dr. S. kaczkowski, Poland Id. (missing) UN Radio Interview with Mr. W.L. Clayton, USA Speech by Mr. E. Waerum, Denmark (missing) Speech by Mr. M.A.H. Ispahani, Pakistan (missing) Fourth Pienary Meeting Statement hy U Kyin, Burma Id. Speech of Mr. D.L. Wilgress, Canada 3. Date ITO/ No. Short Title 27.11 49 28.11 50 27.11 51 28.11 52 28.11 52/Rev.1 53 54 55 28.11 56 28.11 57 28.11 58 28.11 59 Take 1-2, 60 28.11 61 62 63 64 28.11 65 66 28.11 67 28.11 68 69 70 28.11 71 Take 2-7 28.11 72 29.11 73 74 75 Speech by Sir E. Cuest; Southern Rhodesia Address by Mr. Kemal Suleyman Vaner, Turkey Biography of Mr. J.J. Dedman, Australia Address of Dr. Sali C. Malidi Haider, Iraq Id. (missing) Statement by Mr. A. Guinness, President, ICC Speech by Mr. W. Stucki, Switzerland Address by Dr. A.K. Kani, Indonesia Fifth Plenary Meeting 4-6 (missing) Address by Mr. Aly Bahgat, Egypt (missing) r, Address by Mr. J.A. Dunaway, Liberia (missing) Address by Dr. George Hakim, Lebanon Statement by Rt. Hon. Walter Nast, New Zealand (missing) Summary, Sixth Plenary Meeting Address by Mr. T. Odhe, International Cooperative Alliance Speech by Mr. A. Philip, France (missing) 4. Date ITO/ No. Short Title (missing) Speech of Mr. W. Muller, Chile (missing) . 80 81 82 29.11 83 84 85 1.12 86 87 1.12 88 89 90 91 92 1.12 93 94 95 96 97 98 99 100 101 102 103 104 Statement by the Hon. C.H. Bhabha, India (missing) " Address by G.C.S. Corea, Ceylon (missing) Speech of Mr. A. Politis, Greece (miss îng) " " Speech of M. Louis Dejoie, Haiti (in French) (missing) " " " " " 76 29.11 77 78 79 " Date ITO/ No. 3.12 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 20.12 121 122 - 176 Short Title Speech by Dr. Diego Luis Molineri, Argentina (missing) " " " " " " " " " " " " Radio Broadcast by Congressman Jacob K. Javits, USA missing 6. Date IT0 No. Short Title 1948 19.3 177 19.3 178 23.3 178/Corr.1 23.3 178/Corr.2 19.3 179 23.3 179/Add.1 20.3 180 181 182 183 20.3 184 20.3 185 186 20.3 187 21.3 188 22.3 188/Corr.1 189 190 21.3 191 21.3 192 193 23.3 194 23.3 194/Corr.1 22.3 195 23.3 196 197 23.3 198 22.3 199 23,3 199/Corr.1 Speech by Mr. Carmelo La Rose, Italy, at final plenary session Speech by Sardar H.S. Malik, India Id. Id. Speech by delegate of China Id. Speech by Delegate of Peru (missing) Statement by Dr. Urbano A. Zafra, Philippine Address of delegate of Canada (missing) Speech of Dr. Fulgencio Lequerica Veles, Colombia Speech by Mr. Walter Muller, Ohile Id. (missing) " Speech by Mr. Ariosto D. Gonzalez, Uruguay Address by Lic. Ramon Beteta, Mexico (missing) Statement by Hon. W.L. Clayton, USA Id. Speech by delegate of South Africa (missing) Statement by Mr. S.L. Holmes, UK Address by Mr. Morrisseau Leroy, Haiti Id. 7. Date ITO/ No. Short Title 22.3 200 201 202 22.3 203 22.3 204 22.3 205 206 207 22.3 208 23.3 208/Corr.1 209 22.3 210 22.3 211 23.3 211/Add.1 22.3 212 23.3 212/Corr.1 23.3 213 23.3 214 24.3 214/Corr.1 23.3 215 23.3 23.3 23.3 23.3 216 217 218 219 23.3 220 24.3 221 222 Speech by (missing) " Speech by Speech by Speech by Mr. .E. Chiriboga, Ecuador Mr. Angelo Arturo Rivera, Guatemala delegate of Venezuela Mr. G. Gutierrez Vea Murguia, Bolivia (missing) Speech by Mr. J. Woulbrown, Luxembeurg Id. (missing) Speech by Mr. A.B. Speekenbrink, Netherlands Speech by Mr. P. Grousset, France Id. Speech Id. Speech Speech by Dr. H.C. Coombs, Australia by by delegate of Dominican Republic delegate of Brazil Id. 19th Plenary Meeting, 9 additional Nations state Views on Havana Charter Speech by Mr. G. Gutierrez, Cuba Speech by Mr. A.B. Speekenbrink, Natherlands Speech by delegate of El Salvador Speech by Mr. Sergio I. Clark, Conference President, at Final Act Ceremony Statement by Rt. Hon. Walter Nash, New Zealand (missing) " 8. Date ITO/ No. Short Title (missing) Statement by the Secretary-General of UN Speech by Dr. Rafael P. Gonzalez Munoz, Cuban Minister of State (missing) 53 Nations sign Final Act; End of Conference N.B. An incemplete set of Havana press releases can be consulted at the Geneva United Nations information Center. 223 24.3 224 24.3 225 226 227 24.3 228

GATT Library

pw548np2341

Problems of Trade in certain Natural Resource Products : Progress Report by the Chairman of the Working Party Non-ferrous Metals and Minerals

General Agreement on Tariffs and Trade, November 22, 0000

General Agreement on Tariffs and Trade (Organization)

22/11/1985

official documents

MDF/25, LIC/M/14/REV.1, DPG/N.85.10, L/5912, L/5916, W.41/1, L/5913, L/5905, BOP/W/94, W.41/2, L/5768/ADD.11, GPR/M/19, GPR/W/73, L/5907, MDF/25, and C/M/193

https://exhibits.stanford.edu/gatt/catalog/pw548np2341

pw548np2341_91180029.xml

GATT_157

RESTRICTED GENERAL AGREEMENT ON MDF/25 TARIFFS AND TRADE 22 November Special Distribution PROBLEMS OF TRADE IN CERTAIN NATURAL RESOURCE PRODUCTS Progress Report by the Chairman of the Working Party Non-ferrous Metals and Minerals 1. The Working Party on Problems of Trade in Certain Natural Resource Products established by the Council on 13 March 1984 in accordance with the relevant decision adopted at the Ministerial Meeting of the CONTRACTING PARTIES in 1982 (BISD 29S/20) has authorized me, in my capacity as Chairman and on my own responsibility, to make a progress report to the Council and the CONTRACTING PARTIES on the work of the Working Party which has been undertaken so far, in the area of non-ferrous metals and minerals. 2. This is the second such report. The first progress report concerned the work done in 1984 on lead, zinc and copper. It may be found in document MDF/3. Notes of the discussions on those products appear in documents MDF/1, MDF/2 and MDF/W/18. 3. At the request of the Working Party, the secretariat has since revised and updated the study on zinc and zinc products and this has been issued as MDF/W/37. A similar revision and updating of the lead study will be prepared. 4. During 1985, the Working Party concentrated mainly on an examination of factors affecting trade in tin and nickel and their products. Background studies MDF/W/20 on tin and tin products and MDF/W/21 on nickel and nickel products prepared by the secretariat, formed the basis for the examination. Minutes on the meeting of the Working Party on 3 July 1985 are contained in the document MDF/21. 5. From the discussions so far the following problems falling under the competence of the General Agreement relating to tariffs, non-tariff measures, and other factors affecting trade in non-ferrous metals and minerals including in their semi-processed forms have been raised: - On the tariff side: remaining m.f.n. tariffs for m.f.n. suppliers; the exclusion of certain m.f.n. tariffs from the Tokyo Round tariff cuts; non-coverage or coverage limitations in certain GSP schemes for GSP suppliers; tariff escalation; effective tariff protection. - With respect to non-tariff measures: it was noted that several countries apply to trade of certain non-ferrous metal products import and export prohibitions, licensing, marks and certificates of origin requirements. Moreover, other non-tariff measures were identified which do or may affect trade flows, such as procurement practices, fiscal measures, stockpiling, pricing practices, governmental and intergovernmental grants and loans. 6. The Working Party will next turn to the examination of aluminium and is expected to prepare later in 1986 its final report which would address the problems and issues identified in the background studies and in the course of discussions of the Working Party. 85-2072

GATT Library

mx938dz1184

Protocol extending the arrangement regarding International Trade in Cotton Textiles of 1 October 1962

NaT

legal instruments

Instrument_No_105

https://exhibits.stanford.edu/gatt/catalog/mx938dz1184

mx938dz1184_90090013.xml

GATT_157

PROTOCOL EXTENDING THE ARRANGEMENT REGARDING INTERNATIONAL TRADE IN COTTON TEXTILES OF 1 OCTOBER 1962 PROTOCOLE PROROGEANT L'ACCORD CONCERNANT LE COMMERCE INTERNATIONAL DES TEXTILES DE COTON DU ler OCTOBRE 1962 1 May 1967 Geneva PROTOCOL EXTENDING THE ARRANGEMENT REGARDING INTERNATIONAL TRADE IN COTTON TEXTILES OF 1 OCTOBER 1962 PROTOCOLE PROROGEANT L' ACCORD CONCERNANT LE COMMERCE INTERNATIONAL DES TEXTILES DE COTON DU ler OCTOBRE 1962 1 May 1967 Geneva - 3 - PROTOCOL EXTENDING THE ARRANGEMENT REGARDING INTERNATIONAL TRADE IN COTTON TEXTILES OF 1 OCTOBER 1962 The COUNTRIES PARTICIPATING in the Long-Term Arrangement Regarding International Trade in Cotton Textiles (hereinafter referred to as "the Arrangement"), ACTING pursuant to paragraph (d) of Article 8 of the Arrangement, HEREBY AGREE as follows: 1. The period of validity of the Arrangement, set out in Article 14, shall be extended for a period of three years, i.e. until 30 September 1970. 2. The last sentence in paragraph 3 of Article 2 shall be amended to read: "It would, however, be desirable that the overall increase should be distributed as equally as possible in the annual quotas to be applied over the period of validity of the Arrangement." 3. Annex A shall be amended to read: "ANNEX A "For purposes of Article 2 the percentages referred to in paragraph 3 thereof shall be: For Austria 152 per cent For Denmark 24 per cent For European Economic Community 154 per cent For Norway 24 per cent For Sweden 24 per cent" 4. This Protocol shall be open for acceptance, by signature or otherwise, by governments participating in the Arrangement and by other governments accepting or acceding to the Arrangement pursuant to the provisions of Article 11 thereof. It shall be open to the European Economic Community as such to accept this Protocol when it determines that its institutional arrangements enable it to do so. 5. This Protocol shall enter into force on 1 October 1967 for the countries which have accepted it by that date. It shall enter into force for a country which accepts it on a later date as of the date of such acceptance. DONE at Geneva this first day of May one thousand nine hundred and sixty-seven, in a single copy in the English and French languages, both texts being authentic. - 5 - PROTOCOLE PROROGEANT L'ACCORD CONCERNANT LE COMMERCE INTERNATIONAL DES TEXTILES DE COTON DU ler OCTOBRE 1962 Les PAYS PARTICIPANT à l'Accord à long terme concernant le commerce international des textiles de coton (dTnommT ci-après "l'Accord"), AGISSANT conformTment au paragraphe d) de l'article 8 de l'Accord, SONT CONVENUS de ce qui suit: 1. La durTTe de validiTTy de l'Accord, stipTl6à h l'article 14, est prorTg~e pour uneT priode de trois ans, qui prendra fin le 30 septembre 1970. 2. La derènire phrase du paragraph 3 de l'article 2 est modiTfie come suit: "Il serait cependant souhaitable rpartie aussiT 6alement que annuels qui seront appliqTus Accord."' que l'aumgentation globale soit possible entre les contingents pendant la duTre de validiTt de 3. L'annexe Ae st modifTie comme suit: "ANNEXE A "Aux fins ed l'article 2, les pourcentages paragrapeh 3 dudit article sont les suivants: Pour l'Autriche Pour le Danemark Pour la CommunauTtT conomique euroTpenne Pour la Norèvge Pour la Sèude 152 pour cent 24 pour cent 154 pour cent 24 pour cent 24 pour cent" 4. Le pTrsent Protocole est ouvert à l'acceptation, par signature ou d'autre manèire, des gouvernements participant à l'Accord et des autres gouvernements qui accepteront l'Accord ou y acTTcderont confoTrement aux dispositions de l'article 11 dudit Accord. è? Ds qu'elle jugera que ses dispositions institutionnelles le rendent possible, la CommunTaTut conomique euTropenne aura la facTult d'accepter en tant que telle leT prsent Protocole. 5. LeT prsent Protocole entrera en vigueur le ler octobre 1967 pour les pays qui l'auront accTeàpt cette datel. I entrera en vigueur pour les pays qui l'accepteront Tultrieuremeànt la date de leur acceptation. FAàIT èêGeve, le premier mai mil neuf cent soixante-sept, en un seul exemplaire, en langues fçranaise et anglaise, les deux textes faisant galement foi. Tprvus au I hereby certify that the foregoing text is a true copy of the Protocol Extending the Arrangement Regarding Internatio- nal Trade in Cotton Textiles of 1 Oc- tober 1962. done at Geneva on 1 May 1967, the original text of which is de- posited with the Director-General of the CONTRACTING PARTIES to the General Agreement on Tariffs and Trade. Je certifie que le texte qui prTcède est la copie conforme du Protocole pro- rogeant l'Accord concernant le com- merce international des textiles de coton du ler octobre 1962. fait à Genève le ler mai 1967, dont le texte original est dTposTT auFèrs du DirecteurTTgTeral des PARTIES CONTRACTANTESà l'Accord TgTnral sur les tarifs douaniers et le commerce. E. WYNDHAM WHITE Director-General Geneva Directeur TgTnral GnèvTe Printed in Switzerland - ImprimT en Suisse V 1967 - 300

GATT Library

vj932ns8042

Speech by Mr. A. B. Speekenbrink President of the Netherl Lands Delegation before Final Plenary Session

United Nations Conference on Trade & Employment

Department of Public Information Havana Cuba and United Nations Conference on Trade & Employment

NaT

press releases

Press Release ITO/210 and ITO/195-228

https://exhibits.stanford.edu/gatt/catalog/vj932ns8042

vj932ns8042_90200400.xml

GATT_157

UNITED NATIONS CONFERENCE ON TRADE & EMPLOYMENT Department of Public Information Havana Cuba ADVANCE TEXT Press Release ITO/210 HOLD FOR RELEASE CHACK AGAINST DELIVERY SPEECH BY MR. A. B. SPEEKENBRINK PRESIDENT OF THE NETHERL ANDS DELEGATION BEFORE FINAL PLENARY SESSION Mr. Chairman, Now that so many distinguished colleagues already have given their opinion with regard to the results of the United Nations Conference on Trade & Employment you no doubt understand and also appreciate that I limit myself to a relatively short state- i will then in the first place associate myself with all the previous speakers who a expressed their gratitude to you, Mr. Chair- man, and the other officers of our conference for their guidance in our discussions and their manifold and strenuous efforts in this respect. Whelehoartedly I include in this vote of thanks the hard working members of the secretariat and last but not least the inter- preters, male and female, who often have long working hours, the greater part of which they had to spend in those nice looking but still very uncomfortable glas cages. With regard to our share in the discussion I think, Mr. Chairman, that I may say that the Delegation of the Kingdom of the Netherlands, whilst consistently maintaining a spirit of cooperation of compro- mise, has tried to contribute to the work of the conference. We did this with great enthusiasm as it is the opinion of my Government that every effort to improve the relations between the nations of the world and especially those in the economic field, should be supported to the greatest extent. My country has shown this attitude in the past and after the war in no less degree when particuipating in the work of the United Nations. Personally I am very happy, Mr. Chairman, that it has been my good fortune to take part in the sessions of the Preparatory Committee in London and in - 2 - ITO/210 Notherlands Geneva and to have now teh honour of signing, in hte name of the Kingdom of the Netherlands, the Final Act of the Havana Conference. Before doing so I feel obliged to remind you, Mr. Chairmena, again of the fact that the Kingdom of the Netherlands is in a process of reconstruction, not only with regard to the territories in Asia but also to those in the Carribean. I trust that when the tine comes to consider the membership of the International Trade Organ- igation under the stipulations of Article 71 of the Havana Charter, this process of reconstruction will have have come to a satisfactory end, so that my Government will be able to put the necessary facts and propositions before the Interim.executive Committee, we have Just set up, or to the Director Genera of the International Trade 0rganization if such an official will lby then have been appointed. In the meantime, Mr. Chairman, we shall continue in the same spirit that guided us durin this conference and in the previous meeting of the Preparatory Committee. In this conrection .I may be permitted to remind you, that in the meetings of the Contracting Parties to the General Agreement on Tariffs and Trde, which just have been concluded, I had the honour and pleasure to announce that my Government has notified the secretary-General of the United Nations of the fact that in addition to the metropolitan country also the Netherlands Indies, Curacap and Surinam will apply provisionally the General Agreement on Tariffs and Trade according to the stipulations of the Protocol of Provisional Application signed in Geneva on October 30 last year. Mr. Chairman, during this conference the countries of the Benelux again worked in the close collaboration and it therefore has been a great pleasure to me that my esteemed colleague and friend, Mr. Max Suctens, has been given ample opportunity to use his great gifts in several functions. That the Benelux as a. customs union is a member of the Interim Commission gives great satisfaction to my Government . My delegation is convineed that this Commission -3 - ITC/210 Netherlans under the able chairmanship of our esteemed colleague, Mr. Dana Wilgress, will use its best efforte to find a solution for the few outstanding problems with regard to the present text of the Charter. Of these problems I would like to mention in particular the special position of Switzerland with which country the Netherlands have such happy and fruitful trade relations. As you will understand, my country is very interested in the stipulations of article 42 of the Havana Charter which deals with custôms unions and free trade areas. It is our opinion that this article has undergone a great improvement in Havana and it is my sincere hope that together with article 15, which gives certain rules for preferential arrangements for economic development, it will form the framework within which the Members of the ITO will be able to construe greater economic units and by doing so will give a very valuable contribution to the expansion of world trade. The fact that at the sa me time we were considering these problems here, a very important group of European countries has been dis- cussing concrete - measures directed toward an increasingly greater economic collaboration, while last Saturday notice was given of the intended conclusion of a custom union between France and Itraly, makes it abundantly clear that the just mentioned articles in conjunction with all the other articles and principles of the Charter are based on realities. In this connection, Mr. Chairman, I might also express my satisfaction with the new text of the old article 93, now article 98, which deals with the relations with non-members of the Inter- national Trade Organization, It is our opinion that the attraction to be a member of the ITO must arise from the useful work of that Organization and that we should not seek -I might say- enforced cnlistment of other countries into that Organization, At the same time we are in favour of a speedy entry into force of the Havana ITO 210 Netherlands Charter and have therefore suported those delegates who spoke in favour of the old text of the present article 103 of the Charter. :-However, we too consider the present text of that articlel to be a reasonable compromise between different points of view. Mr. Chairman, as I promised to be brief, I mentioned only a few articles of the Havana Charter although for instance. I would have liked to deal at more length with the Chapter VIII of the Havana Charter which deals with the settlement of disputes, My delegation is of the opinion that compared with the Geneva text this part of the Charter has been greatly improved. There is no need for me to emphasize that the Kingdom of the Netherlands, comprising as it does territories in different stages of economic development which on the other hand have generallyy suffered great damage owing to the recent war- is vitally interested in practically every article of the Charter. We have always tried to state Dur point of view keeping in mind the needs and wishes of the dif- ferent parts of hte kingdom and althoug - as practically every colleague- I cannot say that we are entirely in agreement with the present text of all the articles of the havana Charter, we too consider the results of our world` as a reasonable compromise which I too am happy to autherticate by the signature of the Final Act As a contracting Party to the General Agreement on Tariffs and Trade and as signatory of the Protocol of Provisional Application of the said agreement, the Kingdom of the Netherlands will even have to go further in certain respects. Acting on the full powers I have received, I hope to sign on Wednesday also different proto- cols which have the immediate or ultimate purpose of bringing certain stipulations of hte general agreement on tariffs & trade into conformity with the corresponding articles of the Havana Charter. Mr, Chairman, I will not take up more of your time and will therefore and with my thanks to you and to all our colleagues present here for the spirit of mutual trust and friendship in (more) -5- which we have conducted our deliberations and might ask you also to submit the thanks of myy delegation to the Cuban Governemnt and to the city of Havana for the kind and often overwhelming hospitality shown to us. I thank you.

GATT Library

vp729vp1091

Statement by the Nordic Countries

Multilateral Trade Negotiations the Uruguay Round, October 2, 9187

Group of Negotiations on Goods and Negotiating Group on MTN Agreements and Arrangements

02/10/9187

official documents

MTN.GNG/NG8/W/12 and 0269-0278

https://exhibits.stanford.edu/gatt/catalog/vp729vp1091

vp729vp1091_92030008.xml

GATT_157

MULTILATERAL TRADE RESTRICTED NEGOTIATIONS MTN.GNG/NG8/W/12 2 October 9187 THE URUGUAY ROUND Special Distribution Group of Negotiations on Goods (GATT) Original: English Negotiating Group on MTN Agreements and Arrangements STATEMENT BY THE NORDIC COUNTRIES The following statement was made by Finland, on behalf of the Nordic countries at the Group's meeting on 17 September 1987. In document MTN.GNG/NG8/W/3 the Republic of Korea has suggested negotiations to improve the functioning of the Anti-Dumping Code. Also the Nordic countries are among those comparatively small countries, heavily dependent on foreign trade, whose exports have suffered from anti-dumping measures, which in some instances have appeared arbitrary from the point of view of the provisions of the Anti-Dumping Code. Therefore the Nordic countries can, in principle, support the initiative of the Republic of Korea and many of the specific ideas contained in it. Work has been done for several years in the Ad Hoc Group on the Implementation of the Anti-Dumping Code in order to elaborate interpretative rules for the application of anti-dumping measures. The Anti-Dumping Committee has adopted a number of recommendations to signatories of the Code and work in the Ad Hoc Group continues on a number of issues. Among these the Nordic countries attach particular importance to the question of assessing material injury in the case dumped imports from several sources, cumulative injury assessment. However, the Nordic countries feel that the expected launching and the actual start of the Uruguay Round has resulted in a slowdown of the work in the Ad Hoc Group. The Nordic countries feel that it might be useful to review the outstanding issues that have emerged from Ad Hoc Group and to resume work thereon in an appropriate forum. GATT SECRETARIAT 1 UR-87-0276 MTN.GNG.NG8/W/12 Page 2 The Nordic countries take the opportunity in this context to draw attention to one broader question regarding the definition of dumping in the Code. That definition in the present Code is straightforward and simple: sales on export markets below the normal value as defined in Article 2 of the Code. The philosophy behind that definition is that an enterprise strong on its domestic market, either through import protection or dominant position, may reap the profits from that market and utilize surplus capacity for export sales at marginal prices. Thereby the exporter may influence and depress the price level in the importing country. The question arises concerning the relevance of such an oversimplified thinking in today's business world. Although situations such as the one described above certainly exist, the Nordic countries believe that exporters are much more frequently faced with situations where they either have to accept the price prevailing on various foreign markets or to renounce sales on those markets.! The question from the exporter's point of view is price adaptation, rather than price determination. If it so happens that the price on the foreign markets or on some of them is lower than on the exporter's domestic market or on some other export markets, the exporter is faced with the threat of anti-dumping measures as a result of price adaptation. The Nordic countries believe that some fresh thinking should be devoted to this problem and its possible solutions on an appropriate negotiating forum in the context of the UR. The paper from the Republic of Korea in its point G. a) touches upon this question when it says: "In certain Signatory countries, the investigating authorities do not give any weight to evidence that domestic producers have driven prices down themselves and that the imports are merely following these price declines."

GATT Library

my200sj0762

ZZZZ

United Nations

United Nations

NaT

press releases

ITO/1-48 and ITO/1-48

https://exhibits.stanford.edu/gatt/catalog/my200sj0762

my200sj0762_90200317.xml

GATT_157

CPECC ! .' V. ., . .t t Cv 3- - ; I 1. ..G ' :Y±U t , - i 4 ~ 'r U b CC r `SR S 1. I have it to il ~Co .t;0c u .L vzi ûe e The Pre 'tory Committee of which 15 October to 16 Leve or ?, .. -v' l G? are 10 April to 10 cto or 7. - ! . : : '. .,: -- Committee , *' ; .C fork m :':1 r-. 0 to 1. I r--t.. `:r1 t -i-.' it;t-: - o}c ~.> .. * i :-zt 1000 . ectings i co rection it - - -- l -:-; - Trir-e. I go not think that there are many`- ces which have acco olished so uc -or within in an , r-:ui. - ,:' i of . r--:This is definitely the ic: *-'xLlt, on the one "and, of the spirit of co- ,; D ., ^t;o J . r.!7 -v-. rt -: .' ; : on ' ,- t ?n't`-' 2. The Draft Chart r -v _ - ci .is c 'f 0d.Ct ^ ;. -t :four ^ ;^!: ;: '_t ,^ i Its frist object is to -ive i tcrr. tio al tr-. rel -tio s b -~-, ' of a universally recoriced code of rules the --curity from co ercial treaties. The cl-' s of. such tra ties are ot all alike, however. They are not sufficiantly - -`^1 in (more) VERY BAD ORIGINAL character. hey a sometimes cotr, ctory and the`l? jority - of them are ill -or not at all . .ted: to the now technics of commercial policy. It -as necessery to reconsider, clarify and codify them. I shall ention at this oiut the. . ost favoured nafoured-nation clause, clauses aling -with quantative restrictions with transit subsi ies, anti-duming and coanter-vailing duties, custo-s fornalitics i . C:'rrrl &ac so on. e have been cgised to go far beyond the scope of ordinary x;ci.. t:.,s and to ostabish completely, now rules rcgrrding restrictive business practices, that s to say, a -, .<> ts concluded directly between private interests with` '` ' object of resure 2r. ;^ ing co !titior by fixing prices and o- :ort quotas and by sharing markets. Such c -reements have as such i 1ucrc on trade as oridinary co `rcial agreements, It would be impossible to cenceive o::.a co;` `lete code o- rules for cow 'rCt ,GI ' .c: cover such tices. It is that first time an _Gover;a.o. i :agree ont 1iir ; ter c d this field which was formmarly 1 Lfe to the discretion t t c 3. The second object of the Charter is the establish : ; of Cr- ar1'yatioi including on the' - .> ' 1'v O;k J%`.fl5.A> S\` g1 :`t r "`:1;J. intervals and, on the other, .:a.2h :xb*ton<*'ing that the rules laid. down by the Charter were. respected and solting g a y dispotos or. ^ a which in - tu J.: or ^~U. )Zi X.s.! t ; economic relatinos, either tz '- 't 1 n.1 *--1 t or by; : of l. al proceedings. In this <-rr>, the Draft ;:' '' c;. lls r '. other things, for the con con titutor of L:: . o- 1r, r y-.- and ob establishes its Stat t:tes. 4. The third object arises fr:, : . -'iela 17 which states that :k~"1t~? s shall rstetr into .ut.t- l "v . i:::ç'direactted to the substantial reduction on troffs and C-a D' C':. '`s on i and exports and to the eli ai 1o iition, of references .. . . . ra ocrocal and mutally ; tocous basis." '*'t n lu to rut this part of the nrO".-:n a e into ?. .ct. On 10 April the States ( more)' VERY BAD ORIGINAL 3. wtt -* ,i.;- O. . '`. . ; : c. ;1'' Cc, tcc';` . .' oeu: --: b: C- r-. c '-t .s -. L' '` " C '.' r:u. v .w sc t':) . Â J '.. :.t.L`.. v ','` ' _ ''` " ' 'L c)~~~~~~~~~~~~~~fi i- 'Ct ;ri.'u ( ~t: :»Z'*t;' C . 'tLr ''r. I2, . t,.which '"2 _ .(~ y_ 'fl'-`only a, " 't'- "' 'S i'O is t_ 2.. 'largest `. .Z2r4,'ttt1`' -0;..................... * '~ - -IL' .c" " : i;':.:,' C out at .eiC.W t. -` . st'. C.: : OS u'. i ' ti. _ 2i ïzx. : .z C . :u . U . t 't 'x' .rcx .nt :th - ' 1" r .1 t; _i cet .:; s : I '- k .22 ' *: co t .s. , c: s'i Ut tt2 Ço.C .s.i; t ':' '. lc., - I" t ie cf:. 'r.c < .r: s : l.-. . i_. . t Dl SM £ & C' CbvC> or ..': cw'c ' ' i2 t".''. :ctA1,t tr|"'oe 2.1 00 - 2'_t .,. -..s.,,f tKd 't'@ . .:-'zr. .-~ . lu lit tk_.' ' <;;i_ sl 'cc - _i.t_1' '.'orl" t O-~~~.'? v0' :. .l 21 t) Q~~~~~~~~~~~ - J: CC` ras - ;,` .'!0 list of , '. ...... : ': _ .... . <2s .O C o_'ts _' S ... ... _ . . r""'x: n .v ;_, , .' : : ; i-i .~ J. ,_ o ; -s s ' , c:.' _ *. ' t '.. ..._ ,. c - c r i"i'x .` _ _ ' ;,'. _ ' -'''C_!" '' . _ i'' ' . S ', l'.açit r" ; s ::'r :a o' r-:- -v . '- '' ^- - '1 C.' , -:'r-1 tX - . -' |~ ' t',. 'r', '-" . .ç_ 4 _ _i : Y . 2:'.. Lt'...C L 'fl''t t'-î".. ;: . ' CD .i "iC C1 i Q) ` _^.'. - " , C-- t. ~ ~ ~ ( C- , ~ ~It ~ ~ ~ ~ ~ ~ ~ ~ ~~' , ' ; w~~~~~~~~~~~i, - :- 1 ''' 'i '2 ;'' .......t . ; .; o -..... - - r -'-' ' \'J; 49 Cu'w''second\ ''`' ' ---e- - ' VERY BAD ORIGINAL ca £s`_ Rele cc S ITO/2 The third part deals with subjects raised by the agreement itself and not included in the Charter. It is important to note that countries participating in the agreement are to meet regularly and what their first meeting must be held before next March. If the Charter has not come into force within a reasonable time, measures to amend, complete and maintain the General Agreement are contemplated, if that should be necessary. By a Protocol open for signature from 30 October 1947, Australi, Belgium, Luxembourg, the Netherlands, Canada, France, the United States and the United Kingdom have undartaken to put the areement into effect on a provisional basis as from 1 January 1918. Article 17 lays down the conditions under which other countries may participate in the agreement. 5. But that is not all. Heitther the establishment of of principles nor the formation of an organizations to provide a general safeguard and machinery for conciliatino and :Lritration can suffice for maintaing and exp ding trade. I will quote at this point what I said at Geneva :"The law provides security. It does not establish anything by itself . One might even go further The re-establishment of free trade by itself would not be enouh. There must also L. definite co-operative action in the fields governing trade, namely production, consumptin, employment and general economic development, and in particular the general economic developmnet of the under-developed countries. In all these fields the action to be taken is primarily dependent upon national sovereignty. Each couritry must have its c.n; pnliey. But the various polices thus involved would run the risk of conflicting with one another if they were nit controlled by concertd action," The rules for such concerted action form an important part of the Charter and are its fourth objuct. Similarly, mention may be made of the rules laid down in regard to inter- Governmental commodity control agreement. The regulation of the production and consumption of, and trade in, primary cammodities has been reconizeid as necessary in a number of cases. procedure has been established whereby such ( more ) Press Release ITO/2 5. control can be exercised in a manner conforming with the general purposes of the Charter. 6. Our work, such as it is, is not complete. In spite of the good will shown by all, it has not been possible to reach unanimity on a certain number of points, and some delegations have mede reservations regarding various clauses. There are also a certain number of questions which have been left open. After careful consideration the Commitee recogniged that it was not qualified to settle them and that 'that task: could only be performed by the Plenary Conference. It has prepared alternative solutions regarding such points, however, and is submitting them to the Conference. ( more ) 6 6 ITO/2 21 November 1947 This solution was adopted as regards voting arrangements (Art.72), the composition of the Executive Board (Art.75), the interpreta- tinn and settlement of differences (Art. 89 to 92), and finally relations with Non-Members (Art.93). 7. Our work is not only not complete, but is also not perfect. It is with the greatest modesty that we are submitting to you the results of our work. We are not unaware of the criticisms levelled against it, of which twc in particular must claim our attention. The first of them may be summarized as follows: The Charter cculd have been useful, if it had been comprised by a combination of strict rules. Unfortunately that has not been the case. It con- tains a large number of exceptions, ressolutory and even escape clause, so that it does not afford any real assurances but only precarious and hazardous guarantees. I will reply frankly and say that these criticisms are well founded. The situation with which we are confronted, and which is also confronting the present Con- ference, must nct be forgotten, however. If all countries were at the same level of economic development and had the same form of commercial policy, similar m' netary resources and policies and comparable responsibilities, it would be a fairly simple matter to evolve a strict code. That is unfortunately not the case, After this war, which has undermined the very foundations of the machi- nery of trade and has ruined many States, the burdens, needs and the possibilities cf various countries are profoundly different. The problem was one of finding formulas making it in the interest of each ccuntry to subscribe to the Agreement, whilst placing the same burd n of Pbligations on each. On the other hand, the Charter must respect the autonomy of each party, the autonomy of those countries having State monopolies and whose foreign trade itself is MOORE -7- ITO/2 21 November 1947 a monopoly, and that of those whose foreign trade is designed for purposes of reconstruction of industrial development or of price- stabilization, All the rules of the Charter mus" be acceptable to these various types of countries and be adaptable to the nature of the different economic systems involved. For the above rasons, our work could only be one of compromise. Its weakness should not, therefore, cause either surprise or alarm. The Charter is continuously growing. Its text affords opportunities for revision. Furthormore, both the work of the bodies to be estab- lished and the International Trade Organization itself will continue to improve the presernt text. 8. The second criticism in question is directed against the cha- racter of the Charter itself. It is reproached for being academic. It is considered to afforrc but few solucions to the distressing problems which the various countries have to face to-day, The con- clusion of the General Tariff Agreement fully demonstrates what may be expected of the Charter and of these who have signed it, They were as mains to comply with one of their major obligations even be- fore the Plenary Cinference came to consider their work. It is something if a consolation, on the other hand, to note that the Conference of Sixteen which met at Paris to study Europe's difficulties referred to the Charter on several occasions and made certain recommnendations regarding it. No better tribute than that can be paid to the concrete and practical character of cur work. If a further example of that realism were required, I could refer to the stand taken in regard to preferential agreements, The rules of commercial policy in this respect were extremely strict be- fore the war. As regards normal relations between countries not for- ming part of the same political entity, there were two possible for- mulas: on the one hand, the most-favoured-nation treatment, and on the other hand, a customs union. Any other scheme was heterodox. MORE -8- ITO/2 21 November 1947 On that account, for example, such attempts at gradually lowering tariff walls as the Ouchy Convention, signed in 1932 between the Netherlands, Belgium and Luxembourg, were abortive. The Economic Committee of the League of Nations drew attention to that deficiency on several occasions and oven proposed solutions. It can now be seen that under Article 42 of the Charter, before the effective entry into force of a customs union, transitional stages having a prefe- rential character may be contemplated. Similarly, Article 15 pro- vides that under certain circumstances preferential arrangements may be concluded in the interests of the programmes of economic develop- ment or reconstruction of one or more countries, In this respect, as you know, thirteen of the countries whichc h participated in the Conference of Sixteen at Paris to draw up a table of Europets economic neds decided to study the possibility of concluding a customs union between the European countries. This stud: group, comprising delegates or observers from twenty-two countries, met at Brussels on 10 - 15 November. after certain statements, inter-alia those of the representatives of the Netherlands and of my own country, had been heard, it was decided to establish a Preparato- ry Committee which should be entrusted with assembling technical in- formation, A second meeting is contemplated for the last two weeks of January 1948. Gentlement I will say no more about our work. We have tackled the matter three times. We have reconsidered the main questions confr-nting us at least twice. I sincerely believe that the texts which we are submitting to you today not only take thc concrete difficulties which we all have to face in our foreign trade relations more fully into consideration, but also, as regards cohe- rence, logic and clarity, constitute an improvement on the texts drawn up at London and New York. MORE -9- ITO/2 21 November 1947 Our work is one of good faith in every sense of the term. We should be happy if you should accept it as such, and even happier if you could find solutions to the, particularly controversial issues involved which are superior to our own. On my own behalf and on behalf of the countries represented on the Preparatory Committee, I wish the Plenary Conference good luck.